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College Debt Debate: How to Stay Smart

This past Friday, I had the pleasure of meeting with hundreds of students at my alma mater, Penn State. I listened to their financial and career concerns and offered advice on the many things I wish I had known when I was a young Nittany Lion, as well as financial advice relevant to their current struggles.

We focused on a myriad of topics: ways to establish good credit, what a credit score is (many were clueless), ways to make money while in school, the importance of paying all your bills - including student loans - on time, how to budget, the pros and cons of credit cards and how to avoid financial peer pressure. We also touched on some psychological issues -- like how to make money less abstract and the importance of communicating your issues with mom and dad before it's too late. Students loved when we explored Twitter and how to network professionally online. For fun, we asked @LadyGaga what she was wearing for Halloween. (We're still waiting to hear back.)

Thank you to all who attended my sessions -- and special thanks to Professor Pierce's 8 a.m. class for even showing up! I continue to receive the sweetest emails and tweets from the many students who opened a Twitter account for the first time that day. One student emailed me: "I was struggling financially last semester and worked two jobs on top of a full-time schedule ... You taught me a lot about what to expect from the real world ... I am determined to succeed." Another wrote, "I found out that my potential job in the military may be switched around and I might have to adjust things accordingly ... I'm going to take your advice and pay [off my credit card balance] so I won't have debt when I start my career."

Unfortunately, it wasn't all hugs and high-fives on Friday. I did manage to annoy one person who angrily walked out of a session -- it was pretty dramatic. The unhappy attendee wasn't a student. It was, instead, a student advisor who, after about 15 minutes, asked me why I wasn't focusing my talk on "how to be debt-free." She didn't think our discussion was appropriate. Why was I focusing on student loans, credit cards and credit scores? Why not tell students how to be debt-free? she kept asking.

Wha? Sorry, I didn't realize I was promoting being in debt.

Prior to this, the conversation had gotten quite credit-heavy. Students had asked me about ways to establish credit and I was explaining it to them. The proper answer is not "stay away from credit cards for your entire life!" Instead, I chose to teach students about the CARD Act, how to be responsible with credit and how their credit decisions can influence their ability to qualify for future loans and, in some cases, housing and employment. We reviewed the difference between co-signing and being an authorized user on a credit account, what a secured card is, and how credit bureaus are watching many of our credit transactions. We discussed how to manage student loan payments and Income-Based-Repayment and on and on.

"I'm just being realistic," I replied. "The truth is students are graduating with an average $24,000 in student loans and an additional $4,000 in credit card debt." We needed to go over credit-related issues, I said -- such as how to use a credit card responsibly and how to properly borrow for college expenses. I wish everyone here had the $120,000 necessary to attend Penn State without borrowing money; I wish everyone here had enough cash to buy cars and homes. But the fact is, credit is a major part of most people's lives. "In case there's any confusion," I told her, "our discussion is about how to take control of your debt, as opposed to letting it take over your life."

She walked out anyway.

I assume there was a misunderstanding, but what really concerns me is that someone who is given the responsibility of advising college students and preparing them for the "real world" could not appreciate a practical discussion of some of the most pertinent financial issues facing undergraduates.

I was unable to follow up with the advisor after the class, but if she's reading this, I'd like her to know that, had she chosen to stay, she would have been able to establish a deeper understanding of students' concerns, as well as their goals and aspirations. It certainly helped me be better at my job. I think it would have helped her, too.

Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at and on Twitter/farnoosh
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