Academic journal article Journal of Family and Consumer Sciences

Financial Information Project: Assessing the Financial Interests of College Students

Academic journal article Journal of Family and Consumer Sciences

Financial Information Project: Assessing the Financial Interests of College Students

Article excerpt

College graduates are entering the world of work with record levels of school-related debt despite being generally unprepared to face the financial challenges of life after college. Findings from a needs assessment survey of financial topics of interest to college students and staff/faculty and preferences for how the information should be presented are reported. A comparison of responses from the students and staff/faculty surveyed shows general agreement in interests as well as the methods of receiving the financial information. Implications of the findings to students, extension agents, instructional faculty, and counselors are discussed.

In 1993, one out of two college graduates had school-related debt. Today, two out of three students leave college with debt. According to a 2001 Baccalaureate and Beyond (B&B) Longitudinal Study by the U.S. Department of Education, National Center for Education Statistics, college students, upon graduation, have an average of $19,300 (in 1999 constant dollars) of debt (Choy & Li, 2005). This debt is 60% greater than what it was in 1992-1993 ($12,100).

The effects of college debt are far-reaching. Recent studies on college debt found that college graduates with high levels of indebtedness are more likely to make decisions to postpone marriage, delay having children, and delay moving out of their parents' home (Baum & Saunders, 1998). These delays not only have an impact on individual families; they also have financial implications for society and the larger economy.

Another effect of the increased debt load of college students is a significant increase in bankruptcy filings by individuals under age 25. Between 1991 and 1999 there was a 51% increase in the number of filings by the under age 25 group, and the next age cohort (age 25-34) showed a 38% increase in the same period (U.S. Government Accounting Office [GAO], 2001). Individuals under 25 are especially vulnerable because a majority of them enter college with little or no experience in managing their finances and few will study personal finance before graduating (Cunningham, 2000; Mandell, 1999). Debt management information is provided to students who have federally subsidized financial aid or loans, however, this information is provided too late-at the loan exit interview (U.S. Department of Education, 2005).

According to Nellie Mae, a major purchaser of college student loans, about 80% of undergraduate students have between one and four credit cards (Nellie Mae, 2005). The average card debt was $2,169, but nearly one of four undergraduates had outstanding credit balances in excess of $3,000 (Nellie Mae, 2005). Of particular concern is the finding that many of these credit card users, especially first-time users, are unaware of the fee structures and penalties that come with late or minimum payments (Collins, Borden, Marks, & Stone, 2005).

A 2005 U.S. Government Accounting Office study of 112 adult cardholders in Boston, Chicago, and San Francisco confirmed that failure to understand the terms and conditions of credit card agreements is not limited to youth. Even among adults in the study, credit card disclosures were too complicated and written at a level that exceeded the reading level of most Americans (GAO, 2006). Although an increase in bankruptcies cannot be linked directly to increases in credit card debt, groups such as the Consumer Federation of America argue that rising credit card debt is a major contributor to increases in bankruptcy filings by the elderly as well as college students (GAO, 2001). When faced with the addition of mandatory payments on their college loans, an increasing number of college graduates are turning to bankruptcy in an attempt to solve their financial problems.

Results from a 1997 Personal Financial Survey of American high school seniors indicate that financial illiteracy among America's youth is a big and growing problem. A 3!-question multiplechoice test covering topics such as income, money management, saving and investing, and spending and credit was given to 1,532 high school seniors from 65 high schools nationwide. …

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