MANCHESTER, N.H. (5/3/13)--More students pack their bags for home over financial/credit debt than academic performance, according to a release from the New Hampshire Credit Union League. Those lucky enough to graduate are confronted with student loan debt, which averages $27,000 throughout the U.S.
"What we know is that college students are 'signing on the credit card and student loan dotted line,' not realizing the full financial responsibility of these financial contracts," said Daniel F. Egan Jr., NHCUL president. "Student debt in this nation is reaching an epic level of more than $1 trillion and the financial stress is taking a toll on students via an increase in dropout rates."
New Hampshire college students owed the most, with average debt of $32,440. Adequate financial literacy education prior to graduating from high school could have alleviated many of the financial problems, the league said. NHCUL, in partnership with America's Credit Union Museum, has taken the lead in educating New Hampshire school children on basic financial literacy through the CU4 Reality Financial Education Program--in part with Financial Literacy Month events.
Financially stressed students are six times more likely to drop out, which decreases their income earning potential, coupled with student loan obligations, which are unforgivable, NHCUL said.
Nearly half of high school seniors in the U.S. don't know how much money they will need for college, and even more don't understand basic student loan terms, according to the Credit Union National Association's first annual High School Student Borrowing Survey released last month (News Now April 17).
Most students (70%) are confident they will receive a high-paying job upon graduating, CUNA found. That indicates they are willing to pay the cost of college tuition even if they don't understand how the borrowing will affect their financial futures. Of the 847 17- and 18-year-olds polled nationally, 83% did not know the rates and 77% didn't know the duration of their expected or existing college loans.
In New Hampshire, "the goal of the CU4 Reality Financial Education Program is to teach students the basics of spending, budgeting, credit and savings, with the use of a classroom guide, that can be tailored to educate elementary, middle, and high school aged students," Egan said. "The goal is to establish good financial habits at a young age--habits that will last and benefit them for a life time."
The curriculum's culmination is the CU 4 Reality Financial Education Fair, a group event where students choose a fictitious "financial life"--a job and an income--and determine how they will budget. Participants must allocate funds for rent, utilities, insurance, credit card and student loans--then decide what they can afford to spend on discretionary expenses.