Soon-to-be college graduates are eager to get their diplomas, start a job and begin their post-grad life, but many don’t feel equipped with enough financial and credit knowledge to do so — and some think colleges and universities are to blame.
According to a survey conducted by Experian, many new college graduates say their schools have not adequately prepared them to manage credit, and most have questions about credit scores.
In fact, when asked to give their college or university a letter grade referring to how well the institution helped them understand their credit scores, 1-in-5 young adults gave their school an F. The average grade students awarded for debt and credit management education was a C, compared to the B’s given out for “life after graduation” and “managing a personal budget” preparedness.
The survey also revealed many students don’t think schools have provided substantial opportunities to learn about credit and personal finance, either. When asked to rate the kind of access to credit and personal finance information on campus on a scale ranging from “poor” to “excellent,” 48 percent of survey respondents gave their schools only a poor or fair rating.
As a result, students are turning to their parents or the Internet for more personal finance lessons. However, while those may be valuable resources for some, 55 percent of young adults still feel like they are “going it alone” when it comes to credit and debt management.
That’s not good news. With all the resources available to college students today, why do so many still feel in the dark when it comes to financial management?!
Maybe there aren’t enough resources. The Experian survey found 36 percent of soon-to-be college grads wish they’d been able to take a college course in credit and debt management and another 37 percent said the same about credit scores and reports.
Toward the end of my own college career, I also wished I had better resources to guide me. Google searches, lessons learned from mistakes and bits and pieces from family members were only so helpful. As I started applying for jobs, looking at credit check-based apartments and receiving student loan repayment information, I would have loved to know where to go for more reliable help.
I might have been more in tune with credit-related matters than some of my peers just because I’d been financially independent for so long, but I think even if young graduates don’t want help, they probably need it.
Experian found 37 percent of soon-to-be grads have never seen their credit score and even more students (46 percent) have never looked at their credit report. However, 69 percent of respondents have student loan debt, which averages about $22,813 per person, according to Experian. That actually seems like a low estimate as others, such as The Institute for College Access and Success, have estimated student loan borrowers hold an average of $28,950 each.
Another 30 percent of new college grads also have credit card debt, according to Experian, and balances average $2,573 per cardholder.
If students aren’t sure how to best manage these debt burdens or how debt impacts their credit scores, they risk misunderstanding how their actions impact their credit scores. For example, too many missed payments and high card charges could seriously damage a young credit score. Plus, not being aware of what’s on your credit report puts you at risk for fraud and even further score damage if lenders reported your accounts incorrectly. The more debt holders know about their credit profile and health, the better.
Now, it’s not fair for colleges and universities to take all the blame for these supposed lapses in credit and debt education, because they aren’t the only parties involved in preparing young adults for their futures. High schools, family, friends and jobs should all play a role in the process.
It’s time more people realize additional financial education is needed before young adults are left to flounder alone. This could mean introducing more high school classes about personal finance as some states are doing, or requiring college students to participate in a debt repayment seminar before graduating.
In the meantime, if you’re a soon-to-be or recent college grad feeling a little lost when it comes to credit and debt management, read this blog post for some quick tips for getting your credit “real-world ready.” The CreditCards.com help section also has some good resources for credit newbies. We’ve got your back, even if it feels like no one does.