US News article: Financial Aid blunders

[readwithem]

http://www.usnews.com/articles/education/2008/07/29/students-make-costly-mistakes-with-financial-aid.html

I couldn't help but think how this parallels some lottery winners who are broke a year after winning. Maybe Budgeting 101 should be a required class for all scholarship winners.

[Gwen in VA]

Interesting. Financial ignorance is certainly expensive!

[LoriM]

My DH sees this every year. Students who have full USAF scholarships (tuition, books, fees, and room & board) are graduating with $20K-40K in debt...or even more. It's so sad to think that our young people are starting off their professional careers unable to buy a house or start a family because of the stupid money decisions they make in college. He mandates a full course in personal financial management for all his scholarship winners, but even so, young people make bad choices all the time.

[Jane in NC]

One of my former calculus students was failing the class because, she claimed, she did not have time to study. "What do you do in your non-school hours?" I asked. "I work." "Why do you work so much?" "To make my car payment." "Why do you need a car?" "To get to work."

Money management should start earlier than college, however; part of parenting, maybe?

Jane

[hswarden]

I don't see how we could expect any better than this given what the generation that raised these kids has done with our national financial planning. Imagine all that the American people have ordered up in the last 20 years that they are completely unwilling to pay for. Nobody should sneer at these young people. They are practicing not only what we have practiced, but what "we" currently preach and worse yet, what we export to other nations.

[Janice H]

On 8/4/2008 the Wall Street Journal described a behavior called "red-truck syndrome" wherein retirees with 401(k) plans use too much of their nest egg to buy something they always dreamed of having. "Teresa Ghilarducci, an economist at the New School of Social Research in New York, says many workers take their 401(k) in a lump sum and have difficulty making it last."

What is both interesting and frustrating about these examples is that in some cases, education about personal finance made no difference in behavior.