Financial Literacy and Investments in Higher Education

Using a rich data set from a large U.S. non-profit organization, I find that low income post-secondary students are poorly informed about three main financial aspects of their higher education: future income, financing costs and opportunity cost of being enrolled. This result holds for students who are academically talented, have been exposed to financial education (including a semester-long personal finance class) and relevant financial experiences. Furthermore, the first round of results of a randomized controlled trial (N=117) suggests that an hour-long financial education workshop on the main financial aspects of college increases students' GPA by 0.2 points (p-value=0.15) and their ability to receive financial aid from the non-profit organization by 11.4 percentage points (p-value=0.25)