When John-Pierre Cardenas was 16 years old, he got his first debit card like many teenagers. But unlike many teenagers, his mother taught him how to balance a checkbook and how to handle money, a lesson that has proved invaluable now that Cardenas is a first-year graduate student at the Johns Hopkins Bloomberg School of Public Health.
It’s no secret that education is a huge investment, but debt from student loans increased again and has now surpassed credit card debt, USA TODAY reported. There is close to $1 trillion in outstanding student loans, according to the Federal Reserve.
All the debt that keeps piling on brings up the debate about whether courses on personal finance should be required in order to better prepare students to pay off loans and eventually become debt-free.
“Making [personal finance courses] mandatory would be a good intervention,” Cardenas said. “More often now, parents will provide their kids a credit card and not teach them what it is and go through how to balance a budget. … It’s really a fundamental skill that kids need to have.”
Many colleges across the country provide seminars and online tips about how to manage finances, but they are mostly optional. The University of Texas at Austin (UT), for instance, provides workshops on money management, financial aid and living independently. The workshops, named Bevonomics after the university’s mascot, focus on paying loans after graduation. Between the fall and spring semesters, Johns Hopkins also offers a free class on personal finance.
Fourteen states require a personal finance class taught in high school, before students have to worry about paying off student loans, according to the Council for Economic Education. The research showed that students with states where a financial education course was required were more likely to save, less likely to max out their credit cards and less likely to make late credit card payments.
A report from the Institute for College Access & Success stated the average amount of student loans from those who graduated college in 2011 was $26,600.
“There are really interesting statistics about a significant percentage adults over 40 are still paying off college loans. … I can only imagine how old I’ll be,” Cardenas said.
However, Linda Vasquez, a senior journalism major at UT, said she does not think mandatory personal finance classes would work because of student schedules, and the fact that finance workshops are optional in some universities is good enough.
“I’m glad my university offers opportunities like Bevonomics, however, it’s more of a personal responsibility to learn or know how to manage finances,” Vasquez said. “I think that most of us go into college with no idea how to handle finances, but like most, I believe, I learned by experience. … I’m well aware of my expenses, needs and loan payments.”
Vasquez said she considers herself independent and doesn’t rely too much on her family for financial assistance. Although she said her family did not teach her how to manage money, they did provide tips, such as being frugal when it comes to living arrangements and personal expenses.
Cardenas suggested that students use the resources they have available at their school, including visiting their financial advisers at school, and if qualified, take federal loans because the interest rates are lower than the private market.
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