Financial Management for College Students: A Web-Based Tool to Teach
By Steve Anderson
Associate Director for Residence Life and Judicial Affairs
Elon University
sanderson2@elon.edu
Posted: March, 2005 Student Affairs Online, vol.
6 no. 1 - Winter 2005
Budgeting is one of the most
important things in life you should learn that many schools never teach. But it is IMPORTANT to being
successful in life. Budgeting is a way
for you to live within your means and meet your future goals. A brief definition of budgeting is to set
aside funds for saving, spending, and future goals. Budgeting means tracking where your money goes, so you still have
some at the end of the month and don’t live paycheck to paycheck.
Why should students
budget? A budget helps students to set
goals for their money and makes sure they spend within their means. If students make a budget and stick to it,
they can use it to finance their dreams.
In doing a little research on
college students, credit cards, and their finances, this is what we discovered:
•
88% of students
signed up for a credit card because of free items given away at the booth.
(Willis, 2002)
•
Students with
credit cards went up from 67% in 1998 to 83% in 2001. (Barrett, 2003)
•
According to
Nellie Mae, 54% of first-years and 92% of sophomores have at least one credit
card. (Barrett, 2003)
•
On average,
undergraduate debt totals $18,900. And the numbers are worse for the 27% of
students who use plastic to finance part of the tab. They face median credit
card balances of $3,400 and student loans of $21,200, according to Nellie Mae.
(Willis, 2004)
•
Average credit
card debt owed by college students is about $2,700! (Barrett, 2003; “Financial
Traps,” 2001)
•
Nearly Ľ owe
more than $3,000 and 10% owe more than $7,000! This is a 61% increase from
2000. (Barrett, 2003; “Financial Traps,” 2001)
•
Of students
with credit card debt, nearly 20% of students owe more than $10,000!
(“Financial Traps,” 2001)
•
64% of students
graduated with student loan debt; average student debt nearly doubled during
the last eight years to $16,928.
(“Student Debt,” 2002)
•
Of the 64%, 39%
of student borrowers leave school with unmanageable debt levels (monthly
payments are more than 8 percent of their monthly incomes). (“Student Debt,” 2002)
•
71% of students
from households making less than $20,000 graduated with debt, compared to 44%
of students from households making more than $100,000. (“Student Debt,” 2002)
With a backdrop of rising
higher education costs and student loans increasing, the prevalence of credit
cards, and our students asking questions about money matters in the traditional
classroom and the lack of a class on personal financial management, we embarked
on a mission to create a tool that would help our students learn about
budgeting and financial management.
Our goals for this project
were to develop an interactive web-based application tool that could be
utilized by our Elon 101 instructors to teach first-year students money basics,
utilized by students to learn about money issues they will face upon
graduation, and teach some basic budgeting skills and terms that are important
in life during and after college.
We created our website Elon
University’s Money Management: The College Years (http://www.elon.edu/101fm) to meet these
goals. Nearly all of our first-year
students (over 1200 this past year) take Elon 101 during their first semester
on campus. Elon 101 meets once a week
and is a one credit pass-fail course.
The most time that we thought we could reasonably expect a class to give
to our financial management site is one class period. So we designed the tool to be used in under an hour. Because the tool is web-based with its own
database, it can be utilized by our students and professors anywhere there is
access to a computer and the web.
Our website offers
information on several different areas of budgeting and personal finances,
including credit cards, banking, personal budgeting, and a real life simulator
personal finances game. We designed the
website with many features, including a pretest on general finances that
students take before they start using the website so their professor can have
an idea of where each student is with personal finance issues and what topics
might have the best impact in a classroom discussion. The professor can assign the student to use the site before class
and the professor then can review each student’s pretest to see which sections
each student completed. Then the
professor can use this knowledge to focus the classroom discussion with the
students during class.
A pretest is also included
with the credit card section, since this is an issue that has dramatically
impacted students’ lives over the past fifteen years in a variety of ways as
seen by the statistics included above, many of them in a negative way. There is also an interactive area where
students can compare different credit card rates (they are even able to plug in
their rates from their own credit cards in this section) and see how each one
works and the impact of interest and interest rates.
There is also a section that
allows students to develop their own budget on the website to begin tracking
income and expenses. At the end of the
time period (week, month, etc.), they can assess how accurate their budgeting
efforts were and utilize that information to develop their budgeting
skills. Some of the features of our
interactive budgeting section are the ability to add or remove categories and
saving/printing each budget in your personal file in our database that can be
accessed in the future. This is a great
way to manage finances by seeing what is coming in (income) and what is going
out (expenses). Hopefully for our students
the income side of the equation is more than the expenses side.
In conclusion, our overall
goal was to develop a site that offers students the opportunity to learn and to
teach financial responsibility via the web.
The site establishes this in a format that the students are comfortable
with and familiar working with to learn these skills, and even includes an
interactive simulation game. The site
also offers a variety of online resources available to expose them to some of
the more educational sites available.
References
Barrett,
J. (2003, October 7). Excessive Credit
Card Use. Young Money. Retrieved December 7, 2004, from http://www.youngmoney.com/credit_debt/get_out_of_debt/021007_03
Financial
Traps for College Students. (2001,
August 9). Young Money. Retrieved December 7, 2004, from http://www.youngmoney.com/credit_debt/get_out_of_debt/020809_01
Student Debt on the
Rise. (2002, March 8). CNN/Money.
Retrieved December 7, 2004, from http://money.cnn.com/2002/03/08/college/q_studentdebt/
Willis, G. (2002, March 8). Credit Card Cause Student to Drown in Debt. CNN/Money.
Retrieved December 7, 2004, from http://money.cnn.com/2002/03/08/college/q_studentdebt/
Willis, G. (2004, April 26). Welcome to the Real World. CNN/Money. Retrieved December 7, 2004,
from http://money.cnn.com/2004/04/26/pf/saving/willis_tips/
Additional Sites:
If you are interested in
utilizing the site please contact Steve Anderson, Associate Director for
Residence Life and Judicial Affairs at 336-278-7300 (email is sanderson2@elon.edu). You are free to take our site (http://www.elon.edu/101fm) for a test
spin.