For many college students, managing money can feel like a juggling act. Tuition, rent, food, and unexpected expenses can pile up, often leading to stress and worry. In response, some students turn to alternative financial services (AFS) like payday loans, check-cashing outlets, or pawn shops for quick cash. While these services may seem like an easy fix, Drs. Brandon Wheeler and Cecilia Brooks argue that they can create more harm than good.[1]
Alternative Financial Services and Financial Anxiety

Alternative financial services are often marketed as convenient solutions to financial emergencies. For college students, AFS like payday loans or pawn shops can appear as lifesavers when faced with unexpected costs. However, Wheeler and Brooks explain that these services come with high fees and interest rates, which can trap students in a cycle of debt.
While AFS can provide short-term relief, they increase long-term financial anxiety. As students take out loans or use services that charge high interest, their debt grows, leading to more stress and worry about paying it back. This anxiety can worsen if students don’t fully understand the terms of these services and end up borrowing more money to cover their previous loans.
The Impact of Social Support and Financial Literacy
Many college students and emerging adults struggle with debt due to a lack of financial literacy.1 Without the right knowledge and skills, it can be difficult for them to make informed decisions about their finances. Concepts like budgeting, credit, and debt management often aren’t fully understood, and this can lead to poor financial choices and traps, such as reliance on AFS.

Parents, friends, and mentors can play a crucial role in helping students develop financial literacy. By teaching them the basics of budgeting, explaining how credit works, and discussing the risks of borrowing, they can empower students to make smarter, more informed financial decisions. Financial literacy programs, whether through schools or community initiatives, can also provide valuable guidance. With the right support and education, students are better equipped to avoid debt cycles and choose healthier, more sustainable ways to manage their money.
Summary
Wheeler and Brooks' research sheds light on a growing issue: the use of alternative financial services among college students and the resulting financial anxiety. While these services provide immediate cash, they often leave students in a cycle of debt and stress. Wheeler and Brooks’ study highlights the importance of financial literacy in helping students make informed decisions and avoid the pitfalls of high-interest loans and other predatory financial services. Creating positive financial habits can help reduce the financial stress and anxiety of college students and emerging adults.
Takeaways
1. Invest in financial literacy. Both parents and emerging adults can prioritize learning about money management. Parents can start conversations with their children early about budgeting, saving, and understanding credit to help prepare them for emerging adulthood. Emerging adults can seek out resources, such as college classes, online courses, workshops, or even talking to a financial advisor, to gain a stronger understanding of how money works. Being educated about financial matters can help emerging adults avoid relying on alternative financial services when unexpected expenses arise.
2. Create a budget and an emergency fund. Emerging adults should develop a monthly budget to track their income and expenses, ensuring that they live within their means. Part of the monthly budget could include contributing to an emergency fund, which will serve as a financial cushion if unexpected expenses come up.
3. Seek out better financial alternatives. Emerging adults can explore other financial options, such as low-interest student loans, credit unions, or student bank accounts, which offer more affordable options than AFS. If an emerging adult is already using AFS, they should look into consolidating high-interest loans, negotiating lower interest rates, or exploring safer options like credit counseling or peer-to-peer lending platforms that offer lower fees and more manageable terms.
References:
[1]