New Jersey Sophomore at Rutgers University Wins the Second Annual Money Fit Scholarship
Tuesday, August 1st, 2023: Money Fit by DRS, a 501(C)3 nonprofit credit counseling agency, announced today the winner of its second-annual scholarship program. The winner of the $1,000 award is Hevenly Pajarito-Toxqui, a college sophomore attending Rutgers University in New Brunswick, New Jersey.
“Thank you so much for this opportunity in helping reduce the costs of my tuition,” Pajarito-Toxqui said of her award.
Money Fit Scholarship Winner
More than 1,300 high school and college students from 45 states and the District of Columbia applied for the Money Fit scholarship by completing a survey of their experience with and opinions about personal finance topics as well as answering questions about how money, debt, and credit work.
“Our nonprofit charter is all about educating individuals and households to get out of consumer debt and manage their finances responsibly. So, of course, our scholarship program fits naturally with our mission,” explains Money Fit education manager, Todd Christensen.
Money Fit, a dba of Debt Reduction Services, Inc., is a national nonprofit credit counseling agency based in Boise, Idaho, with a call center on Long Island, New York serving consumers in all 50 states and the District of Columbia. It was founded in 1996 and serves tens of thousands of consumers and clients each year.
Students Heavily Fearful and Strongly Misinformed about College and Money
As for the questions answered by the applicants, “insights we gain help us develop educational programs that better address students’ real-world financial concerns and challenges,” Christensen notes. “The data confirms much of what we know but also continues to provide some surprising insights into the financial fears, the money management confidence, and the complete misunderstandings of loans that college students take with them to campus.”
Among the most telling results have to do with the students’ underestimation of the value of their college degrees and their overestimation of the cost of related student loans. See more details below, but while 52% of students correctly identified government student loans as carrying the lowest interest rate of the four types presented to them, nearly the same number (45%) believe that credit cards (whose average annual percentage rate is at their highest levels on record near or above 20%) carry lower APRs than personal loans, government student loans, and private student loans.
“I’m afraid the media, bloggers, and parents have beat into our young people the notion that student loans are terrible to such an extent that they may turn to truly poor financial options when considering school financing, if they are too afraid already to even go,” Christensen laments. “We’ve mistakenly lumped the financial troubles of overborrowing by students in for-profit schools and those who drop out of community colleges with those who end up with a 4-year university degree.”
While this video is a few years old, it was in 2015 around the time today’s parents were hammering their kids about all of the evils caused by student loan debt, even if, as the video points out, most of the student loan default problems had to do with students at for-profit and community colleges.
Scholarship Survey Highlights
Good job, Moms and Dads! Past surveys of high school students by Money Fit in the early 2010s revealed that nearly 80% of high school students had never had a conversation with their parents about money. In our 2021-2022 survey, that response had risen to 55%. This year, 58% of respondents indicated they were having financial conversations with their parents at least monthly. Like last year, about a quarter of respondents said they were having conversations about money with their parents more or less annually. However, a much larger percentage (17%) indicated they could not recall having such a discussion with their parents or guardians, compared to 6% last year. This is most likely due to the large number of students surveyed this year compared to the previous year.
Believers in Saving and in Spending Appropriately. Three-quarters of college-bound or current college students believe their financial strength lies in their ability to save money (75%). A similar number (73.4%) sees themselves as knowing how to spend appropriately as their financial strength. 64% see their ability to earn money as a strength while just 43.9% believe they have the financial strength to avoid debt. Further down the list, just one-quarter (25%) believe that they possess strong credit-building skills. Not surprisingly, less than one in 20 (4.6%) believe they have strong skills to navigate the home buying process.
Uh Oh! Given the media coverage of student loan debts for the past 15 years, it’s no surprise that when it comes to what college students fear about money, debt takes the top spot for the survey’s second year in a row. A whopping 68.2% (up from 54% last year) worry more about getting into too much debt than any other financial issue, from credit building and earning money to investing and saving.
Misunderstanding Student Loans. The default repayment period for the vast majority of student loans is ten years. Just over half (52%) of the respondents accurately identified this loan term. However, a full 45% indicated that they thought the default repayment term was just one year. It’s no wonder they fear student loan debt above all other financial issues.
Underestimating Their College Experience. Surprisingly, even though these students are attending or planning to attend college, they greatly underestimate the value of their future degrees. Many studies have concluded over the years that a 4-year degree will double the average student’s lifetime earnings. Similar to our previous survey, just one in five of these students (22%) correctly identified the lifetime financial benefit of their degree. Three-quarters of them (74%) felt that their degree would only increase their lifetime earnings by 25%. Again, is it any wonder students are fearful of student loan debt when they don’t think their degree will benefit them much?
Student Loan Use. Surprisingly, students seemingly struggle to identify the eligible uses of a student loan. While a full 95% correctly noted that it is an appropriate use of a student loan to pay for gasoline to get to campus, only 6% thought they could use their student loans for housing or textbooks, and just 5% for a school meal plan. Yes, nearly one in five (19%) thought that using student loans for dining out (rather than buying groceries and dining in) would be an appropriate student loan purpose.
Asking Questions about Money Leads to Discussions about Money. As intended, the mere asking of money-related questions led to further discussions with a parent or guardian during the actual application for the scholarship. Nearly seven out of ten survey participants (69%) said they discussed one or more of the survey’s money questions with a parent or guardian while completing the application.
