How financial literacy empowers first-generation students

When Riya*, a first-generation college student, received her first scholarship deposit, she wasn’t sure what to do next. Should she pay her hostel fees in advance? Help her parents back home with household expenses? Save it? 

As for many students in a similar situation, entering university presented Riya with financial decisions that her family had never encountered: managing scholarship disbursements, budgeting living expenses, navigating digital payments and deciding whether to save or spend limited funds. Alongside academic challenges, she now had to manage her finances without structured guidance on how scholarship funds should be prioritised or allocated.

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For learners who are the first in their family to attend university, financial stress often arises from limited financial resources, and lower access to financial knowledge and guidance intensify this impact. This in turn undermines confidence, retention and long-term success. Young adults from less privileged backgrounds have lower levels of financial literacy, according to OECD and the FINRA Foundation research. In India, only 27 per cent of adults are financially literate, with first-generation students especially at risk, found the National Centre for Financial Education (NCFE). Financial anxiety reduces productivity and retention, according to a PwC Employee Financial Wellness Survey, patterns that closely mirror how financial stress affects students’ focus, engagement and persistence in higher education.

Why first-generation students need targeted support

Institutions that aspire to be truly inclusive must go beyond scholarships and access policies. Inclusion also means equipping students with the tools to stay at university and thrive. First-generation students often lack family guidance in navigating tuition, savings, credit or digital payments. Without structured support, financial missteps can quickly spiral into debt, dropout risks or disengagement.

Financial literacy is often less accessible to first-generation students not because of lack of ability, but owing to social and cultural barriers such as stigma around discussing money, norms of financial privacy within families, limited exposure to formal banking or credit systems, and fear of asking “basic” questions in institutional settings.

Practical steps for universities

Universities can embed financial literacy into both academic and student life systems through the following:

• Introduce early workshops. Short modules in the first semester on budgeting, credit awareness, student loans and digital payments can make a lasting difference. The Reserve Bank of India’s Financial Literacy Week offers adaptable materials, while the OECD/INFE core competencies framework provides international benchmarks.
• Create structured peer-mentoring networks. Pair first-generation students with trained senior peers who have completed university-led financial literacy programmes, and engage alumni separately as mentors for longer-term guidance. Clear selection criteria, basic training and institutional oversight help ensure advice is reliable, reduce stigma and encourage healthier money habits.
• Normalise money conversations within structured, confidential settings such as financial-literacy workshops, academic advising sessions, orientation programmes or moderated peer-mentoring groups. Develop safe spaces where students can ask “basic” financial questions without fear of judgement. A strong model, with drop-in clinics, webinars and peer ambassadors, comes from the University of California’s Basic Needs and Financial Wellness programmes; for example, campus-level financial wellness initiatives at UC Davis and UCLA integrate financial education with student support services.
• Integrate career-linked financial learning into career services and placement preparation. Employability modules and internship briefings should include salary planning, taxation basics and long-term financial goal setting.
• Include financial wellness in counselling services. This will link the skill set to student well-being within holistic support. Universities often run counselling centres for mental health but miss financial stress as a key driver.
• Leverage technology to teach financial literacy. Universities can add gamified apps and simulations into first-year courses to help students practise decision-making in a safe environment.

In India, targeted financial literacy initiatives demonstrate how such interventions can directly support inclusion and access for first-generation learners. At Christ University, the LiFE (Literacy in Finance and Education) campaign, which focuses on students from under-represented backgrounds, translates abstract financial concepts into practical decisions about fees, scholarships and living costs. By engaging students early and in familiar educational settings, the programme reduces hesitation around asking financial questions and helps students remain engaged with higher education rather than withdrawing because of uncertainty or stress.

This approach illustrates a broader principle: when financial literacy is embedded as a student-support mechanism – rather than offered as generic awareness – it can lower non-academic barriers that disproportionately affect first-generation students, improving retention, confidence and continuity in higher education.

Benefits for students and institutions

The benefits of embedding financial literacy extend far beyond individual student outcomes. For students, it reduces anxiety, lowers dropout risks and builds resilience for life after graduation. For universities, it strengthens retention rates, enhances employability outcomes and fosters stronger alumni engagement. For society, empowering first-generation students helps close intergenerational wealth gaps, promotes equity and contributes to sustainable development.

Studies also show a positive feedback loop: financially capable graduates are more likely to give back to their alma mater through alumni networks or philanthropy. By teaching financial literacy today, universities invest in both their students’ futures and their own long-term sustainability.

For many first-generation students, financial literacy is not a luxury but a lifeline. It is a bridge from uncertainty to empowerment, from access to inclusion, from aspiration to achievement. Universities that commit to building this bridge will not only transform the lives of their students but also shape more equitable, resilient futures.

* Name has been changed.

Manjari Sharma is associate professor in the department of commerce and coordinator of immersion and exchange programmes in the Office of International Affairs at Christ (Deemed to be University), India.

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