College students aren’t typically known for their financial literacy or prudent spending. While some accrue debt in student loans every year (which totals more than consumers spend on credit cards) the bigger issue is that students are maintaining ignorance where financial goals are concerned. A new program at Missouri Western State University seeks to curb that train of thought.
It’s a typical scenario: Students finish college, enter the real world, then quickly 
find out that the debt they developed while in college is their responsibility and theirs alone. They never really thought about paying back those loans before, but now the bills are coming due and they’re fully unprepared. Those that did consider repaying loans may not have considered all the ways a paycheck that at first seemed large from a “real job” can be spent quickly during the month.
Missouri Western State University, a four-year, public university located in St. Joseph, MO., offers a program called SALT, which was created by American Student Assistance, a non-profit group that offers guidance to America’s college students. The ASA’s goal in developing the SALT program was to develop financial competencies within students.
SALT uses proactive communication about the repayment options available for students; one-on-one counseling; a personalized dashboard for students to track their federal and private loans; web tools and calculators to help them budget; interactive Web financial education and other programs. Of course, the program is offered free to students and is currently offered at around 250 higher education institutions across the U.S.
Financial goals during the college years generally extend as far as the weekly budgeting for food and fun. Students, however, need to be thinking about the loans they’re taking out and how they’ll pay them back after graduation. Is working during college an option to offset the cost? Are scholarships available that could take the place of loans? These are things most college students should be thinking about.
Students today are pricing themselves out of careers. For instance, students with a passion for teaching are walking away from education programs and toward more lucrative degrees because their student loan debt is not manageable on a teacher’s salary. Investment experts agree that some student loan debt is expected for students today, but going in debt by $20,000 or more is not advisable for most degrees.
However, the average student loan debt last year was less than the average price of a new car. It’s the relative cost that matters. Is it worth the cost of a new car to get a college degree? Absolutely.
Additionally, a huge key to controlling college expenses is the decision of where to go. An elementary education degree – with accompanying student loans – from Harvard may not make sense if it has to be financed with extreme borrowing. But that same degree from a good regional or community college makes perfect sense. Some parents saddle their kids with student loan debt to satisfy their own ego needs or personal desires. Instead, helping students match career goals with the issue of student loans is much more manageable.
Not only are students taking on more loan debt, they’re defaulting at higher percentages. Fortunately, with the help of programs like SALT and the ASA, students taking part in the program have a default rate about half that of the average student with loan debt. The CEO of ASA said their research shows that having one-on-one engagement and conversation with students about how they finance their college education is extremely helpful in lowering their risk for default.
Investment advisors are also well equipped to offer advice to students that will keep them free of default and free of crushing student loan debt. The professionals at Family Investment Center are experts at giving investment advice for people in transition, including parents who need help in exploring their options as they prepare for a child entering college. The founder/CEO of Family Investment Center, Dan Danford, has close ties with Missouri Western and has served on the Board of Governors, which means he’s very knowledgeable of what students are facing today. Contact Family Investment Center to talk about this important life transition or others – the commission-free atmosphere means honest and valuable advice.
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