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Virginia Cooperative Extension -
 Knowledge for the CommonWealth

Students' Personal Finances and Expectations: Professor/Student Perspective

Farm Business Management Update, April 1999

By David M. Kohl and Bethany J. Beckerink of the Department of Agricultural and Applied Economics, Virginia Tech

One of the largest expenditures in the family household budget is the cost associated with college. If the household has multiple children, these expenditures can last 10 to 15 years. Some children finance part of or all of their expenditures, while others are solely dependent on parents or relatives.

College-age students are very susceptible to personal finance mistakes. Beginning with their first day on campus, students are bombarded by credit card companies offering pre-approved limits for first time credit users, phone companies offering special "college-rate" long distance phone cards, airlines offering student discounts, and travel agencies offering enticing spring break specials. College students can easily become overwhelmed by these personal finance risks, because they are dreaming, perhaps somewhat unrealistically, about future earnings and employment once they have their degree.

During the decade of the 1990s, Kohl conducted a personal financial survey of our Agricultural Finance class at Virginia Tech. Each year, revealing findings result in teachable moments throughout the semester. This year's class was no exception. In the first week of class, the 135 students primarily from the College of Agriculture and Life Sciences were asked to complete a four-page survey concerning personal finances.

The Class

About 50 percent were male and 50 percent were female, and two-thirds had Junior status or above. Animal, Dairy, or Poultry Science or Horticulture majors made up 70 percent of the class. Although the class is not a random sample of all students, it is a good representation of the 1,500 students enrolled in the College of Agriculture and Life Sciences.

Educational Funding and Loans

Approximately 75 percent of the students were financing some part of their tuition and expenses. One-third financed at least 25 to 99 percent of the cost, while one in seven was completely responsible for fees as college costs have risen. Over the decade of the 1990s, the percent of students funding their education has increased.

Over half the students responding to the survey have student loans. Thirty-six percent had balances between $1 and $5,000. Another 30 percent have loan balances between $5,000 and $7,500. The remaining students had loans outstanding for their education that were greater than $7,500.

Does their education pay? According to Price Pritchert in the book Mindshifts, a person with a bachelor's degree will earn an average of $14,000 more per year than a high school graduate.

Student Employment

Increasingly students work while attending school. Forty-two percent reported no job in the spring semester while attending school. One in seven students worked between one and ten hours per week. Approximately one-fourth were employed between 11 and 20 hours, and 15 percent reported working more than 20 hours per week. Generally, when students attempt to work more than 20 hours per week while enrolled full-time, grades, personal life, and extra-curricular activities suffer.

Financial Obligations

Eighty-four percent of the class reported owning vehicles. Two-thirds estimated the value of their vehicles to be between $1 and $10,000. Nearly one in seven owned vehicles valued at more than $15,000. Less than 25 percent of students had an outstanding car loan. Of those reporting loans, their current monthly payments were frequently above $200 to $250 per month.

Credit Card Usage

According to the "Money Section" of USA Today, the typical college student has a balance on their credit card in excess of $1,500. Sixty percent of individuals in the general public with balances on their credit cards have a total of $6,000 on 14 separate cards.

Seventy-five percent reported that they had a personal credit card. One-half the class had just one card, while one-fourth were using two cards. Over 20 percent had three cards or more.

Just over one-half of the class utilizing cards reported an average balance under $200. Another 25 percent had an average balance between $200 and $1,000. Approximately one in 14 percent of the students maintained an average balance between $1 and $5,000. And an amazing 5 percent had an average balance from $5,000 to $20,000.

If a student has a balance of $10,000 on his credit cards and pays the minimum amount each month, at the current credit card rates, it would take 36 years to eliminate the debt. A rule of thumb is that for every dollar borrowed on a credit card it takes $3 in payback.

Employment Expectations

The near-record economic expansion with a tight labor market is changing student expectations concerning salary, fringe benefits, and working conditions. Students were asked to identify what they thought were reasonable starting salary expectations. Approximately half responded that the cash starting salary range should be between $20,000 and $30,000. Another one-third indicated somewhere between $30,000 and $35,000. Fifteen percent responded by saying that the cash starting salary should be $35,000 and above.

Two-thirds indicated that they expected a fringe benefit package between 10 and 30 percent of their cash salary. Another 10 percent had expectations above 30 percent of starting cash salary.

Fifty percent of the students felt that they would be employed 50 hours or less per week in full-time employment. Forty-eight percent of the class was under the impression that a full-time job would encompass between 50 and 70 hours. Many of the dairy majors indicated that they would be working 65 hours or more per week.


The decade of the 1990s has seen nearly 1,200 students complete the Agricultural Finance class at Virginia Tech. The trend has been towards more hours working while attending school and more widespread credit card usage, with higher balances on the cards. Vehicle ownership has remained constant. Vehicle value and monthly payments have increased for those students who desire relatively new vehicles. Average starting cash salary expectations have increased by nearly 60 percent, while time on the job has remained the same. A positive trend is that nearly 33 percent of the class are actively investing through stocks, bonds, and mutual funds. This group of students is taking the initiative to secure their financial futures.

Advice to Parents and Educators

The results of these surveys suggest that parents need to encourage our public schools and Cooperative Extension Service to incorporate and teach personal finance in the curriculum. The basics of budgeting, credit usage, and investing need to be stressed at an early age.

Advice to Students

While a credit card can be an important tool used to build your credit history, maintaining only one or two credit cards with low limits and paying the balances in full each month is wise. Pat Robertson of the 700 Club says, "If you can't afford to save for it, you can't afford to charge it." College students need to carefully track their expenditures and watch out for special "college student deals." Often, several hidden costs are associated with these enticing offers. Financial mistakes made early in life can haunt even the most formally educated individual for a lifetime.

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