Why Colleges Need to Educate Students About Money
It’s no secret that college students like to spend money. Most college students spend $6,000 a year on basic living expenses like rent, groceries, and utilities. Meanwhile, college students across the nation spend $27B a year on “non-essential items” like clothes, movies, and eating out.
College students obviously have money to splurge. But where are they getting this spending money — from parents, a job, or student loans? And how much influence do parents have on their child’s spending habits?
The answers to these questions can help your brand understand college students’ discretionary spending habits, so you can best strategize how to encourage students to send a little of that splurge money your way.
Of all the ways college students get money during their undergrad years, their primary source of income is their parents.
But how much cash are college students getting from their parents? In a survey of 1000 college students who receive an allowance from their parents, most aren’t getting all that much — over half receive $2,000 or less a year from their parents.
An important thing for brands to know, though, is that the money college students get from their parents usually isn’t going into savings — most college students who are receiving an allowance from their parents are using it as spending money.
Of the college students who reported getting an allowance from their parents, they reported using their parents’ allowance for eating out (76%), clothes (59%), drinks and snacks (53%), and partying (15%).
Let’s do a little math: There are currently about 17 million students enrolled in undergrad programs in the United States. If half of them get around $2,000 a year from the parents in spending money, we’re looking at about $17B in discretionary funds.
Now that humble $2k is looking like a big opportunity, especially if you’re marketing products that college students love like clothes, electronics, and snacks.
The more parents give their college student as an allowance, the more that college student has to spend.
You could assume that wealthier parents are probably giving their college students bigger allowances. That would mean your brand will probably have more luck targeting children of upper class parents, especially if you’re selling luxury goods like trendy high-fashion clothing or expensive dorm furniture.
But there’s more to understanding the influence that parents may have on their children’s spending than just income level.
80% of college students say they learn about how to manage their finances from their parents, meaning college students are likely share some of the same fiscal priorities as their parents. This behavior can extend to what they spend their money on, their credit card habits, and more.
So even if a college student isn’t getting an allowance from their parents, mom and dad can still be a big influence on how they spend their money, wherever they do happen to get it from.
Although most college students’ main form of income is their parents, the majority of students surveyed had another form of income besides mom and dad’s wallet.
In fact, part-time jobs come in close second to allowances — 3 out of 4 students hold a job while in college.
In the survey of 1000 college students mentioned above who are receiving money from their parents, the majority received income from working a job as well:
● 44% worked every year they were in school
● 86% worked a summer job
● 54% earned at least half of the money they spent recreationally while in school
College students who work a job have more discretionary spending money, regardless of whether they get an allowance from mom and dad — the majority of working college students earn between $7,500 and $42,000 per year.
Even if students don’t have a job or get an allowance, there’s still the money many get from student loans. But how do they spend that loan money, and is there any left for your brand after tuition, room & board, and the other basics?
About 1/4 of college students borrow an extra $2,500 or more than what they need for basic school expenses each year.
There’s no hard data on how that extra loan money is spent, but research shows that most college students aren’t spending their loans on “spring break” or other non-necessities. So brands may be better off focusing on parental allowances and student jobs as the primary providers of discretionary budgets for college students.
Whether you need a fresh perspective on how to market to college students or are just stepping into this world for the first time and are looking for expert advice, we can help.
Our consulting packages provide you with an experienced hand to help bring your campus marketing plan in line with both the current market for your product and the habits of the students you’re trying to reach.