On Financial Literacy

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Many policymakers have now developed an interesting fixation on student finances. Maybe college students need classes about how to manage their money. According to an article by Taya Flores in Indiana’s Journal & Courier, one Purdue professor explained that college,

“[Is] a turning point in their life where they can take some news skills and knowledge and use it to their advantage,” Burns said.”If they don’t do it right, it can cost them for many, many years after college.”

She said a major pitfall for college students is falling into debt, which typically occurs when students don’t budget correctly.

Really? Now, no doubt there are responsible and irresponsible financial decisions students can make. But so much of this discussion about “financial responsibility” for college students seems to be driven by this weird assumption that students get into debt largely because of too much takeout food or shopping.

In fact, crippling debt seems mostly to come from student loans, not personal spending.

In 2009 the average college carried about $3,000 in credit card debt. At the same time, the average graduating college senior had about $23,000 worth of student loans to pay off. Which one of these is a bigger problem?

Meanwhile, Indiana’s cutting funding cutting funding for colleges and forcing many students to take classes more than once.

Perhaps “budgeting correctly” means a little more than teaching 19-year-olds how to balance their checkbooks. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer