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# Only 11% of college students correctly answered these 4 money questions—can you?

Dylan Gelula as Xanthippe Lannister Voorhees (left) and Ellie Kemper as Kimmy Schmidt from Season 3 of the Unbreakable Kimmy Schmidt
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College students and relatively recent grads are pretty confident when it comes to money. Roughly seven out of 10 college grads rank their financial skills as either excellent or good, while almost six out of 10 students feel similarly.

That's according to Sallie Mae's 2019 Majoring in Money report, which surveyed 804 college grads ages 21 to 29 and 810 college students ages 18 to 24.

When respondents were put to the test, though, only about one in four college grads were able to correctly answer four questions about key financial concepts such as how interest accrues and how to pay off debt. Current college students fared worse: Only about 11% of them answered all the questions correctly.

Most respondents did, however, get at least a couple of the questions right. Among college students, 28% got three questions right and only 8% scored zero. Recent grads did a bit better: A third correctly answered three out of the four, while only 4% got them all wrong.

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Here are all four questions, if you'd like to put your own knowledge to the test. The first question was the one most students and college grads got right.

1. Suppose you had \$100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

a. More than \$102

b. Exactly \$102

c. Less than \$102

d. Not sure

2. Assuming the following individuals have the same credit card with the same interest rate and balance, which will pay the most in interest on their credit card purchases over time?

a. Joe, who makes the minimum payment on his credit card bill every month

b. Jane, who pays the balance on her credit card in full every month

c. Joyce, who sometimes pays the minimum, sometimes pays less than the minimum, and missed one payment on her credit card bill

d. All of them will pay the same amount in interest over time

e. Not sure

3. Imagine that there are two options when it comes to paying back a loan and both come with the same interest rate. Provided you have the needed funds, which option would you select to minimize your total costs over the life of the loan (i.e., all of your payments combined until the loan is completely paid off)?

a. Option 1 allows you to take 10 years to pay back the loan

b. Option 2 allows you to take 20 years to pay back the loan

c. Both options have the same out-of-pocket cost over the life of the loan

d. Not sure

4. Which of the following best defines the term "interest capitalization"?

a. The type of interest charged on high-balance loans

b. The addition of unpaid interest to the principal balance of a loan

c. Interest that is charged when you postpone payments on your loan

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Despite the fact that 39% of college students failed the quiz, having gotten only two or fewer answers correct, experts say there are signs that many young adults are practicing good money management skills.

About 60% of students and 64% of grads say they pay off their credit cards in full every month and fewer than 1% say they pay less than the minimum, according to the report.

And when it comes to saving money, 62% of college grads are putting aside money from their paychecks every month, while almost half of students do the same.

These "are all positive steps forward," Sallie Mae spokesman Rick Castellano says.

Everyone is a life-long learner when it comes to financial literacy and the conventional wisdom is that young adults really have a lot to learn, Castellano says: "What you're seeing is that there is a sense of confidence and responsibility when it comes to managing money."

(Answers: 1: a; 2: c; 3: a; 4: b)

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