Red to Black
Maybe it’s a craving for instant gratification. Maybe it’s the hectic pace of college life that leaves little time for anything but study and work. Maybe it’s that students simply don’t know how to do better.
But somehow most seniors will leave college at least $20,000 in debt, according to a recent study, http://www.nelliemae.com/library/cc_use.html
The student counselors at Red to Black, a financial planning and consulting organization at Texas Tech, are working to get Tech students “out of the red, and into the black,” said Dorothy Bagwell, associate professor of personal financial planning.
The organization serves as an outreach for the personal financial planning program at Tech. Students studying PFP make up Red to Black’s staff of counselors, offering help to their fellow Tech students on a wide variety of financial issues.
It’s an increasingly important service, said Stephen Hunsaker, coordinator of Red to Black.
“Financial literacy is starting to come to the forefront,” he said.
Where people once learned how to handle their finances from their families, Hunsaker said many students no longer have good role models to learn from (many families have similar debt issues.) Other students have parents who simply refuse to talk about the “f word.”
“We’ll talk to our kids about sex and things like that,” Hunsaker said. “ But we won’t talk about how much we make with people,”
From everyday expenses, to student loans, to preparing for the future, most students are simply in the dark, said Stephen Hunsaker, coordinator of Red to Black.
“There’s little to no knowledge on even the most basic of stuff, like the difference between credit and debit cards,” he said.
This lack of knowledge is often combined with a tendency to exceed income. Studies show that nearly half of students surveyed owned at least four credit cards, and that the median credit card debt of college students is comparable to the median credit card debt of families in the U.S.
Often, these patterns settle in because of a desire to keep up with friends, or just to have a good time, Hunsaker said.
Overextension of budgets and credit card issues are the two most common problems students coming to Red to Black seem to have, Hunsaker said. The organization also sees a spike in appointments just after finals, as graduating seniors realize for the first time that they may be facing big issues after they leave school.“Many students will wait until it’s too late,” Bagwell said.
Hunsaker said he urges students to make appointments soon, and to do so even if they aren’t having financial issues.
“There’s a lot of kids out there who are financially illiterate,” he said. “But if someone isn’t savvy to something, they’re not going to go out and find help and do something about it until it becomes a problem.”
While working to help students on an individual basis, Red to Black is also trying to rid the nation of financial illiteracy.
Bagwell, who founded Red to Black in 2001, is working to establish similar programs at other universities.
This year Hunsaker participated in a national summit in Washington D.C., where he discussed Red to Black and the need for financial education in schools in front of the nation’s policymakers. He said with national attention on the issue, and through the work of organizations like Red to Black, students may begin to get the financial education they need to prepare for the future.
For now, he said he’s excited to see individual student’s lives improve through the work of Red to Black.
“It is amazing to see the turnaround, once we give people the tools to succeed,” he said.