As budgets tighten, bankruptcies mount, and students accrue massive debt, several consumer and banking groups have stepped in to help with new financial educational tools.
Most of the programs kicked off during April 2009’s Financial Literacy Month, and precede National Credit Education Week — observed April 20-26.
Development of these education programs coincides not only with financial holidays and swelling consumer credit and debt problems, but also with research indicating that Americans are underprepared to address financial issues. In a survey measuring Americans’ “Financial IQ,” conducted by Capital One Financial Corporation, fewer respondents said they understand financial fundamentals compared to previous years, and most said they are not saving enough for the future. According to the survey, 59 percent of Americans consider themselves highly knowledgeable or very knowledgeable on personal finance, which is a decrease from 64 percent in 2007.
Several of these new programs are aimed at students who are sinking into debt in their struggle to pay for a college education. According to a study released April 13 by student loan company Sallie Mae, 84 percent of undergraduates have a credit card, which is up from 76 percent in 2004 and 67 percent in 1998, and half of all college students have four or more cards, contributing to students amassing debt at record levels. The average credit card debt undergraduates carried in 2008 was $3,173, the highest since the study began in 1998.
Student Debt Alert
In the wake of the student loan crunch, the Student Public Interest Research Group (PIRG), a national student consumer interest group dedicated to making education more affordable through media and political influence, launched its website Student Debt Alert in early April. Visitors to the site are educated about Student Debt Alert’s campaign for increasing grant aid and improving student loan programs. Students are also encouraged to bring Student Debt Alert to their campus, and can borrow campaign materials, such as a large inflatable ball-and-chain prop meant to represent the hindrance placed on students by debt.
Student Loan Borrower Assistance Project
The National Consumer Law Center also reaches out to students in debt with its Student Loan Borrower Assistance Project(SLBA) website, at which financially stressed students with student loan repayment problems can research their available options and rights. They can learn through a list of frequently asked questions, and can contact the SLBA with general questions if they don’t find their answer online. The SLBA website does not provide legal assistance firsthand, but does provide visitors with contact information for qualified legal help.
Ask Dr. Debt
Consumers seeking solutions to debt problems have a new online resource through Ask Dr. Debt, a financial education website that ACA International — a nonprofit credit association — unveiled April 15. “It’s … essentially an online version of ‘Dear Abby’ for consumers with credit and debt questions,” John Nemo, public relations director for ACA International, said in an e-mail. Nemo said visitors to the site will be able to search a database of frequently asked questions and submit their own. Ask Doctor Debt also contains interactive tools to educate consumers, such as budget calculators and a free personal financial management Web course.
Teach Children to Save Campaign
Meanwhile, the American Bankers Association (ABA) launched the Teach Children to Save Campaign, which aims to give students a head start on financial literacy, and targets students of all ages. Officially launched April 9, the site is an extension of the ABA financial literacy campaign, which has been taught in classrooms since 1997. It offers children and their parents easy access to advice on how to create a budget, start a savings account and make deposits. The ABA also announced its lofty goal to to teach 1 million new students about saving. More than 900 banks have accepted the “Million Child Challenge,” in which participating bankers can visit students in their classrooms to teach them about interest growth, budgeting, and how to prioritize needs versus wants.
Laura Fisher, director of the Foundation, said the website is also intended to teach children who may miss out on the Million Child Challenge program. “The new website will help educate those students who do not receive an in-person banker lesson,” Fisher said. “It’s one more way to help students get money smarts to go along with their book smarts.”