Student Loans: How One College is Turning the Tide
Part one in a series about college kids and money, based on an interview with Stephen Seaward, an advocate for financial education in the classroom. Find part two here, part three here and part four here.
St. Joseph's College in West Hartford, CT, has a remarkable record when it comes to students and money:
- Nationally, student indebtedness is on the rise. But at St. Joseph's, the average amount of student debt at graduation declined last year -- to $35,000 from nearly $40,000 in 2009.
- The default rate within two years of graduation on loans taken out by students at St. Joseph's is just 2% -- less than a third of the national average.
- The typical St. Joseph's student scores 66% in a 50-question personal finance quiz when they enter the college and 84% after completing an introductory course on money. In grade terms, they move from a "D" to a "B." Not bad.
This is encouraging stuff because even as momentum for teaching kids about money in high school and college builds worldwide, so too does a dissenting voice that asserts there is little evidence that teaching personal finance in school actually works.
Critics of this kind of financial education want schools to stay focused on the Three Rs. They want to leave the financial education of kids to parents. They believe the best use of government resources is not to educate but to set up elaborate consumer protections to guard us against ourselves.
That's why I'm intrigued by the experience at St. Joseph's College. It demonstrates that personal finance can be taught, that the lessons stick, and that they make a difference.
The cornerstone of St. Joseph's money curriculum is an online course called MoneyU. The lessons are game-based and interactive; the whole thing takes about 10 hours and the college "strongly encourages" all freshmen to take it. About 80% complete it.
"The feedback from the kids has been phenomenal," Seaward says. "I had students tell me they finished that course and went down to the bank and opened an IRA, or that they went home and gave their mother an earful because of all the credit card offers she's been taking."
The college follows up on these basic money lessons through a series of "career track" courses offering instruction in things like resume writing and job search and which also includes a component on "financial freedom" offered by a financial planner with a healthy disdain for debt -- including student debt. Seaward believes this part of the series has contributed mightily to the falling average debt figure and below average default rate among St. Joseph's students.
The college is now building a course to be geared at seniors and which will teach how to craft a post-graduation financial plan that will wipe out their student debt and set them up for long-term savings success.
I ran across Seaward as part of my research for a book about kids and money. His passion was infectious and I ended up speaking with him at length about the value of teaching young people about money in school. He's convinced that it makes a huge difference in kids' lives. In future posts I'll explore more of his thoughts and wisdom.
Photo courtesy Flickr user alacleaver
In this series:
· Part Two: How Excessive Debt Limits Career Options
·Part Three: 3 Surprising Ways Debt Diminishes Campus Life
· Part Four: Common Money Mistakes in College
More on MoneyWatch:
· 8 Ways to Wipe Out Your Student Debt
· Student Loans: How They Changed One Life for Decades
· Student Loans: How They Changed Another Life for Decades
· Student Loans? First Pass This Test
· College: The Flawed Case Against Getting a Degree
· The Top Reason Kids Don't Learn Money at School
· Teaching Kids About Money, What We're Up Against