Managing by the Number (Pt II)
Part II: I’ll admit I was fairly proud at the advances made in tracking the team's success. My employees were more engaged in their work (as compared in previous years...
One of my die-hard passions is financial literacy. Understanding personal finance is a lot like mastering the tee-shot in golf: hit it long and straight and you’ll be setup for success in the future, shank it into the weeds and you’re in for a rough day.
Too many people are intimidated by the numbers of budgets, retirement, or 401(k) plans. Even more people lack the simplest understanding of the long term consequences of their financial choices. There are few demographics more susceptible to financial missteps than college students.
Early in my career I worked closely with college students from all walks of life and at all types of colleges. The one piece of their experience which always made me cringe was seeing their attitudes toward student loans. In some cases 18 year old men and women were (and still are) signing on to $50,000 or more in debt!
Stop and think about that for a minute…$50,000 in debt! At 18 years old! At 18 I was barely mature enough to do my own laundry let alone figure out how to handle that kind of debt; and the sad part is, students, by and large, are given no resources for making better decisions at this stage in life.
One university is changing this.
In 2012 Indiana University (the alma mater of a certain studly blogger) opened the Office of Financial Literacy with the intent of providing resources to help students make better financial decisions in their life. There are many initiatives this office has undertaken but one simple program has had a HUGE difference in the way students finance their education:
They send a one page letter which tells them what their loan obligation will be…BEFORE they take out the loans.
An example of the letter is included here: IU Loan Debt Letter
The results of providing this small bit of information have been a breath of fresh air. In a press release issued by IU earlier this fall they reveal students have reduced the amount of total loans taken across the IU system by 15% or $98 million over the last four years! (See the full press release here)
Students are finding other ways to finance their education or they are deciding they don’t need every dollar they are approved for. By telling their students where they stand financially, IU is helping them avoid tens of thousands of dollars in debt and several more thousand in interest payments.
Our fearless leaders in Washington have been tasked with finding a better way to help young people get an education. Until that solution comes however, more schools should be adopting the educational approach of Indiana University.
Go Hoosiers!