Any parent of a college student knows that even the brightest undergrad has trouble sticking to a budget.
And the thought of saving money is as alien to them as doing their own laundry.
Undergrads typically struggle “being able to put together a basic budget and manage their own spending,” said Tom Montilli, vice president of marketing at Harvard University Employees Credit Union in Cambridge
Another problem for many college students, he said, is “not having a good understanding of credit and credit scores, and running up credit card debt.”
Even college seniors about to leave the Ivory Tower are sometimes naïve when it comes to personal finance, he said.
“At Harvard, all students live on campus for all four years,” Montilli noted. “They don’t have any experience paying rent.”
Jon Reske, vice president of marketing at Hadley-based, UMass Five College Credit Union, agreed: “Graduating seniors are not as well-versed in the world of personal finance as they should be. They’re literally walking out of school, probably getting their first decent paycheck and not even knowing what to do with it.”
To help undergrads better manage their money, HUECU and UMassFive are offering on-campus, personal finance workshops this spring. The programs will address personal finance fundamentals, including budgeting, building good credit and borrowing money.
‘Time on their side’
Explaining what’s involved in getting a credit card or taking out a personal loan may seem “very simple and basic,” Recke commented, “but if you’ve never done it before, you’re clueless.”
Borrowers need to ask questions, he explained, such as: What’s the total interest, and how long is it going to take to pay off the principal?
UMass Five plans to offer a two-and-a-half-hour seminar for graduating seniors that will not only cover budgeting and spending basics, but other personal finance topics, such as understanding credit scores and preventing identity theft.
Because of their limited credit history, college students usually have good credit scores, making them attractive targets for ID thieves.
“Twenty-somethings, especially those in college, are one of the biggest targets for identity theft,” Recke noted.
Participants will receive an accompanying workbook with exercises, such as figuring out a financial goal and determining how much money to save each month.
HUECU has offered similar workshops in the past at its branches.
But its program this year will consist of several one-hour sessions, and will take place on campus, in partnership with Harvard University’s Office of Career Services.
Increasing visibility
The seminars are intended as a service to the Harvard community, according to Montilli.
“For us, financial literacy is a big part of our core values,” he explained. “We’re always looking for opportunities to educate the membership.”
But Montilli said he also hopes the seminars – which will be open to all students, not just HUECU members — will boost the credit union’s visibility on campus and spread the word about its no-fee “College Life Accounts.”
“The more we can deepen our relationship with the university, it’s a benefit for us,” he said. “It makes us more visible to the undergrads. A lot of people don’t realize students are eligible to join and that we have special student accounts.”
Only about 1,000 of HUECU’s 30,000 members are undergrads. (HUECU membership is open to employees, students and alumni of Harvard University, Harvard teaching hospitals and affiliated organizations.)
About 2,600 undergraduate students belong to UMassFive – just a tenth of the credit union’s 26,000-membership base. (UMassFive serves employees, families and students in the University of Massachusetts system, Amherst College, Hampshire College, Mount Holyoke College and Smith College.)
UMass Five is also opening its workshop to all students in its network. Recke said the sessions may encourage students to think about becoming credit union members.
“We do think this will help us establish a relationship with them,” Recke said.
