08/11/09 – In Midst of Credit Crunch: Survey Finds College Students Don’t Know their Credit ABC’s
Findings Demonstrate Unprecedented Need for More Econ 101
WASHINGTON, DC — The Center for Economic and Entrepreneurial Literacy (CEEL), www.econ4u.org, today released a new survey of 500 U.S. college students that underscores the need for increased education on personal finance and economic issues. The national survey conducted last week shows that an overwhelming number of America’s college students are already credit dependent, but do not understand the basics of borrowing and interest rates. Also troubling, many students admit to making poor decisions with their own personal finances and express concerns about their financial future.
As college students across the nation get ready to go back to school, the new CEEL survey shows many need a refresher course on their financial ABC’s:
- APR Basics — 44% of respondents did not know the APR of the credit card they use most. 81% severely underestimated the amount of time it would take to pay off a credit card balance making only the minimum payments.
- Balancing a Checkbook — 54% reported having overdrawn their bank account. And 63% wrongly believed that bouncing a check costs less than a two week payday loan or the fees for a wire transfer.
- Credit Dependency — 64% of college students already have one or more credit cards. 42% of freshmen are already credit card dependent. 61% of total respondents reported credit card debt and 25% reported owing more than $1,000.
But it’s not all bad news! The survey also found some encouraging news about America’s current college students:
- 60% reported keeping a monthly budget.
- 92% understand the basics of supply and demand.
- 75% of those with student loans thought that they would be able to pay them off in 10 years or less.
Additional highlights from the survey include:
- Only 35% of college students reported taking a personal finance class in high school. 58% said the majority of their financial knowledge came from their parents.
- Only 34% knew the size of the federal debt.
- 69% think Social Security will be gone by the time they retire.
- 44% get the majority of their financial news online.
Full results of the survey can be found at: http://econ4u.org/downloads/Econ4U_Survey_US_College_Students__Finances.pdf.
“As college students arrive back on campus, they will be met by new roommates, professors and ideas – and they will also take the first steps towards financial independence,” said James Bowers, managing director for CEEL. “Learning about basic economic principles is just as important as reading Plato and memorizing the Periodic Table of Elements. We need to give America’s youth the information to succeed financially. CEEL’s survey shows that a majority of these future leaders are already credit dependent, don’t understand the basics of borrowing, and may not have the tools to manage their personal finances in the future.”
“It is clear that we need to increase personal finance education at all ages so we have better informed employees, borrowers, and voters.”
This press release presents the findings of a telephone survey conducted by Opinion Research Corporation among 500 current college students living in private households in the continental United States.
Find more fast facts about personal finance and take our economics quizzes at www.econ4u.org
