Financial literacy a critical college curriculum
In Elgin Community College's Game of Life, students move from station to station selecting a career, paying taxes and student loan payments, housing and transportation costs, and food clothing and other expenses. Then they spin the wheel and randomly receive an unexpected obstacle like car problems or a doctor's visit, before filling out a sheet of wants like cellphone, pets or dinner out. Finally, they complete their budget work sheet to determine how it all adds up and how much money they have left, if any.
It's a fun, but stark lesson for many students who often grapple solely with the cost of college on the front end - how will they pay for it - and rarely with the idea of how paying for an education will affect them after they graduate.
Student loan debt is the issue of greatest importance when we discuss paying for college. A July 2015 MarketWatch.com story pointed to the approximately 40 million Americans with some part of the $1.2 trillion in student loan debt as well as the nightmarish statement that the student loan debt grows by $3,055 every second.
That's the student side of the issue. On the institution side, student loan default rates are the topic of major concern, despite the recent good news from the Department of Education that cohort default rates (a three-year look back) went down.
ECC's student loan default rate went from 20.5 percent for cohort 2011 to 14.5 percent for cohort 2012. We are happy to make progress on that front, but there is still so much to do when it comes to financial literacy and college.
That is why ECC has instituted serious and comprehensive financial literacy components for students, efforts that were recognized in a report authored by President Obama's Advisory Council on Financial Capability for Young Americans.
Whether it is mandatory one-on-one loan counseling or a massive open online course to understand paying for college, we have to challenge our students to think about it from all aspects.
We need to help them ask themselves the tough questions. Does your college investment match your future career's salary expectations? How long will it take you to pay off your loan? Do you know you don't need to borrow more than you need?
These are important questions and the answers, or lack thereof, matter because they can change people's lives just as much as their education can. Because many students don't have the skills or understanding of financial aid, loans, debt or the need for a budget, financial literacy can be the key to being successful in college and in life.
Dr. David Sam is president of Elgin Community College in Elgin.