College Finance 101: Learning Money Management in the Classroom
To remedy any financial fears of its students, Bentley University is planning on teaching its students how to manage their money. All of the students. According to a press release from the college (via Reuters), the school's First Year Seminar course, a mandatory class for incoming freshmen, will include an entire section about personal finance. The course will also introduce students to financialfootprint.com, a new personal finance guidance service that was co-founded by Bentley alum Dave Kittredge. The service offers students (and parents) tools to help understand personal finance, as well as advice from real people.
"Students often ask us questions about how to pay off debt and how to manage money so they can study abroad. It makes sense for us to offer them information on money management," said Gerry Stenerson, associate dean for First Year Programs at Bentley University, in the press release. "They need to learn how to budget their money and the costs associated with higher education. Some will be dealing with substantial debt when they graduate and they need to think about that now so they make good financial decisions." The press release also points to a study conducted this past summer, The Merrill Lynch Affluent Insights Quarterly, which found that 51% of parents cited "financial know-how" as the most important life lesson to share with their children. It's this sentiment that led Bentley toward teaching students about financial responsibility. Bentley's Center for Market Technology (CMT) also conducted research to gauge the university's students' understanding of personal finance.
"Results showed that students are very intimidated by the act of managing their own finances, and they typically only get help from their parents," said CMT Director Ian Cross in the press release. "There is a definite need for this kind of service. If students at Bentley – a school with a strong background in accounting, finance and business -- need help, then the need is likely even greater at other colleges." And Bentley certainly isn't the only college that teaches personal finance.
Business Week ran a story three years ago detailing a few different colleges that offered finance courses. Among them were the Olin School of Business, Drexel University, Indiana University, and the Hankamer School of Business. The story says that demand for the personal finance class at Olin had grown substantially, saying the class had grown from 80 students to 200 students within 10 years. Indiana University's program has seen even more drastic growth: from 25 to 225 students. And in addition to parents seeing a need for these classes, professors see it, as well.
"It's sort of a shame that kids can graduate from college with things like music and art appreciation, which they will only use on quiz shows like 'Who Wants to Be a Millionaire?', and they don't have a clue about their personal finances," said Franklin Potts, associate professor of finance at the Hankamer School of Business at Baylor University to Business Week. "It's like sending the lambs to slaughter."
Anne Arundel Community College offers a wealth of courses all rooted in personal finance. Aside from the "Retirement" and "Stock and Bonds" sections, the "Personal Finance" section lists classes such as "Where Does All My Money Go?", "Personal Finance," and "Debt Elimination Techniques That Work." Unlike the required program at Bentley, however, these are noncredit courses.
But how effective are college personal finance classes? According to research done at Ohio State University, students who took personal finance classes didn't end up saving more money. The study also showed that students who took a high school personal finance class didn't do any better on a test of investment knowledge than students who had never taken a personal finance class. Also, it said that students with higher income or who owned stock did significantly better on the test. Jonathan Fox, co-author of the OSU study, said, "... We need better ways to promote financial literacy and positive financial practices like saving and planning for retirement."