by Aidan Kang, CFA
Senior Writer
UPDATED: October 13, 2022

Several studies prove that financial problems affect the cognitive abilities of college students and likely lead to poor academic performances. Students who don’t have to worry about money tend to perform better and are more likely to finish their studies, while those with financial stress perform poorly and drop out of school. This is why it’s become a necessity for colleges to hold financial literacy classes for their students. 

A study of student financial wellness at Ohio State University found that over 70% of students have financial stress because they’re scared of not meeting their tuition costs and monthly expenses. It becomes more of a problem considering that many college students lack food and accommodation security students are struggling financially

Also, it’s worth mentioning too that many universities and colleges are struggling financially because of a decline in enrollment and operational deficits. This is mostly because most students are struggling financially. 

It’s good that we all agree that students are struggling financially, leading to poor academic performance. However, we should know how much students are affected beyond acknowledging a problem. 

Impact of student’s financial stress

1. Increase in drop-out rates

The most common response to financial stress is to drop out. This makes sense in the short term because they no longer have to worry about tuition fees. However, it also means that they’re losing:

  • Scholarships
  • Higher earning power
  • Work-study
  • Scholarships
  • Grace period for loan repayment
  • Free public transit
  • Subsidized board and room

It is common knowledge for universities that at least one-third of students who start a four-year degree don’t finish it. Another survey published by the best dissertation writing service confirms that at least half of these students stop schooling because of financial problems. 

This also affects the colleges because potential students look through their graduation rate before choosing it. A low graduation rate is now linked to low academic ad faculty support and high tuition fees. This means that enrollment reduces as graduation rates further reduce. Also, students that drop out of school are unlikely to give to the school in the future.

2. Poor physical health

This is another common sign pointing to students’ financial problems. A survey by Student Loan Hero found that over 60% of students lose sleep because of their financial issues. This lack of sleep has several other issues that it might cause, such as:

  • Poor performance at school or work
  • Risk of heart disease
  • High blood pressure
  • Anxiety
  • Depression
  • Substance abuse

Many of these issues are already common with students. They don’t even include the physical symptoms many students suffer because of their financial problems, such as muscle tensions, headaches, stomach issues, hand tremors, heart palpitations, shortness of breath, and exhaustion. 

These point to the fact that students suffer from several health issues due to financial stress, which might require them to see medical care from the campus facilities. Consequently, this leads to increased operating costs as the use increases because the university’s insurance covers them. 

3. Poor mental health

Many mental health issues college students experience linked to financial stress. While they suffer from these issues, most students tend to isolate themselves. They also suffer from restlessness, depression, irritability, and dread. 

Several studies prove that:

  • 75% of the mental problem starts at 24.
  • 30% of young adults between 18 and 25 experience mental illness. 
  • 33% of mentally ill people consider committing suicide.
  • 33% take medication for their mental health problems.

These are scary numbers that point to mental health crises within academic institutions. This is confirmed by a survey of student affairs administrators, with two-thirds of the participants claiming that their top student concern is mental health. 

However, because of the cost of counseling, universities are starting to either charge students for their visits, cap their visits, or add the cost to their bottom line. 

Also, the increased load means universities have to hire more counselors. This means a large university may have hundreds of counselors. The goal is to keep the students mentally healthy because they will likely graduate. 

4. Low GPA

Financial stress means students are going to suffer low grades. This is because they're likely to neglect to study due to stress. Besides stress-reducing their cognitive abilities, they're unlikely to buy the necessary study materials because of the cost. 

Also, their financial stress means they're likely to have one part-time job at least. In many cases, this job interferes with their studying. They're also likely to choose the job over their studies if they had to choose. 

One factor that can help improve their grades is to seek mental health counseling. However, the cost is too high, and they're unlikely to go for it. 


Financial problems are one of the oldest problems students face in college. However, it has become a bigger problem in recent years and has unhealthy academic implications for students.