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College LIFE Act – The Silver Bullet for Financial Literacy?

Trying to incorporate financial literacy programs into a campus setting has been the goal of many colleges and universities in the past year (and probably will be for the upcoming academic year as well). Some schools have been very successful in weaving a financial literacy component into their campus framework and others are still trying to get something up and running. Regardless of where these schools find themselves in the process, I am glad to see financial literacy starting to garner some attention. It truly is a win-win for the college and the student.

While most colleges and universities have been implementing these financial literacy programs voluntarily, it appears that new legislation is being proposed that will make the campus based programs mandatory.

Senator Daniel Akaka, representing the great state of Hawaii, recently proposed the College LIFE Act (College Literacy and Finance and Economics Act of 2011) to help introduce financial literacy among young adults attending college.

What The Bill Mandates For Colleges and Universities (excerpt from bill)

Each eligible institution shall provide financial literacy counseling to student borrowers in accordance with the requirements of this subsection, through—financial aid offices; an employee or group of employees designated; or a partnership with a nonprofit organization that has substantial experience developing or administering financial literacy and economic education curricula.

Financial literacy counseling, as required under this subsection, shall be provided to student borrowers on the following 2 occasions: (i) ENTRANCE COUNSELING.— not later than 45 days after the first disbursement of a borrower’s first loan; (ii) EXIT COUNSELING.— prior to the completion of the course of study.

MINIMUM COUNSELING REQUIREMENTS.—Such financial literacy counseling shall include a total of not less than 4 hours of Entrance Counseling and an additional period of not less than 4 hours of Exit Counseling. A total of not more than 2 hours of counseling for each shall be provided electronically.

What The Bill Hopes To Accomplish

  • Financial literacy counseling under the College LIFE Act would teach the Financial Education Core Competencies – earning, spending, saving, borrowing, and protection
  • This financial literacy counseling would complement existing loan counseling activities
  • Provide sound financial footing (independence) for students entering and leaving college
  • Help to reduce Cohort Default Rate on repayment of student loans

My Personal Impression Of The College LIFE Bill (my two cents)

It is hard to argue with a bill that is promoting financial literacy for our young adults. My belief is that the more we teach financial literacy the better our society will be in the long-run. It is important that everyone (young and old) regardless of socioeconomic background be afforded the opportunity to learn the basics of financial literacy.

All that being said, I think Senator Daniel Akaka may be missing the boat on this legislation and here are my reasons why:

  1. Have you ever tried to get a college student (or anyone for that matter) to sit down with you for 4 hours to go over anything? Senator Akaka is proposing that college students do a 4 hour session once when they go to college and another when they leave. Granted, his bill allows for 2 hours of each session to be done electronically but the other 2 hours require direct face-to-face time.
  2. Has anyone read the news lately about the state budget cuts and all the financial hits that colleges and universities have had to absorb across the nation? Mandating another unfunded requirement such as this is surely going to bring many schools to their knees.
  3. I think the bill deserves recognition but if you really want to help all the people, shouldn’t we come up with something a little more comprehensive that helps everyone and not just those going to college? If a person is going to college, I am thinking that they are already taking a little initiative to better themselves along with their financial aptitude. Let’s branch out a little..

I don’t have the ultimate solution (or alternative) to the College LIFE Act but if college age students are our intended target, I think we should implement programs that work best with their time schedules and within their technical expectations. Which is why I think Online Financial Literacy Resources are critical to reaching young adults. Throwing in a smattering of in-the-classroom interactive presentations probably wouldn’t hurt either.

At the end of the day, we all want people (old and young) to have a better understanding of the basics of financial literacy. The delivery of the information should be tailored for each population and each setting that we are trying to reach and should not be disseminated by a blanket mandate across the board. I believe that the College LIFE Act is a good attempt, it just needs some tweaking (and maybe some input by college age students as well as school administrators) to help it gain more footing and relevancy in the college arena.

Click here if you would like to see a copy of the proposed bill. If you have thoughts on the College LIFE Act, feel free to leave a comment below.

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