Most American college students lack basic financial knowledge. Low financial literacy increases students’ risk of poor credit and default and decreases the likelihood that they will save for emergencies and retirement. ACE member University of Kentucky (UK) is determined to turn this around for its students, and the institution is putting its money where its mouth is.
Last fall, UK piloted a new initiative in which it pays students who take financial education courses and engage in other activities the university wants to incentivize. It is now available to the entire student body. The program, called UK Invests, is the result of a partnership between the University of Kentucky and Fidelity Investments, an ACE affiliate member. To participate in UK Invests, students will set up special brokerage accounts only available to UK students that minimize their financial risk and teach them the value of saving and investing money early.
“The power of saving a little today—and compounding interest over a lifetime—is undeniable,” UK President Eli Capilouto told UKNow, the university’s news service. “UK Invests is the next step in what has been a long-term commitment we have made to the success of our students.”
The university has been escalating its efforts and programming related to financial literacy, including opening a financial wellness center in 2017, and its leaders have developed this program to engage even more students. They hope that cash incentives will be a more effective motivator than free T-shirts or food and help students form healthy habits that outlast their time in college.
UK will pay each student as much as $250 per semester for completing activities in four categories: Financial Literacy, Involvement, Employability Skill Building, and Wellness. These categories, respectively, include activities like taking an online financial literacy class, going to a university-sponsored social event, attending a session at the career center, or working out at the gym. After a student digitally checks in to a qualifying activity or event, the university will deposit money in their account. Attending a single event can earn a student between $10 and $30, depending on the event’s modality and category.
“UK Invests is a program that will encourage students to hardwire their habits around healthy behaviors,” Kirsten Turner, UK’s vice president for student success, told UKNow.
While UK’s leaders would like all of its nearly 33,000 students to participate in UK Invests, opening an account is voluntary. To encourage participation, the university has made it simple and safe to invest. The accounts have no fees or minimum amounts and permit students to choose from four low-risk mutual funds. Students will retain control of their accounts after they graduate.
The university began rolling out UK Invests last fall, allowing student-athletes, resident advisors, and ROTC students to enroll while they fine-tuned the program. According to these students, it has been immensely valuable.
“I love that UK is doing this, because my parents never taught me how to save or invest,” Annika Williams, a recent UK graduate and former member of the track and field team, told UKNow. “It has already taught me a lot about life. And one day, I’ll be able to teach my kids about investing.”
Photo courtesy of UK Photo