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Financial Literacy Education: Making Students Aware of Credit Scores, Debt and More

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College is an exciting time of newfound freedom for most people, but many young adults lack basic money management skills. Excessive student loan and credit card debt often accumulates during the college years, creating the foundation for a life full of financial woes.

The recent collapse of the housing market in the United States has some financial experts wondering if borrowers even understood the details of the mortgages that they were signing. Very few states require schools to teach basic personal finance skills and Champlain College in Burlington, Vermont is trying to change that.

Learning the Importance of Credit Scores

Between their junior year and graduation, Champlain undergraduates are required to participate in two Financial Sophistication sessions. The stylishly-named activities in financial literacy were developed as part of Champlain’s life skills program to educate students about debt, credit scores and credit reports, creating a budget and more.

The school hopes to improve students’ knowledge of their own financial futures. “It was based on a simple observation that nearly everyone agreed with, and certainly employers did,” Champlain president David Finney told the New York Times. “The average college graduate doesn’t know how to do anything or how to function in the world.”

Champlain’s Financial Sophistication programs include various courses such as Understanding Credit Part 1, which provides an introduction to what goes into your credit report and credit score and how they can affect your life. Understanding Credit Part 2 takes a closer look at credit reporting and scoring. Students review sample credit scores and learn how to repair and work toward a stronger credit report and score.

Peers Teaching Peers about Interest Rates and Paying Bills on Time

A non-profit group called Champlain Housing Trust offered to teach one of the Financial Sophistication courses and train other instructors, who now handle the introductory material. The other instructors are Champlain students.

Champlain’s student teachers emphasize that paying bills on time, the amount of debt you have versus your credit limits and the type of accounts you have are the most important factors that make up a credit score. Some things, such as how long accounts have been open, are partly out of students’ control for now because of their age.

“We wanted to create little foot soldiers to go out and spread the word,” said Shelli Goldsweig, who runs the life skills program at Champlain, which includes the financial sophistication workshops. “When a peer tells them that a computer will cost 21 percent instead of 9 percent if they make the following mistakes, it carries a lot more weight than if I said it.”

Educating young adults about the importance of their credit scores while they are still in college is a good idea because many are unaware that a person’s score is often a determining factor when applying for many jobs.

Students Overly Optimistic

It appears that most young adults have distorted views of their own finances. Many college students fail to realize that they’ll most likely want to make major purchases shortly after graduation, such as buying a new car or their first home. Their financial situation, particularly their credit score, will play a big role in their ability or inability to make those purchases.

A national online student poll of 1607 high school seniors conducted by the College Board and Art & Science Group, LLC in late November 2009 and early January 2010 suggests that students and their parents are making decisions about college affordability without accurate or complete information about what their likely financial commitment for college will be.

Disturbingly, nearly all students believe that their families will find a way to pay for college, even if it will be difficult for them to do so despite concerns about college affordability. Many turn to excessive student loans, and the Chronicle of Higher Education reports that student loan default rates continue to rise.

Goal Setting and Budgeting

It’s important for students to realize that wishful thinking alone won’t pay the bills. Champlain’s Goal Setting and Budgeting workshop teaches just that, covering the core financial topics of budgeting and goal setting in a non-judgmental setting. Students will learn tools to set and stick to a personal budget, track their expenses and accomplish their financial goals, whatever they may be.

The school wants to eventually hold a financial literacy conference for politicians and other influential people, as well as a summer institute to train high school teachers who want to include more personal finance in their own courses.


Melissa Rhone+

Melissa Rhone earned her Bachelor of Music in Education from the University of Tampa. She resides in the Tampa Bay area and enjoys writing about college, pop culture, and epilepsy awareness.

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