Examining correlations between student debt levels and financial literacy

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University of New Brunswick


The financial landscape is increasing in complexity. This is largely due to deregulation of financial markets, easier access to credit, and increased responsibility for retirement planning (Marcolin and Abraham, 2006). With this increase in complexity comes the increased importance of financial literacy. Previous literature has concluded that the general level of financial literacy has not kept up with this increase in complexity of the financial landscape and has contributed to increased debt levels and lowered financial satisfaction. Of particular concern is the literacy of university students. The shift from being financially dependent on parents to complete financial independence along with an increase in costs associated with attending university creates a challenging situation for students. Large sums of debt are incurred through their time at university, which then must be repaid after graduation, creating a significant burden. This study surveys 193 University of New Brunswick students and compares student debt levels to financial literacy levels. The results showed a significant negative correlation between these two constructs for certain cohorts of students. It also revealed an important finding of the effects of financial attitudes towards student debt levels.