Teaching Financial Literacy Across Two Generations

“When I crunch the financial aid numbers for parents–that’s when I see a lot of ‘aha’ faces.”

—F. Duane Quinn, Director of Wellness Outreach at ASA

ASA, in collaboration with the Colleges of Worcester Consortium, led a program to improve the financial literacy of public high school students and their parents and prepare them to apply for college financial aid. The goal was to help bolster the personal finance skills of students and families and make them both successful borrowers and empowered financial citizens.

Preparing Students for Financial Responsibility

At two Worcester-area high schools, ASA training specialists conducted four sessions of interactive financial literacy training in senior-year English classes over the course of six weeks. Their aim was to provide students with the basic tools to handle whatever monetary challenges they faced in college and beyond.

“We found the students had a great deal of savvy,” says ASA training specialist Shauna Greene, “so we worked hard to harness their teenage street smarts into knowledge that would make them good borrowers.”

The class worked through reality-based assignments like creating budgets that focused on staples like groceries, rent, books, and transportation rather than on cell phones and cable. The ASA trainers tasked the students to follow up by recording all their spending in notebooks and trying to separate the purchases that were wants from those that were needs. Learning that difference is a key step on the road to saving for college. Later, students will face the challenge of living within their college budget without falling into another kind of financial trouble—out-of-control credit card debt.

Avoiding the Pitfalls

Despite the sometimes overwhelming temptation of credit cards, which can seem like free money to students, the trainers got through to the students with a message of caution and moderation. They explained that, on average, cardholders will end up paying 115% of what they originally spent due to interest and fees. So, that $100 pair of jeans that seemed like a need will cost $115 by the time the students realize it was merely a want.

The ASA trainers also explained that while credit cards can be useful and practical when used sensibly, irresponsible usage can cause serious damage to students’ credit records. And the state of their credit could affect students’ chances for future borrowing, such as for cars and homes, even if those items seemed far away from the vantage point of high school.

“It was important for us to help the students see how the financial world worked through reciprocity and realize that there was a place for them to be successful and prosper in that world, too,” says Greene.

What Parents Need to Know About Financial Aid—But Don’t

In addition, ASA held three night sessions over the course of the school year that were geared specifically toward the parents of high school seniors. In the first session, ASA facilitators explained how to navigate the financial aid process. In a later session, they provided parents with an insider’s perspective on how to pay for college and borrow wisely—applying ASA’s concept of Wellness to prevent families from taking on more debt than they could handle and winding up in default.

In the third session, ASA reviewed families’ financial aid offers individually to assist each household make the wisest choice for their financial health. According to F. Duane Quinn, ASA’s Director of Wellness Outreach and a former financial aid administrator for 20 years, this stage can be the most emotional for parents. After all the research, intricate applications, and suspenseful waiting, parents finally are faced with the last word from schools’ financial aid offices. Unfortunately, for many families, seeing the numbers and jargon in black and white doesn’t make their financial picture much clearer.

After the ASA facilitator defined the basic terms that recurred in most of their awards, the parents came forward—nervously, worriedly, and sometimes proudly—with their letters. Then they watched him read and waited for his reaction. The ASA facilitator worked with each group of parents, helping them recognize the advantages of subsidized loans over unsubsidized ones and emphasizing the value of grant and scholarship money. He also encouraged them to think through the repayment phase of borrowing—and to be realistic about what amount of debt they and their children could afford to take on.

The Moment of Truth

“This part of the program can be both heartbreaking and exciting, as parents realize exactly how much aid is available to them,” Quinn says. “Many parents understandably get wrapped up in the experience. For parents who are witnessing the first generation in their family have an opportunity to attend college, the emotional aspects of their decision can be especially hard to ignore.”

ASA helped all the parents in the program consider their options carefully. For some families, the best choice was to pick a moderately priced public university or community college that was within their economic means. For many, the advice that ASA offered allowed them to assemble a plan that included sound financial principles—and their dream school.

In addition to continuing the program at the Worcester high schools, ASA hopes to grow its relationship with the Colleges of Worcester Consortium and continue to find new ways to support its mutual goals.