Strengthening student financial resilience may accelerate progress on SDGs

Rising tuition costs, unstable job markets and growing living expenses are increasing financial pressure on university students worldwide. While higher education is often viewed as a pathway to economic security, many students are navigating financial stress long before entering the workforce. New research now highlights how saving habits, debt control and budgeting discipline are shaping students' ability to withstand economic shocks.

The study, Financial Resilience and Wellbeing in College Students Within the Sustainable Development Goals Framework, published in the journal Sustainability, examines how university students perceive, experience and respond to adverse financial situations. The research links student financial resilience directly to global development priorities under the Sustainable Development Goals.

Financial resilience takes center stage in student wellbeing

The concept of resilience has long been associated with ecological systems and the ability to absorb shocks without collapsing. Over time, it has expanded into socioeconomic contexts, where it describes how individuals and households cope with and recover from financial disruptions. In this study, financial resilience is defined as the ability to withstand economic shocks without undermining overall stability and quality of life.

The researchers surveyed 256 university students from public and private institutions using a validated financial resilience scale grounded in financial health indicators developed by BBVA and aligned with the Center for Financial Services Innovation framework. The instrument examined three interrelated domains: students' perceptions of financial health, their lived experiences with financial challenges and the actions they took during or after adverse financial events.

The findings show that financial resilience among college students is not an abstract concept but a measurable and structured construct. Saving behavior, sustainable debt management and forward planning emerged as the strongest pillars of resilience. These elements form the backbone of how students protect themselves against unexpected expenses, delayed income or academic disruptions linked to financial strain.

Importantly, the study highlights that financial resilience is closely tied to overall wellbeing. Financial stress has well-documented effects on mental and physical health. By strengthening students' ability to manage money effectively, financial resilience contributes indirectly to SDG 3 by reducing anxiety, emotional strain and uncertainty associated with economic instability.

According to the authors, financial education is not simply a technical skill but a protective factor. When students understand budgeting, debt limits and savings strategies, they are better equipped to avoid financial fragility. This directly supports SDG 4 by embedding financial literacy as a core component of quality education.

At the macro level, resilient students are better prepared to transition into the labor market, manage income fluctuations and contribute productively to economic growth. In that sense, financial resilience becomes an enabling condition for SDG 8.

From five factors to three: Refining the measurement of resilience

The study applied exploratory factor analysis followed by structural equation modeling to validate the internal structure of financial resilience in a university context. Initial statistical analysis suggested a five-factor structure explaining more than half of the variance in the construct. However, confirmatory modeling revealed that several indicators lacked sufficient robustness when applied specifically to students.

Through systematic refinement based on both statistical thresholds and theoretical coherence, the researchers reduced the model to a more parsimonious three-factor structure. This final configuration retained the strongest and most consistent indicators of resilience while removing items with low factor loadings or conceptual redundancy.

The refined model demonstrated improved goodness-of-fit indices, reduced multicollinearity between factors and greater interpretability. Reliability measures exceeded established psychometric standards, with Cronbach's alpha and McDonald's omega coefficients indicating strong internal consistency.

This methodological refinement is not just technical. It points out a key theoretical insight: financial resilience does not manifest uniformly across populations. Indicators that are relevant in adult or household samples may lose explanatory power in younger, financially dependent groups. For example, items related to insurance coverage and long-term investment strategies did not perform strongly in the student sample.

The study suggests that students prioritize liquidity and immediate financial continuity over risk transfer mechanisms or wealth accumulation. In practical terms, this means that financial resilience during early adulthood is primarily defensive. It is oriented toward managing current expenses, avoiding debt overload and maintaining short-term stability rather than building diversified portfolios or long-term insurance schemes.

This finding aligns with previous research showing that employment status alone does not guarantee resilience. Many students either do not work or hold part-time jobs with limited income. In the sample, nearly 69 percent identified as only students, and 66 percent reported that job seniority did not apply to them. Among those employed, income levels were generally modest.

Such structural realities shape financial priorities. Students rely heavily on precautionary savings and disciplined spending rather than complex financial instruments. The model adjustment reflects these contextual conditions and strengthens the validity of measuring financial resilience within a life-cycle framework.

Linking financial behavior to sustainable development

Financial stress undermines mental health and academic performance. Students burdened by debt or unstable income may struggle to focus on coursework, increasing dropout risk and reducing long-term earning potential. Strengthening financial resilience therefore enhances both wellbeing and educational continuity.

The study integrates three theoretical perspectives to support this argument. Resilience Theory explains how individuals adapt to shocks without losing core functionality. Human Capital Theory highlights the role of education in strengthening economic decision-making and lifetime outcomes. Behavioral Finance Theory accounts for psychological and emotional influences on financial choices, recognizing that decisions are not always fully rational.

By combining these frameworks, the researchers conceptualize financial resilience as multidimensional. It is shaped by cognitive skills, behavioral patterns and contextual constraints. This integrated approach reinforces the idea that financial education is an investment in human capital that pays dividends across health, employment and social participation.

The findings also have clear policy implications. Universities can play a strategic role in embedding financial education into curricula or offering specialized support services tailored to student realities. Rather than focusing on advanced financial products, interventions should prioritize core competencies such as budgeting, responsible borrowing and emergency savings.

At the public policy level, the study suggests that youth-focused financial programs can reduce vulnerability during formative years. Facilitating access to basic financial tools and promoting precautionary saving can strengthen long-term economic stability.

However, the authors warn that the study's findings are context-specific. The sample was obtained through non-probability self-selection, which limits statistical generalization to all university populations. Future research could expand external validity through probabilistic sampling and cross-country replication. Integrating direct measures of mental health, academic outcomes and labor market transitions would also deepen understanding of how financial resilience operates within sustainable development pathways.