Combating Student Debt with Financial Education
While budgets are always getting tighter, educators must remember one significant cause of belt tightening is student dropout. In a recent survey, the Bill and Melinda Gates Foundation discovered that money management problems are the No. 1 reason for college dropout. If schools can stem the money-motivated exodus, there will be more money for financial literacy programs.
But if financial illiteracy is the No. 1 cause of dropout, the money must be spent now on financial education programs. If colleges and universities take a hard look at the real reason they are losing so many students, they will find that a financial literacy program is money well spent. One dollar spent up front might save $5 on the back end.
Time, naturally, is the other precious resource. But higher education institutions needn’t shoehorn a whole new class into students’ already busy schedules. Many financial literacy programs are available online and are parceled into five- to 10-minute segments, allowing students to complete these programs at their own pace in a non–disruptive format.
The real issue then isn’t time; it’s flexibility. Schools should look for a program that offers its lessons in small, palatable segments. This will allow educators to slip an e-learning program into any existing curriculum. While the lessons should all tie together into one complete course, lessons should be able to stand on their own.
When evaluating a personal finance education program, whether it is an online program, a guest speaker, or in-classroom curriculum, schools should give considerable weight to the fun factor. Programs that incorporate jokes (all too often a rarity in personal finance education) will go far in inspiring students. Students expect a finance class to be boring. When they are suddenly shown a humorous video clip or stumble across a joke answer in a multiple-choice quiz, they will wonder just how many other fun surprises are hidden within the course.
Checklists are another crucial part of any personal finance education program. A checklist paves the road of action and steers students out of the land of theory. Worksheets for common, everyday financial occurrences—such as things to look for when buying a car or renting an apartment—will travel with the student even after the personal finance course is over. When it finally comes time to buy that car, a student is far more likely to bring the checklist than she or he is to revisit an entire lesson on car buying.
Personal finance education should answer the timeless student question, “When am I ever going to need this?” Courses that provide not just information but also the resources to solve financial problems that students currently face, will quickly turn financial education into financial action.
Take this real-world example. In a speech at a college in Georgia, I came across a 20-year-old student who had signed up for a cell phone and, failing (as we all do) to read the fine print, soon found she owed a collection agent $600. The bold truth is that most personal finance courses would not have been able to help this student. She did not need to learn about budgets or the benefits of saving 10 percent of her income. What she needed were the actual words one should speak when contacting a collection agent.
All too often, finance courses don’t provide this real-world advice. Either it is not mentioned at all or, if it is, it’s glossed over with a general statement like “Contact your creditors and work out a plan.”
A course that takes the extra step to provide an actual sample script as a guide when contacting a collection agent will offer students the practical tools they need to not only learn about their financial lives, but also improve them.
Specific resources, such as sample scripts, coupled with practical financial lessons that focus on immediate action steps, such as checking credit scores, provide students with the instant gratification and feeling of accomplishment that puts a shine on the duller sides of personal finance education.
There is no doubt that students need more financial education. There is also no doubt that parents want to see money management curriculums in higher education. It is time for schools to realize that financial education programs that are affordable, practical, and entertaining do exist. Such programs will pay great dividends in the realms of admission, retention, and student success.
Peter Bielagus is a financial author and speaker who has been speaking to college students and administrators for the past 10 years. He has delivered more than 500 presentations on money management to college students in 49 states (missing Alaska) and eight countries. He is the author of three books on money management for young people and has appeared in the Wall Street Journal and USA Today, and on the PBS Special “Your Life, Your Money.”
Reprinted from “Combating Student Debt with Financial Education” in Recruitment and Retention 29.9(2015)1,2 © Magna Publications. All rights reserved.