Lack of education spurs college students into credit card debt

Graduating college students have an average of $23,200 in student loan debt. They have an average of three credit cards and carry with them after graduation a credit card debt averaging $2,700. They have no sense of delayed gratification or stable spending habits. Grade point averages decline during their college career, and 20 percent of graduates put off getting married or having children after their graduation, because of financial stress. These statistics, provided by Nellie Mae and a recent University of Georgia (UGA) research study, are disgusting. They are sickening. They are shameful. And it’s your fault.

Financial Literacy is an increasing problem for college students. Many reasons can be attributed to this issue, but the old excuse of “Well, we just didn’t know…” is closing in on being used, abused, and tired. It’s easy to get into debt, but with high interest rates and a relaxed individual fiscal policy, it’s increasingly difficult to get out of it. Many factors inhibit college students’ abilities to manage their money effectively, but ultimately, it’s all because of a poor fiscal education. It also doesn’t help that the cost of living and tuition have increased, there are flat wages in the job market, and student grants are declining. But as with everything else in the real world, graduates have to adapt to their environment.

Cyndy Hayworth, president of Junior Achievement of Central North Carolina, who acts to increase the financial literacy for all K-12 students statewide, noticed a gap in financial education. “The parents think the school is teaching it and the schools think the parents are teaching it. Because of this break in communication the students are developing poor spending habits which continue to affect them later in life. We try to get in there before it’s too late.” Junior Achievement, with 370 prominent businessmen and women volunteers, infiltrate the classrooms of our youth and teach them age appropriate money-management and business skills to help stem the increasing phenomena of poor financial literacy. And with adaptive curriculums, they stay ahead of the game. But the only way they can get in the schools is by request, which requires the understanding that neither the parents nor the teachers are ensuring their students’ financial literacy. In another UGA study, researchers found that 70 percent of high school students attribute their financial literacy as, “acquired by their parents.” The average competency level of these high school students on the fiscal examination was a 2.7 on a 10 point scale.

Fortunately for future generations of N.C. students, Senator Kay Hagan has a bill on the Senate floor requiring financial education in every K-12 classroom statewide. Should it pass, we’ll be the third state to adopt such a policy. The other two states that adopted a fiscal program are reporting lower amounts of personal bankruptcy claims, possibly as a result of a sound fiscal education.  Unfortunately for present day college students, the ability to develop an individual fiscal policy has been missed. So what now?

In an interview with a Uno Nieeban, a recent UNCG graduate who now works with Lonano Financial Advisors, Inc. on Wendover, the number one reason that college students are failing at the money game is that “Most college students have a problem organizing their cash flow and understanding the effects of immediate gratification.” When your expenses are greater than your income, as is the case for most college students, you will incur massive amounts of debt, especially if you splurge every weekend for that pair of jeans that you “need” or that night out that you “deserve.” The first step is to learn about budgeting. Learn to trim the fat around your expenses. Learn to be a bargain shopper. Use those coupons. Use that student ID for discounts. Start monitoring your spending habits now, and enter the world with splendid spending habits, rather than leaving the world with them. Who cares if the credit card market targets college students with their predatory tactics? Who cares if student tuition and loans are increasing along with the cost of living? The ultimate responsibility falls onto the individual.

Once you’ve started saving your receipts and you start understanding that the plastic cards you use for monetary exchanges are in fact real dollars and cents which you are accountable for, you can start working toward your financial freedom. According to George Clason’s novel The Richest Man in Babylon, the first law of money is to set aside 10 percent of your funds for future use. Save 10 percent of everything you make. If you start this now, a year from now you will appreciate its’ benefits.
Unfortunately, present day college students might have missed out on a solid fiscal education, but we’ve got to start working now to remedy the prophetic negative outcomes of underdeveloped spending habits, the false sense of entitlement to material goods, and the misunderstanding of the money game. It’s our responsibility to take charge of our fiscal education, and should we fail, it will only be our fault.