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Friday, 11 April, 2008 2:05 PM
Many College
Students Graduate Bankrupt
It's
all about students not learning simple financial skills early, notes
Stephen A. Epstein, founder of DollarCamp
Graphic
courtesy of students.ou.edu
SAN FRANCISCO
-- Graduating from college
with honors and full of high hopes for the future is a prevailing
American dream. But some of these dreams are turning into financial
nightmares when graduates find out that they are literally bankrupt
--
that they owe much more money than they are worth at the end of
their
college life.
The cause is the credit
card. It is the chilling but familiar story of
students getting way over their heads in credit card debt the day
they
arrive on campus. New and naive students are bombarded with credit
card
offers, despite many having student loans and little or no income.
A
student can hardly walk on to a college campus these days without
getting seduced, or harassed, by some promoter peddling free t-shirts
and gift certificates just for signing up for a piece of plastic.
Often
the teaser rate is 0%, but skyrockets to 20% or 30% after a few
months.
At those rates, it is easy to drown in red ink.
These students are definitely
taking the bait, for 50% graduate with
$5,000 or more of high interest credit card debt. And excessively
high
interest payments keep coming month after month just when they can
least
afford it. Then, establishing good credit is even more difficult.
Why are students falling
for this predatory lending? The reason is
simple -- they don't know any better. No one ever sat them down
and
explained the financial facts of life; how credit cards work and
why
they can be dangerous. Same goes for credit scores and budgeting.
Kids
don't learn it at school. Many parents try to talk to their kids
but any
parent knows how effective that is.
DollarCamp, a San Francisco-based
company, is doing something about this
financial mess through its crash course on financial literacy for
high
school and college kids. DollarCamp' program focuses on teaching
kids
basic budgeting skills and tips for staying out of financial trouble.
"DollarCamp is about
preventing kids from making easily avoidable
mistakes," says founder Stephen Epstein, a San Francisco native
who
learned about these mistakes first hand as a student. But, are kids
responding to his message of fiscal restraint?
Epstein says, "We
have had tremendous results by teaching the basics
through story-telling and case studies that kids can relate to.
After
all, when you hear it from your peers, it isn't as if your parents
are
talking." Epstein notes that all DollarCamp instructors are
in their
20s, recent graduates themselves, who often use their own personal
experience as a backdrop to their instructions. "Kids are smart;
they
don't want to be talked down to, but a sincere message from someone
relatively close to their age gets through.
Key to DollarCamp's message
is making a proper and realistic budget.
Without a good system it's almost impossible to be organized and
disciplined with one's money.
Once a good system is
in place, the individual can form good money
habits that will be with that person for the rest of his or her
life.
Epstein, a recent college graduate himself, sought information from
parents, teachers, accountants, financial planners and wealth managers.
He believes that the most powerful part of the course is the real
stores
about how students get into financial messes.
Source: DollarCamp
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