Student loan debt reached an all-time high in 2018. According to the Federal Reserve, the total outstanding student loan debt was $1.569 trillion during the fourth quarter of 2018. These are alarming numbers! Crippling student loan debt has forced many student borrowers to put their lives on hold. Some have held back on purchasing a home, getting married, having children and saving for retirement. These decisions have long-term effects on our economy and society.
Some universities have taken steps to enhance their financial literacy programs to educate students on ways to manage their loan debt and avoid excessive borrowing. Edmit recently spoke with Phil Schuman, senior director of financial literacy at Indiana University (IU) about their award winning financial literacy program – MoneySmarts. Phil is the co-creator of MoneySmarts and manages a host of financial education programs at IU.
Edmit: What is MoneySmarts?
Schuman: The University launched MoneySmarts in 2012 to help students make smart financial decisions and avoid excessive debt. It is a university-wide program serving all IU campuses. The program includes an interactive website, one-on-one financial coaching by student peers, online modules, workshops, classes and podcasts. Student classes and organizations can also request one-on-one appointments and group presentations with our MoneySmarts Team. Our team is comprised of IU students who are trained to provide financial education to their peers. Some students say that the one-on-one coaching is a cathartic learning experience. Students can come in and meet with our team members to learn how to adjust their financial habits.
Edmit: Has the University experienced a change in its student loan borrowing?
Schuman: MoneySmarts is part of the University’s commitment to affordability. Students receive letters from the university which provide them with their aggregate loan debt and what it will take to repay the loans. Overall student loan borrowing at the University has decreased over the years; over a six-year period, from 2011-12 to 2017-18, student loan volume is down 19 percent, accounting for $126.4 million less in borrowed money. The program and the hard work of our team helped reduce overall student debt.
Edmit: What is MoneySmarts U?
Schuman: MoneySmarts U is an online platform that was created based on our own MoneySmarts program. It was developed in partnership with financial planner Peter Dunn, also known as “Pete the Planner.” Pete’s brand of humor helps provide a more humanistic and holistic approach to finances. He currently serves as a consultant and partner with the University. MoneySmarts U have instructional modules, which include 45 – 60 minutes videos, interactive exercises, calculators and guides.
Edmit: Who can enroll in MoneySmarts U?
Schuman: The platform is available to our undergraduate students, graduate students and recent alumni. The platform is also available to high school students who are considering college. It could be a high school senior beginning their college application process to a graduate student nearing the end of their program. It’s a diverse population. We also make the program available to other institutions willing to sign on. Each course in the program is designed to make learning about personal finance relevant to where the student is today and where he/she would like to be in the future.
Edmit: What is a MoneySmarts U Score?
Schuman: The MoneySmarts U Score measures each student’s current level of financial habits. After completing each course, students receive a MoneySmarts U Score to see how their financial habits have progressed each year in college. The goal is to have students develop smart financial habits by the time they graduate so those habits follow them into their personal and professional lives.
Edmit: What lessons have you learned since launching the program in 2012?
Schuman: One of the lessons we learned is that it’s hard to be everything to everyone. The program is designed to offer relevant information to each student depending on where they are in their financial lives. Different types of tools and resources including videos, exercises, calculators and guides are available. Some students use them often while others do not. We try and provide as many resources to students as possible but know that we’re still not reaching everyone. That’s our ongoing challenge.
Edmit: What are some challenges you continue to experience?
Schuman: One of our biggest challenges is student participation. We’re looking at innovative ways to increase online participation and attendance at our various workshops. The beginning of March is typically when we begin to see in increase in student participation. We also plan to enhance the presentations offered throughout the year.
Edmit: What is the number one lesson you share with students?
Schuman: I remind students that happiness is what is most important and not necessarily making a ton of money. I encourage students to avoid making life decisions solely on money. Happiness comes from experiences and sharing those experiences with those who are most important to you.