Stop Student Loan Problems Before They Start – Financial Education Is Key
April 11, 2013

Too many Americans – millions in fact – are overwhelmed by student loan debt. Of the trillion dollars of student loan debt, half is not being serviced – either in deferment, delinquency or default – and that amount is getting worse every day. This begs the question – why are so many in financial straits with their educational debt? Ironically, the answer is a lack of education…

We go to college to learn, but there are obvious gaps in practical knowledge when it comes to personal finances and taking on debt. Most high schools have a basic personal finance course requirement that teaches student to balance checking accounts and encourages saving, but it seems that there’s a dearth of practical education on student loan debt.

As a college freshman, barely out of high school, I was given forms to sign to take on student loan debt that I didn’t understand. They were presented to me as pro forma to be able to pay for my rather expensive private college and I signed where the financial aid adviser pointed and didn’t think a second thing about it. Then late in my freshman semester, when credit card offers began filling our mail boxes at the student post office, most of us accepted those – excited to have plastic of our own for the first time. But when American Express offers a no-limit credit card to an 18 year old, this can quickly become a problem.

Not only are most college students graduating owing nearly $30,000 in student loans, but they are also amassing a serious amount of credit card debt as well. Most seniors owe thousands of dollars on their plastic – either from paying college expenses or just from over indulging because they have an available line of credit. These are serious financial circumstances for a young person to find themselves in – particularly if graduation isn’t immediately followed by a job offer with a salary that allows them to satisfy their debt obligations.

With that in mind, here are some resources for high school seniors and college students to educate them on the consequences of the debt they are readily taking on – both from student loans and credit cards:

#1 360 Financial Literacy

The American Institute of CPA’s (the uber-number crunchers of our nation) have provided free financial education resources. One of the topics of interest to college students is Paying for Education, but there are other interesting (if a little dry) resources on this site.

#2 Cash Course

This site was developed by the National Endowment for Financial Education (NEFE) and their Paying for College section includes topics of Understanding Financial Aid and (most importantly!) Repaying Student Loans. Entertaining videos, calculators and quizzes make this site engaging.

#3 One for Your Money

This site is corporate backed by Higher One – a financial corporation that provides on-campus banking services at certain institutions. While their tips and guidance on student loans is seriously lacking, their Financial Cents page has some great information on budgeting and managing debt.

#4 Education Cents

Although this resource was developed for Colorado students by the Colorado Department of Education, the tools can be used by anyone. Their Financial Aid 101 portal features handy topics that can take students from high school to college but when it comes to borrowing responsibly, their info is a little light.

#5 Hands on Banking

This site is sponsored by Wells Fargo and presents financial education by stage in life from kids to teens to young adults, adults and even entrepreneurs. Their young adult section features a set of short videos on school money that is entertaining, if not in-depth information and worth watching.

What I found when looking for financial education resources for college students is that what’s out there is pretty light for a topic so serious. It’s important to be money savvy and aware of cash-saving strategies such as carpooling and thrift store shopping. But when it comes to taking on student loan debt, there’s a lack of information that lays out explicitly the potential consequences of over-borrowing to pay for college or choosing a college that’s simply too costly for what you’re getting.

Check out these resources for more general financial skills education, but I also recommend reading our detailed blogs on student loans we’ve presented here including:

Pay As You Go – A More Affordable Student Loan Model

What’s Your Degree Worth? Top 10 Schools for Educational ROI

5 Easy Ways to Cut College Costs

Countdown to Admissions Deadline: Last Minute Financial Aid Tips

In addition to providing this blog with tips and information on student loans, debt collection, legislation and other important topics, we also offer a free tool for you – try Tuition.io’s student loan management tool to optimize your debt, track your loans in one interface, see repayment options and contact your lenders!