April 16, 2013

Perhaps the greatest challenge of all for educators and the topic of money as a life skill is how to make it interesting and relevant to young people. Far too often the basic principles of being a good consumer, how to shop, how to budget and so on, get transformed into academic discussions far too abstract for young people to identify with or to absorb into their daily lives. They become courses that people pass or fail, rather than life-changing models for people to adopt and become a code to live by.

What also gets lost is the proverbial question, “Who is your market?” In Daisy Chan’s case, the market appears to be wealthier kids who have choices about whether to save, spend or invest money rather than middle and lower income families who struggle to meet the basic essentials in life – and often need credit to make it through.

The student population needs to be divided into those who need student loans and those that do not. For young people, they may see the great question arise as to whom is responsible to pay for post secondary education – Students? Parents? The government? This is not a popular question for parents and the government but does promote the interdependency of the three agencies involved in post secondary education. Poor people need the co-operation of all three.

Those young people who fall into the student-loan category should be subjected to normal lending questions – like, what do you want the loan for? HOW MUCH CAN I AFFORD? When will you pay it back? How much will it cost the student in interest? What happens if I don’t get a job and cannot pay the student loan back? This will introduce the student immediately to the realities of borrowing, affordability and the prospect of default. Affordability may examine the cost and benefits of taking certain subjects or courses.

After deciding to borrow gargantuan amounts of money to attend college or university, then it would be appropriate to discuss how to manage/live on limited funds. Budgeting on a Student Loan might be a great topic. How to get the best value for your dollar while living on a tight budget. Why you should not use credit cards while living on a student loan.

From this perspective, the biggest part of the big idea for young people is the student loan debt that leaps onto the family budget 6 months after graduating or ceasing to be a student and will remain there for several years for many if not most young people from middle or lower income families. This would be an excellent time to add to the course curricula the topic of Budgeting After Graduation or Budgeting After School with a Student Loan or Financial Planning and Student loans.

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