College students need money that travels with them
When it comes to carrying cash, many college students are leaving home with a lot less of it.
Sure, debit cards are a must in their wallet. But more students are accessing mobile payment applications on their cellphone, such as PayPal, Apple Pay and Venmo, to pay for groceries, movie tickets, splitting a restaurant bill or bar tab with friends and ponying up money for fantasy sports leagues.
Fresh evidence of the growing popularity of money transfer apps — also known as peer-topeer or p2p — comes from a report released this month by Sallie Mae, the student-loan provider, and its Ipsos research partner on how college students and other young adults manage their finances.
The Majoring in Money survey builds on a similar report in 2016. It gauged how respondents pay for purchases, tested their knowledge and use of credit, their perception of their money management skills, and their desire to improve how they handle money and credit.
The survey of 2,419 adults, ages 18 to 29, covered nearly identical numbers of college students, college graduates and those who did not complete college.
The most significant increase from the 2016 survey involved mobile payments. When asked if they had ever used a mobile payment program, nearly 90 percent of the student respondents said they had, up from 77 percent in 2016.
“College students use their phones for everything,” said Rick Castellano, a Sallie Mae spokesman. And with mobile payment apps, “there's a comfort level, and more ease of use.”
Mobile pay surpassed debit cards to become the fastest-growing payment method. Cash, on the other hand, dropped from the most commonly used to third-most, the survey noted. About 57 percent of students also reported using a credit card, up from 56 percent in 2016.
As popular as mobile payments apps have become, the survey said college students still use their debit cards more frequently.
Mobile and online peer-to-peer payment systems have grown rapidly over the last few years, making about $147 billion in transfers over the past year, according to various research reports. And that trend is expected to continue.
What's the most popular mobile payment app among students interviewed for this study? It's PayPal, but Venmo is the fastestgrowing. In 2019, 37 percent of students reported using Venmo, up from 11 percent in 2016.
When asked why they chose one payment product over another, respondents said it was because their friends and family use that service.
The survey found that college graduates also are becoming more comfortable accessing mobile payment systems. But those who did not complete or attend college are generally shying away from money transfer apps, perhaps because of credit problems or a lack of comfort in using them, Sallie Mae researchers said.
Overall, the study pointed out that only 42 percent of those who do not have a college degree rate their money handling skills as excellent or good, compared with 71 percent of college grads and 59 percent of students.
“The non-completers need more help practicing good money habits,” said Marie O'Malley, Sallie Mae's senior director of consumer research.
In other survey findings:
Students, on average, reported carrying or using five credit cards, up from three in 2016. Their 2019 average balance was $1,183, up 11 percent from 2016's average balance of $906.
Twice as many college students and graduates said they pay their credit card bill in full every month than non-college grads. A third of college students said they get payment help from their parents, which can help with credit scores.
While college students are confident in their financial skills, perception is different from reality. When asked financial literacy questions, for example, one in three students said a high credit card balance will have a positive impact on a credit score. Questions, comments, column ideas? Send an email to sbrosen1030@gmail.com.