Northwest Association of College & University Housing Officers

Cognitive Impacts of Financial Stress and Strain

Author: Olivia Stankey

“Students attending college in today’s society are doing so following the worst recession since the Great Depression” (Serido et al, 2014).  This reality has implications on our students for both their current and future financial lives. The financial decisions students make in their years of undergrad will have an effect on the rest of their lives – positively or negatively.  It is more important than ever that our students know how to navigate the financial realm around them. Unfortunately many of our students are not coming into college equipped with this information.

Financial Literacy is defined as, “a person’s ability to process economic information as well as make informed decisions about financial planning, wealth accumulation, debt, and pensions” (Lusardi & Mitchell, 2014).  As a sub-portion of Financial Literacy, Student Loan Debt Literacy is defined as, “The ability to identify, understand, interpret, and navigate student loan options, principles, and practices associated with responsible borrowing and debt management” (Lee & Mueller, 2014).  Taking a moment to reflect, if you have student loans, do you know how to identify, understand, interpret, and navigate this realm? Who taught you what you needed to know about finances? Student loans? Who is teaching our students?

In addition to the overall importance of learning to have agency over your own financial life, being under financial stress and strain, as many of our students are, has actual cognitive consequences.  Financial Strain is defined as, “financial demands that tax one’s ability to manage those demands [and] is a source of stress among college students” (Serido et al, 2014). According to the study done by Serido and colleagues (2014), there are five cognitive consequences for individuals under Financial Strain:

  1. Limited view of potential financial options
  2. Blind-spot for long term effects of financial decisions
  3. Not enough time spent gathering relevant information
  4. Errors made in their assessments and predictions
  5. Oversimplification of their decisions

Thinking about your students, have you seen this happen?  Have you seen a student sign up for a credit card to pay their late student tuition bill without thinking about the interest rates?  Have you seen students express financial strain but then not visit the Scholarships and Financial Aid office? What ways have your seen this phenomenon affect your students and what can you do about it?

There are a number of proactive actions you can take as a professional to support your students around financial literacy and alleviating the effects of financial stress and strain.  Below are three action steps you can take with no financial expertise required, as you may also be under financial stress and strain.

  1. Get to know the students that you work and interact with.  There is a significant amount of shame around financial need, so getting to know the student and building trust is the first step in helping the student help themselves.  
  2. Become familiar with that your campus does to help students in financial need, from financial assistance to counseling for stress.  
  3. Look for opportunities to save students money while protecting student anonymity, such as meal plan donation programs, offering full meals at programs instead of snacks, scholarship forms that are one page or less to complete, and not providing an entrance fee to services.



Lee, J. & Mueller, J. A. (2014). Student loan debt literacy: A Comparison of first-generation and continuing-generation college students. Journal of College Student Development, 55(7), 714-719.

Lusardi, A. & Mitchell, O. S. (2014). The economic importance of financial literacy: theory and evidence. Journal of Economic Literature, 52(1), 5-44.

Serido, J., Shim, S., Xiao, J. J., Tang, C., & Card, N.A. (2014).  Financial adaptation among college students: Helping students cope with financial strain. Journal of College Student Development, 55(3), 310-316.

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