By Justin Ammon
Mississippi Agricultural and Forestry Experiment Station

MISSISSIPPI STATE -- All college students run a high risk for serious financial problems, and a Mississippi Agricultural and Forestry Experiment Station study indicates that older students are actually less financially secure than younger ones.

The study found that college students’ financial troubles stem from general instability in relationships, living arrangements and religious beliefs. Led by Mississippi State University School of Human Sciences professor Sheri Worthy, the study set out to identify what kind of student is most vulnerable to financial turmoil.

“Some students who come from low-income backgrounds are basically forced to be adults sooner than others, so they are financially independent at a younger age,” Worthy said. “Some of them have children of their own already, so there is a group of students who don’t really even go through that emerging adult stage.”

About 450 students at MSU and the University of Mississippi were surveyed. The research team turned up multiple surprises. One surprise was that younger students are less likely to have financial problems than older students.

Worthy said age does not necessarily indicate true adulthood. Students were categorized based on their answers to questions such as, “Are you ready for marriage or settling down?” and, “Have you achieved financial independence from your parents?”

According to the study, emerging adults who are prone to thrill-seeking behavior and alcohol abuse actually endured fewer financial hurdles than their older counterparts, who represented 40 percent of the participants.

“The study found that adults have more financial problems because they have more responsibilities and perhaps weaker support systems. They are trying to work and go to college,” Worthy said. “They may end up maxing out their credit cards and having to borrow money from friends and may even consider dropping out of school to go back to work.”

According to Worthy’s research, alcohol consumption, smoking and other forms of risky behavior have little bearing on a student’s financial wisdom. Emerging adults tend to drink more than adults do and to binge drink. But those surveyed had a better financial track record than the older adults in the study.

“While binge drinking is not good, it is often a developmental phase that many students go through. The research does not indicate that binge drinking makes a person a bad money manager,” Worthy said.

The results may be skewed, as a handful of students claimed to binge drink up to 30 days a month, Worthy added.

Students who engaged in sensation-seeking behavior tended to have more financial problems than their calmer counterparts did. To identify sensation seekers, researchers asked students to choose between a “wild, uninhibited party” and “quiet parties with good conversation.”

Researchers found that each one-point increase on the sensation-seeking scale correlated to a 6.1 percent increase in the number of financial problems.

“I think people who tend to have sensation-seeking behavior get a rush out of spending money they don’t have,” Worthy said. “It might be cool today, but maybe not so much in the future when that money is no longer in the bank.”

Worthy and her colleagues also found that females were 29 percent more likely to make unwise financial decisions than males were. The research indicated that race bore no correlation to risky financial behavior.

For college graduate John Doe, whose name has been changed, trying to match the lifestyle his parents had provided was problematic.

“I think my parents probably tried too hard for a period of time to compensate for their divorce and mistakes they had made between each other,” Doe said.

While pursuing his education, Doe opted to live in off-campus housing and splurge on the finer things.

“I eat good food. I occasionally spend a lot of money out on the town. I prefer quality over quantity, so when I buy something, I usually aim for the best,” he said.

Doe now owes $90,000 to a variety of student loan sources.

The college graduate considers himself “more fiscally loose than most his age” and is not sure into what category of financially challenged student he should be placed.

“I would be lying if I said I didn’t seek thrills, but I would say I’m an adult at this point, and I have done a bit of gambling in the past,” Doe said. “But most of my financial problems, at their root, can probably be traced back to how I was raised.”

Worthy said college administrators, college counselors and parents could all gain insight from the findings in this study. She said university curriculums should offer more classes that focus on financial responsibility and more financial self-help programs for students.

“This is something we need to think about for our future generations,” Worthy said. “As kids come out of college with all this debt, whether it is student loans or credit cards, it can be a burden for everybody.”

Contact: Dr. Sheri Worthy, (662) 325-0918