Hey guys! We got a guest post today on the topic of financial literacy! Financial Literacy Month may have been last month, but it’s importance extends well beyond the thirty days of April. So I would like to introduce Laur Davidson, freelance writer and soon-to-be college grad. You find her over at laurdavidson.com.
Laur, the site is all yours. Have fun and don’t leave a mess.
Financial literacy is not something that all students understand and many of them go through college without the notion of how to properly pay their bills, save their money, or even how much money to borrow for college. This is a growing problem and something that needs to be addressed.
But, who needs to address it?
The school? The parent? Or, should children be responsible for teaching themselves? This is a subject that needs to be covered, as it will benefit the student in the financial long run. Schools and parents should be responsible for teaching students about financial literacy. Let’s look deeper into this.
What is Financial Literacy?
Financial literacy is best described as a solid understanding of your personal finances and being able to make a decision about them after thinking about the consequences that may come from them.
There are many pros to financial literacy, especially for students who are entering college. For example, students who have financial literacy will make better decisions about their student loans. Think about it for a moment. A student with a good understanding and grasp of financial literacy will know that they should only choose to borrow the amount of money they need to go to school.
Again, a student with financial literacy will try to find other ways to pay for college before they take on a lot of debt. In this case, the student may choose to apply for scholarships, apply for grants, or even participate in the on-campus work-study program.
The problem with not having a good grasp on financial literacy and student loans is that a student may not truly understand the negative ramifications that come along with them. It is no surprise that there is a student loan debt crisis and students who do not understand much about student loans may borrow as much as they can, every time they can, and this leads to a massive amount of debt that will be their responsibility until it is completely paid off.
In addition, students who do not have financial literacy often do not know how to budget, especially when they enter into college. What happens is the student takes out the maximum amount offered to them by their student loan and then they look at the money as play money. They can go out and party or they can eat out every night and devour a steak and lobster when they choose. This is not what the money is supposed to be used for and it can lead to serious debt.
Even if a student takes out the maximum loan amount or they have a job and receive a paycheck every week, they need to know how to budget. Without this understanding of how money works, they will run out quickly and have nothing to fall back on.
Colleges with Financial Literacy Programs
There are over 50 different colleges that offer a literacy program for students and this is a wonderful option, especially for freshmen who are entering college for the first time. Below, we will list some of the top colleges that offer literacy programs.
Syracuse offers a literacy program on campus and students who qualify receive a grant that will allow them to pay down some of their student loan debt. Students who successfully complete the program can become a Peer Financial Coach and help other students.
Bowling Green State University
This university has partnered up with PNC to provide workshops on financial literacy to students on campus. The students have the opportunity to be awarded a $500 scholarship too. In addition, the students learn about setting financial goals for themselves, identity theft, and how to spend money with their future in mind.
Ohio State University
This college has a financial coaching program on site that is dedicated to helping students become financially literate. They offer students one-on-one consultation sessions with financial experts, who will guide them and provide them with the answers they need. This program offers to provide students with a $25 waiver for late fees should they receive a consultation.
Final Thoughts on Financial Literacy and New College Students
Financial literacy is important and should be taught to students, no matter the college they attend. Unfortunately, it is not and those students who do not have financial literacy will be left to borrow money without any understanding of how student loans work and without a budget in place, nor will they know how to refinance student loans with credit unions and community banks. This can be very dangerous, so it is vital that all new college students learn financial literacy one way or another. Students who choose to attend one of the three schools above should definitely enroll in the literacy programs on site and take advantage of them.
Readers–What do YOU think!? Is financial literacy education important? Or have we done just fine so far without it? Has anybody had any experience with the financial literacy programs Laur spoke about? Leave your thoughts in the comments below!