College students may have the second highest personal bankruptcy rate in the US. When you add credit card debt taken on by parents to help fund their children’s education, which we see often in our Boston personal bankruptcy practice, this is a scary statistic. In a national study, the EDSA Group determined that while 28% of college students that dropped out of school for academic reasons, 38% of college dropouts left for financial reasons. The actual reasons may be related to the way college is now paid for – more work study and fewer grants, more students and parents using credit cards to finance education, and more student loans. In Massachusetts, the trend is up for student loan defaults.
Wherefore, students (and parents) need to know how to succeed with the tremendous financial undertaking they are attempting in getting a college degree. The educators at EDSA conclude that students should have a financial education before college if possible but that it should “should be mandatory” at the university level, if for no other reason than to keep students in school to achieve graduation. The EDSA concluded that students need budgeting stills and to learn about goal setting. Furthermore, students need an education about student loans. While students don’t plan to file bankruptcy, the fact that discharging student loans in bankruptcy is very difficult adds to the problem of educating students on financial matters.
EDSA has a financial education program called Good Money Habits for Students. While we don’t profess to know the class or EDSA’s history, we endorse financial education as critical – for students, for parents, for all consumers.