Just a few months into her freshman year, Jordan Davis got a phone call that sent her into a financial tailspin: Her mother had been laid off and no longer could pay Davis’ college expenses. “It was sink or swim,” Davis, now a UC Berkeley senior, recalls. “I was terrified.”
Over the next few years, Davis – who hadn’t yet learned to manage her money – made some costly mistakes. But the tough lessons she learned aren’t buried in the past. Instead, she freely shares them as one of seven peer mentors for Bears for Financial Success, a financial literacy program for undergraduates that launched at Berkeley during the 2014 spring semester.
“Money troubles make a lot of people feel hopeless. When you can’t afford to live, to pay for rent and food, it’s dehumanizing,” says Davis, 23, a political economy major. “But it’s nothing to be ashamed about. And it’s easier to hear someone close to your age saying, ‘It’ll be OK.’”
A comprehensive new agreement announced today between UC Berkeley and Bank of the West will provide much-needed financial support for this young program, which seeks to grow by adding one-on-one appointments, marketing materials, online tools and services for graduate students.
“To date, we’ve held 95 workshops and reached nearly 2,000 students,” says Claudia Montesano, financial wellness and outreach manager for Berkeley’s Financial Aid and Scholarships office. “Using funds to advertise our services to students on a much larger scale, our numbers will increase significantly.”
The 10-year agreement, which establishes Bank of the West as the “Official Bank of UC Berkeley,” will provide the campus with more than $17 million in revenue to support merit-based scholarships and paid summer internships for students, as well as funding for priority programs like Bears for Financial Success and the UC Berkeley Food Pantry. An additional $13 million will be provided for operational support for an on-campus branch and ATMs, as well as tailored banking products and services that include discounted mortgages for staff and faculty. The bank’s announcement was made this morning.
“This is a ‘best-in-class’ partnership, the most comprehensive one we’ve seen between a bank and a university,” says A.J. Maestas, president of Navigate Research, the Chicago-based company that helped Berkeley analyze the value of an agreement of this caliber and then build it. “Many focus on the basics — affinity cards and growing checking accounts — and not as much on the financial well-being of students, faculty, staff and alumni.”
A shared mission
For many years, various Berkeley departments and units have entered independently into contracts with financial institutions. The new relationship with Bank of the West, which has sponsored Cal Athletics for more than 20 years, “brings together those efforts to streamline business operations and provide better services to our campus community,” says John Wilton, Berkeley’s vice chancellor for administration and finance. “At a time when about 13 percent of our funding comes from the state, this is one example of the university’s broader strategy to generate new revenue to support our public mission.”
The University Partnership Program (UPP), which guides and oversees agreements between Berkeley and prospective partners, created the Banking Working Group to select an official campus bank. The 11-member group of faculty, staff and student representatives chose Bank of the West through a competitive proposal process and after research into the downsides of school-bank partnerships.
Solly Fulp, executive director of university business partnerships and services for Berkeley, says students played a major role in the process. “They were involved every step along the way and made it very clear that protecting student interests should be the highest priority,” he explains. “Our banking partner will not receive any guaranteed business based on new accounts opened and will never market credit card products to students.”
During negotiations, the working group’s student representatives strongly advocated for Berkeley’s financial literacy and food security programs to benefit from the relationship. “We were very moved by the students’ concern for their peers’ well-being, and those values resonated with Bank of the West’s philanthropic mission in the community,” says Andy Harmening, vice chairman of consumer banking at Bank of the West.
“Food security and financial literacy are some of the foundations upon which students’ academic and extracurricular endeavors are built,” says Rodolfo Mendoza-Denton, professor of psychology, who was not a member of the Banking Working Group. He helped create a 13-part video series sponsored by the Office of the Vice Chancellor for Undergraduate Education about student wellness in areas such as sleep, financial literacy, nutrition, mental health and exercise.
“Not all students come to Cal with the same resources to face challenges around money and food,” he adds. “It’s great to see the university seeking to support programs around these issues, and promoting wellness more generally.”
With revenue from the banking relationship, the UC Berkeley Food Security Committee will expand its reach. “Since 2010, one in every five Berkeley students has reported in the UC Undergraduate Experience Survey having to skip a meal to save money,” says Ruben E. Canedo, a Berkeley research and mobilization coordinator for the campus’s Centers for Educational Equality and Excellence who leads that committee.
This year’s food pantry fund, he adds, will provide emergency food assistance to students who have exhausted their financial aid packages. It also will pay for fresh produce for the pantry, which opened in 2014-15 and has had more than 2,500 student visits.
In future years, Canedo says the pantry likely will serve double or triple the number of students it now supports. He aims to build the program to include a comprehensive food security nutrition model that will include a full-time instructor who will teach courses, train peer advocates to teach students about nutrition and how to shop and cook on a budget, and produce high quality assessment and impact data.
Sixty percent of Berkeley undergraduates finish college without any debt, and of those who do leave with debt, the average cumulative loan debt is $17,964 – 30 percent lower than the national average for four-year public universities.
Yet, Berkeley students still worry about money. Seventy-two percent of students in the 2014 National Student Wellness Study indicated financial stress, says Montesano, and students at Berkeley report the same, and at a similar rate.
“Many students haven’t been introduced to basic personal finance concepts and, even if they have, they don’t necessarily put them in practice,” she says. “As a result, our financial aid office assists those students who run out of money by the end of the semester and are in a state of emergency. This is one of the driving forces behind our holistic approach to educating our students, not just about financial aid, but about finances in general. Teaching students these skills while they are at Berkeley can prepare them for life post-Berkeley.”
Peer mentor Davis knows that anxiety well. While a freshman at Santa Monica College – she later transferred to Berkeley – Davis dropped classes after her mother’s job loss, in order to save money and look for work. Her wages were low, so she applied for credit cards, only to rack up debt.
“I ignored the bills, and the debt collectors started calling,” says Davis. “It was very stressful, and my schoolwork really suffered. I hit rock bottom and thought, ‘If I don’t dig myself out, no one will. I wish someone would have been there to tell me what to do.”
Using personal stories and self-deprecating humor, Davis today educates her fellow undergraduates about credit cards, creating a budget, identity theft, saving and banking, and moving out of the dorms. “I once lived with a family that charged me $200 to rent their living room, but it turns out it wasn’t legal,” she says. “Your name needs to be on the lease or you can be kicked out.”
The Bears for Financial Success peer mentors “bring energy to a topic that is not typically exciting for students,” says Montesano. “I often hear students at a presentation bring up something they’ve struggled with, and our peers can say, ‘Me, too. I’ve done the same thing.’”
“My favorite part of mentoring is making a connection with a student,” agrees Davis. “It can be embarrassing to talk to someone who has everything together when you don’t.” She adds that she also has experienced food insecurity, and that “you can’t continue to function, being stressed and hungry.”
“Just setting a long-term goal – like raising your credit score, or building $5,000 in savings – is an important step,” says Davis. “Mine was to be the first person in my immediate family to finish college.”