Less than 7% of African American families own stocks or mutual funds. Many are also living paycheck to paycheck. Children within those households not only face the challenge of being able to attend institutions of higher education but in trying to attain wealth for themselves.
Experts say financial literacy will be key in helping to close the massive gaps that exist. So, three Historically Black Colleges and Universities are planning to do that, partnering with The Society for Financial Education and Professional Development and Carver Federal Savings Bank on an initiative that will put students of color on a path to financial success.
Medgar Evers College, Howard University, and the University of the District of Columbia will be piloting the Student Ambassador Program from SFE&PD that will give students the opportunity to learn from peers on how to make smart use of their money. Students at the three universities will be learning proficiencies in a number of areas – saving, investing, budgeting, credit and student loan management, and goal-setting.
For those who attend HBCUs, it is critically important to gain those skills because the partners say an emphasis on money management typically doesn’t occur inside their homes.
“These skills help to level the playing field for diverse students who often do not have access to information or a support system to make informed financial choices,” said Ted Daniels, Founder and President of SFE&PD, which serves a financial literacy and professional development nonprofit that teaches financial skills, particularly to those in underserved communities. “Financial literacy during the crucial college years fosters long-term economic equality. Thanks to our partnership with Carver, we can expand the program’s reach and teach more students the financial skills they need to increase economic prosperity throughout their lives.”
The wealth gap that exists between Blacks and Whites is significant. The Washington, DC-based Urban Institute noted that the average wealth of White families from 1963-2016 grew by more than $900,000 while Black families only gained $140,000 during that time. White families have also invested far more than Black families in stocks, bonds and mutual funds – 25.3% compared with 6.5%, according to a study done by the Federal Reserve Bank of St. Louis.
In order to close those gaps, change must occur, and leaders at the institutions involved in the new partnership say it starts with education. The new program puts student ambassadors – who are guided by financial instructors from SFE&PD and business school professors – in front of younger students to teach them personal wealth and development skills while initiating other resource-filled campus events.
“It is more important than ever for Howard University students to learn financial literacy principles so that they can effectively manage their money during and after college,” said Lynne Kelly, Associate Professor of Finance at Howard University. “College students face increasingly complex financial decisions. Many students have higher debt levels today than previous generations. It is also far too easy for college students to get into financial trouble, given the barrage of online shopping, gambling, and trading options at their fingertips. I believe the partnership between the SFE&PD and Carver is a step in the right direction to alleviating these financial stress points.”
Debby Lindsey-Taliefero, an Associate Professor of Economics at Howard, echoed her colleague’s point, citing too the disparities that exist for African American students, especially since the start of the pandemic.
“Based on a 2018 Federal Reserve Bank survey on consumer finances, 40% of Americans do not have $400 for an emergency expense. These financial worries are even worse within communities of color,” she said. “This program is providing minority students with a roadmap for financial well-being that will last well beyond their college years.”
