Forget about the freshman 15. The number college students (and their parents) need to worry about is this one: $3,2800. That’s the average outstanding balance carried by undergraduate credit card users according to student loan provider Nellie Mae. And it’s a number that causes more health problems than a few extra pounds, or so Minnesota colleges and universities have found amongst their students.
“We’re working on reducing lifestyle expectations back to that of the starving student,” says David Golden, director of public health and communication at the University of Minnesota, where financial counseling recently became a part of the school’s health services. “It’s appropriate for students to eat ramen noodles, for spring break to be a camping trip and not a tour of Europe. When you’re in school, grades should be the focus, not paying off credit card debt.”
Diagnosis: Debt
Every three years, the U performs a survey to assess student health — questions cover things like alcohol consumption, tobacco use, etc. — and that survey has consistently shown credit card debt as a mental health obstacle. “Every time we do the survey, we find a very strong link between high credit card debt and poor health,” explains Golden. “High credit card debt means a student is more likely to have a diagnosis of depression, to use alcohol, and to have a lower GPA.”
While the U hasn’t allowed credit card companies to solicit students on campus for almost 20 years, cutting down on the predatory offers that enticed students to sign up for a credit card in exchange for things like T-shirts and pizza, those companies still reach students via direct mail and even at off-campus events like Gopher football games at the stadium, which is not school property. Banks, like all companies, want to nab customers early before they’ve developed loyalty to other brands.
To combat the growing issue of student debt, the school turned to Darryl Dahlheimer, program director for Lutheran Social Service Financial Counseling. It was a call he wasn’t surprised to receive. “We serve a lot of people in their 30s who are still paying off credit card debt from the college years,” says Dahlheimer, whose organization now offers debt counseling through the school’s Boynton Health Services. “We saw coming to campus as a chance to address that 30s flood by catching the debt early on. It’s definitely a matter of health promotion.”
Across town in St. Paul, the College of St. Catherine got wind of the U’s program and enlisted grants to bring similar debt education to their students. A speaker series titled “Money Doesn’t Grow on Trees” regularly brings financial experts to campus, and this fall Dahlheimer set up a similar counseling program for the college as well. “We’re excited to offer students financial counseling on campus because it fills a real hole, based on what we heard from students,” says Ellen Richter-Norgel, director of student retention at St. Kate’s. “Financial aid counselors are very different than financial
counselors.”
St. Kate’s has also added a financial management course aimed at juniors and seniors and a two-credit financial fitness course for underclassmen so students can beef up their financial knowledge and their transcripts at the same time. The added education has caused students to ask for even more services — this time surrounding help planning for retirement. “That blew us away,” says Richter-Norgel. “It was encouraging to see these students thinking about their futures instead of debt. They’d gotten really savvy.”
Don’t wait for a crisis
“Here’s what I’m not in favor of: a crash course the summer before college where parents are slapping a credit card in their child’s hand with no information about how to manage money or what it means to have a credit card,” says Nathan Dungan, founder and president of Share Save Spend, a Minneapolis-based firm that offers money education to families. Dungan credits the sizeable student debt issue to a lack of information at home and says children should begin learning about money as soon as they can form the words “I want.”
“The biggest mistake families make is they don’t have a system for how they talk about or teach money; it’s very random,” explains Dungan. “Randomness does not beget healthy money habits or behavior, given what’s at stake.” In an effort to school families on financial education before the kids hit college, Dungan partnered with Pastor Tania Haber at Westwood Lutheran Church in St. Louis Park to offer parent/child classes on money matters. Haber, who recently sent her older daughter off to college, is acutely aware of the dangers of debt.
“What we’ve found is parents don’t know how to model financial behavior,” says Haber. “By making it intergenerational, we open up the conversation in order to teach kids about money.” Dungan’s teaching hits on a variety of fiscal lessons ranging from credit scores and credit cards to first jobs and allowances. And in the world of auto bill paying, Dungan encourages parents to sit down with their child and a month’s worth of bills for an ad-hoc money-management course.
The results have been eye-opening for Haber and her congregation, who have learned to incorporate lessons into everyday activities like a visit to the ATM. “It’s been very beneficial for us as a family to open up the conversation,” says Haber. “People only seem to talk about money when they’re in a crisis, and when things are good it doesn’t come up. It’s much healthier to talk about money when you aren’t yelling at a kid for [running up] too many cell phone minutes.”
Money Dos
Nathan Dungan, president and founder of Share Save Spend, offers these essential tips for making money a regular topic in your home.
#1 Money management begins at home. It’s imperative to have children manage their own money while still under your roof.
#2 Sharing is as important as saving and spending. Parents should encourage their children to make charity a part of their finances. “Giving really grounds children in terms of a sense of what others have and don’t have,” says Dungan. “When you realize there over 2 billion people living on less than $2 a day, it frames up the choices you’re making.”
#3 Allow for money mistakes. Kids are going to stumble, and that’s why they’re practicing under your supervision. Remember not to judge; mistakes are part of the financial learning process.
#4 Share your stories. Tell the tales of your money highs and lows, especially from when you were the same age. Enlist grandparents, aunts, and uncles to do the same. “If grandparents experienced the Depression, their stories express a sobering difference in terms of needs and wants,” says Dungan. “Those intergenerational family stories are really helpful.”
#5 Start with cash. The first lessons begin with an allowance, then migrate to a debit card in the mid-teen years, and plastic prior to college “if they’ve earned the right,” says Dungan.
#6 Pull in a financial advisor. Teens don’t always listen to their parents. An expert’s opinion can carry weight, and Dungan recommends having kids meet with one when it’s credit card time.
#7 Make money communication an ongoing topic. Don’t nag, but be in a healthy rhythm of talking finances. That way, you hear about the first missteps instead of getting an emergency call about a $3,000 credit card bill.
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