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Students Must Be Informed About Credit Dangers!

January 4th, 2009

I recently read these two articles on the way colleges help market credit cards and are then given a share of the spoils and I was both unsurprised and appalled. I lament daily on the poor state of financial education in America. Granted, this is something that parents should be teaching at home I still expect, as a student and future parent, that the education will cover the things I think are important, after all I am their customer. Frankly, colleges should be ashamed of themselves for both failing to teach students one of the most important lessons students need to hear (that most parents are ill equipped to give) and at the same time exploiting the fact that they have failed to educate students on these issues.

If this were only being done at public schools that would be one thing. However, is is particularly incongruous to see similar actions taken at Christian Universities that believe they are behaving biblically. At my particular small (1500 students) private Christian university I’ve seen similar occurrences and have been the only one taken aback by them.

During our school loan exit seminar there was a gentleman from a CITI Bank that tried to sell students on consolidating their loans through him. He gave a fairly even handed synopsis of the good and bad of consolidating loans explaining there were a few reasons not to consolidate and, in his opinion, far more reasons for students to consolidate their loans. this, of course, culminated in the handing out of his business card and students walking out armed with applications to consolidate their loans through CITI bank. I don’t know if the school benefited from this arrangement, perhaps they were just looking for someone knowledgeable on the issue and he only agreed to speak if he were allowed to try to make a sell.

There were also instances where credit cards were offered, sometimes coming with a free pizza for applying. It’s unlikely the school benefited from all of these programs, but it doesn’t matter. To an outsider looking in these all seem like pretty hefty conflicts of interest for a Christian university. From day one on campus shouldn’t Christian universities be teaching students not to borrow, nor lend, money? Perhaps, I’m naive for expecting a Christian University to teach students long forgotten Christian principles like living debt free.

I suspect, sadly, that schools won’t behave any differently unless parents and students, their customers, demand it. Just like any company selling something, these universities will have little reason to change if customers continue buying what they’re selling. I encourage parents to read through the universities requirements for graduation. If a personal finance class isn’t required make sure they offer one! If they do offer one make sure it will fit into your child’s schedule no matter what Major course of studies they may choose later down the road. If they don’t offer such a course don’t pay for your student to attend that school. Most importantly, however, parents musk make sure their students learn the lessons of good personal finance early in life. That is probably the best thing you can do for your student.

Creative Commons License photo credit: Andres Rueda

Author: T.J. Seabrooks Categories: Finance Tags:
  1. Bruno
    January 4th, 2009 at 22:51 | #1

    here’s my follow up http://i-progress.blogspot.com/

  2. Karl
    January 5th, 2009 at 12:20 | #2

    Easy credit in college is a great way to establish good credit early. I had one of each major flavor (Discover, Visa, Mastercard, and Amex) when I graduated college. In the 14 years I’ve had credit cards I’ve never been “trapped” into paying the clearly laid out interest or late fees. Its not hard to do if you follow one simple rule - don’t spend money you won’t have by the time the bill comes due.

    Its seems it is much harder to get a credit card with no credit history after you get out of college. I’ve seen friends who didn’t get cards in college have to get secured credit cards or pay high annual fees after college because they didn’t get the cards in college and had no credit history.

    Credit is a tool like a chainsaw. If you use a saw wisely you can clear trees after an ice storm or heat your home. If you use it foolishly you can cut your leg off. In both cases, I don’t blame the tool for user error.

  3. January 5th, 2009 at 12:46 | #3

    It’s definitely a tool, that is exactly the problem. The instances I’m talking about above are specifically cases where the schools are making it very easy for students to get a hold of the tool and not performing the task of teaching them how to use it. Certainly you wouldn’t advocate giving the chainsaw to a child without instruction?