Eager to use their recently granted financial freedom, many
incoming students eventually learn the harsh realities of personal
finance during their college careers.
With an abundance of credit card offers and instant approval
often available, it has become more likely for students to be
tempted by credit and eventually get into debt.
There are resources on campus to help students with debt
problems and answer questions about credit.
UCLA students receiving loans from the university must attend a
debt management session. The seminar highlights the importance of
minimizing debt and keeping a budget.
Instead of paying off debts accrued from college, graduates can
start investing their savings and prepare for retirement. Savings
can also go toward a down payment on a new home or car or on paying
off student loans.
The session also shows students how to make accelerated
payments, helping students get out of debt faster.
For students who experience unexpected money problems such as
car or medical expenses, eLoans are available. These short term, no
interest loans are provided by UCLA Loan Services. The loan is also
instantly approved.
Depending on the financial need, loans issued go up to $350.
However, the loan must be paid back in full by the 20th of the next
month.
University Credit Union offers its members free checking and
free savings accounts. Members must be affiliated with the
university. “We have some money management seminars that talk
about budgeting,” said credit union supervisor Michelle
Aguilera.
“If they do have problems or questions, we have a
“˜balance’ program,” she added. The program
entails working with a financial counselor to develop short-term
and long-term financial strategies.
Though the credit union wants to promote its services, Aguilera
points out, “We don’t push it onto students.”
Getting credit seems easy, as students are being targeted to
sign-up for credit cards. Citibank has even come to campus offering
free prizes and T-shirts for applying.
Though participating in such offers appears quick and easy, they
can be deceiving.
A Citibank “Platinum Select Card” for college
students may have 0 percent interest for the first six-months, but
afterward, the interest bumps up to 14.99 percent.
As this interest compounds, it may take years to pay off. In
addition, paying the minimum each month is not enough to eliminate
the accrued debt.
When students exercise their credit, they may forget the
importance of maintaining good credit. By making payments on time
and avoiding debt, they can increase their credit score, or measure
of their credit standing.
The higher the credit score, the easier it is to apply and be
accepted for loans in the future, such as car or home loans. Also,
a good credit score will allow borrowers to take out loans at lower
interest rates. In fact, 35 percent of a person’s credit
score is based on payment history, the largest of five components,
according to Fair Isaac, a financial services company.
Credit cards are not the only contributor of debt. Student loans
also add to the burden.
More then 60 percent of UCLA seniors graduate with loan debt,
according to the Loan Services Office. The mean amount borrowed to
finance an undergraduate education is approximately $12,886. The
average amount borrowed for the Masters in Business Administration
program at Anderson School is $45,000.
Because the credit system heavily emphasizes staying away from
debt, students are taught in the debt management session to
maintain a budget and not overspend.
The seminar explains establishing a budget can give students an
idea of how much they can spend each month. If students spend under
their budget, they can take the extra money at the end of the month
and use it to pay off their loans.