Undergraduate coping with financial stress: A latent class analysis

Abstract

Undergraduates are increasingly caught between three financial realities. First, the sticker and net cost of attending college has outpaced the rate of inflation (Baum & Ma, 2012). These increases result from factors ranging from declining state subsidies (Quintero, 2012), increased enrollments (Bound & Turner, 2007), and effects of the 2008 recession (Baum & Ma, 2012). Second, in the decade between 2001 and 2011, family incomes declined across the entire income distribution after accounting for inflation (Baum & Ma, 2012). Therefore, many parents of undergraduates experienced financial hardship and Were less able to pay for college costs. Finally, due to their low incomes and assets and lack of financial knowledge, students constitute a financially vulnerable population (Avard, Manton, English, & Walker, 2005; Berkner & Wei, 2006; Chen & Volpe, 1998; Murphy, 2005). Consequently, undergraduates have had difficulty absorbing the additional college cost burden placed upon them over time. The rapidly rising amount of student loans debt incurred per borrower highlights this fact (Baum & Payea, 2012). Due to these financial realities, a significant source of stress for undergraduates is their finances. In one recent national study, approximately a third of students recently described their finances as "traumatic" or "very difficult" to handle (American College Health Association, 2012). Another study, focusing specifically on financial stress, found even higher rates among a national sample of undergraduates and recent graduates (Trombitas, 2012). Approximately a third of the respondents in the latter study stated that financial stress negatively impacted their academic performance or progress. An impression supported by previous research associating financial stress with dropping out of college, lower academic performance, anxiety, and depression (Joo, Durband, & Grable, 2008; McPherson, 2012; Ross, Cleland, & Macleod, 2006). The available evidence clearly indicates that undergraduates frequently experience financial stress; however, less is known about how first-year students react to financial stress and how it varies by demographic groups. To fill in this gap, this study investigated how undergraduates coped with financial stress and how coping strategies correlated with student characteristics.