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According to the 2007 survey released by The Hartford Financial Services Group, Inc - Students and parents agree that college students are not well prepared to deal with the financial challenges that lie ahead. Less than one-quarter of students and only 20% of parents say students are very well prepared to deal with the financial challenges that await them after graduation.

Anecdotal evidence seems to support this. The familiar story of students getting way over their head in credit card debt the minute they arrive on campus. Students are bombarded with credit card offers, despite having student loans and no documented income. You can hardly walk onto a college campus these days without getting harassed by some promoter peddling free t-shirts and gift certificates for signing up for a credit card. Students are definitely taking the bait. 50% graduate with $5,000 or more of high interest credit card debt (according to the Jump$tart Coalition For Personal Financial Literacy). Often the teaser rate on these cards is 0%, but skyrockets to 20% to 30% after a few months. It isn’t hard for students to get in over their heads at those rates.

Why are students falling for this predatory lending? The reason is both simple and sad. They don’t know any better. No one ever sat them down and explained how these cards work and why they are so dangerous. Same goes for credit scores and budgeting. College-aged students just simply aren’t getting exposed to this stuff at school. Many parents try to talk to their kids about this mpm, but any parent knows how that works…

One company in San Francisco, called DollarCamp, is trying to do something about this financial crisis, though, through its crash course for college kids on financial literacy. Their program focuses on teaching college students basic budgeting skills and tips and tricks for staying out of financial trouble.

“DollarCamp is about preventing kids from making easily avoidable mistakes”,

says founder Stephen Epstein. But are grads responsive to the message?

“We have had tremendous results by teaching the basics through story-telling and case studies that [students] can relate to… After all, when you hear it from your peers, it’s not like it’s your parents talking”.

Stephen is referring to the fact that all DollarCamp instructors are in their 20’s — recent graduates themselves — who often relate their own personal experience. Stephen notes,

“[College] kids are smart, they don’t want to be talked down to, but a sincere message from someone… their age really gets through”.

I wish I had had something like this before my financial hardships. But DollarCamp definitely seems like a good idea to me…

(image by weddingssc1)

Technorati Tags: personal finance, budget, debt, credit cards, college, graduation, financial literacy

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