College Students Need Personal Finance Education
Often, the twenty-first century is referred to as the "Information Age." With a few keystrokes, a large percentage of individuals on the planet is able to access incalculably large databases containing the sum of human knowledge. No longer do students have to toil for hours in paper-based libraries to complete research; most research can be attained in the home via the Internet. Furthermore, individuals can purchase Christmas presents, apply for mortgages, download music and movies, and communicate with every other individual possessing a computer and Internet access. All of these tasks require relatively little effort and even less time. Even though our century's appellation, "the Information Age," is accurate, perhaps the time in which we live would more aptly be called "the Instant Gratification Age." The world of knowledge is at our fingertips, and we can get this information fast. Patience, for some, is no longer a precious virtue, and our modified value system, namely that we should have everything we want, right now, affects more than the way in which we navigate the Internet. Because our society is increasingly digital, tangible cash is used infrequently. Commerce on the Internet is conducted almost entirely with credit cards or with Internet accounts established with credit cards. For many, particularly young people for whom cash has never been a necessity, it is easy to give in to the urge for instant gratification, even when there are no funds available to support this gratification. In particular, college students may fall victim to this trap: they may not see a credit card purchase as spending with "real money," they have little or no experience with credit cards or loans, and they are new to living independently from parents who have advised them not to buy things in the past. It is easy and enjoyable to use credit cards for purchasing fancy dinners and fashionable clothing, and many students do not understand what an "APR" is or why it is important to avoid carrying a balance on a credit card (Bragg). To complicate matters, graduating college students today typically owe about $27,900 in federally-funded student loans, which is fifty percent more debt than possessed by college students six years ago (Auer). Increasingly, student debt upon graduation is a crippling burden upon the student ("Graduated payments"). However, the solution to the problem of out-of-control student debt is not, as some suggest, to tell college students not to have credit cards (Singletary); rather, college students should learn how to use their credit cards wisely and how to structure student loans and career plans with an eye toward the future, both of which can be accomplished by attending personal finance classes and by beginning with smaller credit card lines.
The problem of student debt is twofold, and therefore, managing student debt should employ a double-barreled approach. Credit card/consumer debt is only one facet of the student debt issue, but students need to be able to distinguish between their necessary federally-funded student loan debt and their self-imposed credit card debt. In recent years, it has become common practice for credit card vendors to set up shop on college and university campuses, usually near the school bookstore (Fisher). Once established on campus, credit card companies attempt to lure students into signing up for credit cards by offering free incentives such as tee shirts or water bottles (Fisher). It is all too easy for students to succumb to the temptation for and the ease of obtaining credit cards when these credit lines are pushed so forcefully toward the often naive college student cohort. However, these same college students are often shocked when they receive their credit card bills; it is alarmingly easy to "max out" a credit line, and the idea of accumulating interest is a foreign concept to many young people (Bragg). According to a 2000 Nellie Mae survey, seventy-eight percent of undergraduate students have credit cards, and of this seventy-eight percent, almost a third have at least four cards. Among the initial seventy-eight percent of students possessing credit cards, average credit card debt is $2,748. Nine percent of these students have at least $7,000 in credit card debt (Bragg).
Personal finance education is crucial if students are to avoid destroying their credit histories before they really even have them. $7,000 in credit card debt can be overwhelming to a student with no immediate access to extra income, as was tragically proven in the cases of Mitzi Pool and Sean Moyer, both students at the University of Oklahoma. Pool and Moyer each committed suicide, presumably over credit card-induced stress (Bragg). Personal finance education might have saved Pool and Moyer, and personal finance education will...
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