Student Lending Analytics Blog: This Week in Financial Literacy

National Foundation for Credit Counseling releases video focused on credit issues facing college students: ""College Credit for Life," a nine-minute video that introduces students to lessons surrounding the temptations and responsible use of credit cards. Much of the video features young people talking about the mistakes they themselves made in college. The video also features other voices, in the form of an apartment rental agent, a car salesman, and a human resources executive, all discussing the implications that both responsible or irresponsible use of credit can have as students prepare to move on from college and into the real world."

U.K. parents concerned about future indebtedness of their children (from Female First): "The research shows that a quarter of mums and dads around the country say despite the more cautious financial environment we’re now in it will still be easier for their kids to get into debt than it was for them and a third think their children will be less able to manage their money than they are. Almost one in five (19%) say their children will be ill equipped to understand and deal with their own finances as there is simply too much jargon to wade through and not enough practical guidance in schools. Despite this almost a third of parents believe that imparting their own experiences can help their children learn and improve their chances.

Australia prepared to make commitment to financial literacy education (Sydney Morning Herald): "Dr Garner said the report showed there needed to be cultural and structural reform in relation to financial education at schools and to encourage people to save money and make household budgets. ‘‘We are encouraged by the Prime Minister’s pre-election commitment to make financial literacy a mainstream subject in schools across Australia,’’ he said. ‘‘These programs must be sustained over time, ingrained in our education and culture.’’

Network for Teaching Entrepreneurship (NFTE) CEO discusses how best to teach financial literacy to low income kids (emphasis is mine): "The other thing we've talked a lot about lately in America is the fact that Americans need to become more financially literate and really understand the consequences of how they manage and save money. Obviously many people are scarred from the mortgage crisis they're facing and I think we often make the mistake to think that we can teach the traditional texts of financial literacy -- like teaching young people how to open a checking account -- as though that somehow will make a difference. Well, (poor) young people usually don't have any money to put in those checking accounts. So, using entrepreneurship as a tool to think through and embed within it -- which NFTE does -- the important things about not only making a dollar, but how you manage that dollar is really important for America."

Columnist at News and Observer makes final plea in her last personal finance column: "I can't leave without one more plea: Teach financial literacy at home and school. I've written more than one column about the importance of teaching children that money doesn't just flow from the ATM. They need to be taught to save for the things they want. I felt a small victory in my own home this week when my son asked if he could go on a school trip to Germany if "he saved the money for the trip himself."

Candy management as a metaphor for personal finance (from Star Tribune): "My wife and I have tried to instill this trait in our own teenagers through their allowance. We pay for all of their school-related activities; by managing their allowance, our daughters pay for everything else. Every dollar that they save toward college, we double. This has radically changed their buying and saving behaviors. They "need" far less when they are paying for it. As college approaches, they are saving significantly more."

Personal finance apps go mobile; Pageonce profiled: "Pageonce is a web and mobile device application that serves as a portal to all of your online accounts...you have access to your credit cards and bank accounts online in the "Finance" section, but that's just one category. There are also areas dedicated to shopping, utilities, travel, email and even social networking accounts. Pageonce boasts that it has over 3 million users for its product and the company says it is the largest mobile personal finance service in the U.S. You can use it on Apple iPhones and iPads, Blackberries, Android phones and other devices."

Does having a goal matter when it comes to setting up savings accounts (Visual Economics)? "From a psychological point of view, setting up different savings accounts to align with your different savings goals makes complete and utter sense. You can name the savings account according to the purpose and set the goal amount you are trying to save. From there, you can make a plan as to how much money you have to save per paycheck, per week, or per month in order to reach your goal. In addition, separating savings goals in this manner also allows you to prioritize your saving efforts. If saving the down payment for the purchase of your first home takes priority over the family vacation, then you know which account needs your focus over another one."

529 Plan providers adjusting their product offering and costs (Newsweek): "Now the skittishness of burned investors and ongoing market volatility have led to increased competition in the 529 space, with providers announcing new products, added features, and reduced costs. One strategy is to offer more conservative options...In recent months, plans from Vanguard and the State of New York have reduced expense ratios by half, and T. Rowe Price said it would cut fees by a third."

Worried that saving too much will hurt your child's chances of getting financial aid (US News and World Report)? "If that's what you're worried about, here's my advice: Relax. Families who save for college are rarely hurt in student financial aid considerations. In fact, it's been estimated that fewer than 4 percent of families who fill out financial aid applications are penalized for their savings."

National Foundation for Credit Counseling survey finds 70% of respondents plan to pay for holiday gifts with cash or a debit card. They do caution that debit cards carry less consumer protections than credit cards when it comes to contesting a charge: "This is a smart choice for many. However, consumers need to be aware that purchases charged to a credit card come with certain protections that aren’t available when using a debit card. For instance, according to the Federal Credit Billing Act, you can contest a credit card charge for a product you purchased but never arrived. Of course you’ll need to notify the merchant and the issuer of the problem, and take reasonable steps to prove your claim, but the law is on your side. If you paid with a debit card and have a problem, you may ultimately get your money back, but it will be much more trouble and take longer than if a credit card had been used."

Student Lending Analytics Blog