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Shahar Ziv Headshot

Swimming In The Real-World Financial Pool

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The outlook for college students is similarly scary. Today's educational experience increasingly places a heavy burden of debt on students. Two-thirds of those who received a bachelor's degree in 2008 graduated with debt, compared to less than one-half in 1993. Poor decisions made with respect to credit cards while in college serve to amplify students' already significant debt levels. A 2009 study by Sallie Mae, the financial services company specializing in education, found that the average undergraduate carries over $3,000 in credit card debt and "more than three-quarters [of students] incurred finance charges by carrying a monthly balance". Given the increased debt burden, it may not be surprising that a 2011 Scottrade survey found that 55 percent of "Gen Y'ers" have not started saving for retirement; however, this statistic should be disturbing given the shift in retirement risk and the importance financial experts place on saving early to take advantage of the time value of money.

What many students don't realize is that the financial mistakes they make in college and soon after, such as not paying their bills on time, can have significant consequences, including negative effects on their employment prospects. Credit checks are still used by many employers as an input to the hiring process despite a lack of evidence linking poor credit with a propensity to perform poorly in the workplace (several states have actually passed laws limiting the use of credit checks in employment evaluations). As Robert Manning, the author of Credit Card Nation, sums up, "While freshman and their parents are likely thinking more about tests and academics during orientation, the fact is that after graduation a student's credit rating is arguably far more important to his or her future than grade point averages."



Earlier this year, I worked with the Harvard University Employees Credit Union to launch a program providing undergraduates with practical life skills surrounding personal money management. Eighty-five Harvard undergraduates voluntarily gave up a week of their winter vacation to return to campus early for the four-day seminar. Incorporating findings from academic research and feedback from other workshops we conducted, the course focused on moving beyond a pure lecture-based format to incorporate guest speakers, collaborative cases, and peer instruction to engage students and enhance the learning experience. While four days won't turn a college student into Warren Buffet, the goal was to educate students on foundational elements -- consumer credit, budgeting, taxes, insurance, and investing -- as well as help them build a toolkit for practical-decision making in the future.

Feedback from students was overwhelmingly positive with over 90 percent saying they would be extremely likely to recommend the program to a friend. As one student remarked, it was "an essential program. Nobody talks about this crucial information, which is absolutely shocking if students hope to be responsible adults by graduation." Another said it was "one of the most helpful parts of my college experience." The Harvard program also highlights the substantial collaboration opportunities and resources available to a university, both within its own system and through its local community. More schools should take advantage of these opportunities and prepare their students to navigate the financial waters that await them.