Or maybe not. Capital One conducted a survey of high school seniors to determine how many of these young adults are prepared to handle finances on their own. The company asked the students to rate their own levels of knowledge of personal finance. The results may be interesting, but they don’t reveal anything about financial preparedness.

If you ask students or anyone to rate their own knowledge, they can’t produce accurate answers. According to the survey results, 65 percent of the male students rated themselves “highly knowledgeable” about personal finance while only 49 percent of the female students rated themselves the same. With this information, Capital One came to the conclusion that young men are more prepared to handle personal finances independently than young women. That is the wrong conclusion here. This only proves that male students rate themselves higher than female students rate themselves.

Asking people to rate themselves is more a measure of confidence than actual knowledge. When it comes to knowledge, there are things you know, things you know you don’t know, and things you don’t know you don’t know. Think of the “known unknowns” and the “unknown unknowns” popularized by Donald Rumsfeld a few years ago. The world mocked him for sounding somewhat ridiculous, but in the case of this survey, students may not realize how many aspects of personal finance of which they have no knowledge.

Perhaps, in addition to finance, schools and parents should be teaching high school students how to understand statistics to better help detect false conclusions drawn from inadequate data. If drawn from a large enough sample size, we might conclude than male high school seniors are more likely to rate their personal finance knowledge highly, but we should not conclude that boys are more mentally prepared to handle their own finances than girls.

Capital One Survey of High School Seniors Reveals Gender Gaps in Financial Literacy

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Survey Reveals Gender Gap in High School Seniors’ Financial Literacy?

I’ve often written here about the disappointing lack of financial education in schools, and it’s this same dearth of vital information that has apparently led to a new special airing on ABC this Friday:

Schools teach us almost everything, but not “Money 101.” For the basics on finance, turn to UN-BROKE: What You Need to Know About Money. It’s an unconventional look at the fundamentals of everyday finance with all the facts about credit cards, mortgages, stocks and bonds, investing and 401(k)’s, in a fresh new format combining information and humor. The one-hour special airs FRIDAY, MAY 29 (9:00-10:00 p.m., ET) on the ABC Television Network.

Here’s an example video of actor/producer Seth Green’s take on the MTV show “Cribs”:

I encourage you and your families to watch the show, as TV networks almost never take time out of their programming schedule to present the kind of information that, while basic, refuses to graduate to “common knowledge.”

Personally, I plan to set the DVR to record it, and then skip the commercials.

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Un-broke TV Special on Friday, May 29th

If there is a college graduate in your life, he or she is about to receive a number of gifts. The first gift will be the realization that it can be difficult to find a job in this economy right now if the goal is to get a job in the same field of study as the degree. Without a job, our graduate might have little choice but to move back in with mom and/or dad and weather through the recession with curfews as if life were to replay high school.

The next gift will be the shock of the real world in the form of a job. Suddenly the graduate will have to report to work, perhaps at 8:00 am. It might have been easy to blow off early morning classes, but consequences in college were limited compared to the thread of being fired in the first month on the job.

Soon after that, perhaps six months after graduation, the first student loan payment will be due, shackling the graduate into earning enough money to pay off college debt in ten or more years.

If there is a college graduate in your life this year, consider these graduation gift suggestions.

1. Free room and board. There is a time and place for the “sink or swim” mentality, which comes from the idea that throwing a baby into a pool will force it to instantly learn to swim in order to survive. I’ve never known anyone to take this literal approach, but in the current state of the economy you could do your graduate a favor by allowing her to start her career without having to worry about the first several rent checks.

Rent-free living should not last forever.

2. Clothing. Every job has expected attire, even if the environment is very casual. Professionals need professional clothing, whether for interviews or in the office. The graduate is going to need to project an image in the workplace, and clothing is important to making that happen. A gift certificate would work well for clothing, allowing the graduate to choose her attire, but some guidance may be necessary because not every graduate has experience in dressing appropriately for professional situations.

3. A computer. Powerful and reliable notebook computers are relatively inexpensive now. Remember to pre-load important software for someone who will be starting their first post-college job: financial management software. I use Quicken 2009, which is available on sale here, and I still prefer the robustness and flexibility of desktop software like Quicken over web-based financial management like Mint and Quicken Online

4. A gas gift card or monthly commuter pass. Transportation is one of the many expenses new workers have to pay up front before receiving their first pay check. If your graduate has a job lined up and a place to live, she should have determined her transportation needs.

5. A car. If you have the means, a used car would make a good gift for the graduate as well. It doesn’t have to be the latest model, but employers expect employees to have reliable transportation; a clunker that breaks down once a week and causes the new employee to be late arriving to the office will not make a good impression and will not do any favors for career advancement.

6. Cash. Money is helpful when wielded for the forces of good. If you trust the graduate to use the money responsibly, to pay down debt for example, cash can be a good way to go. But don’t give cash if you will be offended if the recipient chooses to use the money for vacation or entertainment. If you cannot give cash with no strings attached, don’t give cash — try a gift card.

7. The gift of mistakes. The last thing a graduate wants is to be told what choices to make. Some guidance is helpful, particularly in choosing the first job out of college, as many graduates do not know the effect this choice can have on earning potential for the rest of the graduate’s life. But let them make mistakes, and when they do, help them interpret them as learning opportunities.

If you are a parent of a graduate this year, what gifts, if any, will you be bestowing upon your graduates?

Students and former students, what gifts have you received or would you have liked to receive?

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Seven Great Gifts for College Graduates

Although the latest figures indicate job loss is slowing, at 8.9% the unemployment rate is continuing to increase. Some unemployed individuals who want to take classes to build skills while looking for a job experience some roadblocks:

• Searching for work can be a full-time job. Finding time for all your responsibilities and desires can be a challenge in addition to tailoring resumes, connecting with contacts, traveling to interviews. There may be more daylight in the summer, but there are still only twenty-four hours in a day.
• If you expect long-term unemployment and want to use the time to go to college full time, under current rules, you lose your unemployment benefits. You have to be actively searching for work in order to qualify, and full-time education usually disqualifies you.
• Financial aid is based on the prior year’s income, so newly unemployed individuals may not qualify despite their lower income this year.

The key to building a strong community, a competitive country, and prosperous world is education. This is true not only for education in finance, but for education in science, history, and the arts. It’s good to hear that education is back on the agenda. President Obama wants to change the rules to benefit the millions of unemployed individuals who want to increase their knowledge.

The President has proposed using current rather than the prior year’s income to determine whether an student qualifies for the Pell Grant, financial aid for low-income families. Another proposal would ensure that students would not lose their unemployment benefits while enrolled in classes and training.

As the proposal takes shape over the next few weeks a government website, Opportunity.gov, will provide resources for unemployed individuals who wish to expand their knowledge through education. States will also be sending letters to residents receiving unemployment benefits to inform them of the new opportunities coming soon.

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Education Opportunities for the Unemployed

President Obama has proposed a number of changes that will affect how college students qualify for and receive loans to finance higher education. The plan calls for significant changes and like many other changes in the government over the past month, it is causing some controversy.

Currently, the government subsidizes student loans offered by banks and other private companies, like Sallie Mae, the biggest college loan company. Low interest rates are offered to students, and in turn, the federal government pays lenders to take on this debt. These subsidies are costly, and eliminating them in 2010 would save $4 billion each year according to Education Secretary Arnie Duncan.

The money saved will be used to increase the level of money distributed to students as grants, making college more affordable to more people. Lenders are concerned about this plan. Sallie Mae stands to lose seventy-five percent of its loan origination business to the government, and banks will lose the ability to offer low-interest government-backed student loans. Without subsidies, it’s unlikely that banks will be able or willing to offer competitive products, and that could reduce choices for students shopping for loans.

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Changes Ahead for Federal Student Loans

Having done all of my formal schooling in New Jersey, some of it more successful than the rest, I was excited to see a short story in NJ’s Daily Record about a bill passing through the NJ State Senate that would require basic financial skills to be taught in High Schools.

This is sorely needed in all public schools. Too many graduates don’t know how to write a check, balance a checkbook, deal with credit card bills, or what goes on when buying a house. All of those topics, and hopefully more, would be included in the proposed classes.

The State Legislature Web site has multiple bills with similar titles, but I believe this is the core of the matter:

The goal of the pilot program will be to ensure that high school graduates in the pilot districts receive instruction on budgeting, savings and investment, credit card debt, and other issues associated with personal financial responsibility. At the conclusion of the pilot program, the commissioner will report to the Governor and the Legislature on the feasibility of implementing the program on a Statewide basis.

Many of the comments on the Daily Record story are concerned with overloading the curriculum and/or extending the school day. Some have questioned whether the new class should replace Home Economics.

This is Home Economics. In my Home Economics class, we learned how to make pancakes and pillows. I would be much better off having learned to balance a checkbook. Besides, my Home Economics class was in 6th grade, and these new classes would be in High School. I recommend using “Finance 101″ to replace European History.

Thanks to Consumerist.com for highlighting this story.

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Basic Finances to Finally Be Taught in NJ Schools?

If the only value of higher education is the money you earn throughout your lifetime with your college degree, then SmartMoney’s recent study might help you decide where to matriculate. Ivy League schools don’t pay off as much as one might expect. The magazine surveyed the annual salaries earned by graduates of 50 of the most expensive four-year schools, three years and fifteen years after graduation. The data were used to determine a “payback ratio.” You can compare payback ratios of different schools to get an idea of whether and how fast the cost of tuition will pay off in terms of income earned.

Here is what SmartMoney has to say about this survey’s approach:

Ultimately, we weren’t trying to measure the quality of education or colleges’ selectivity. Other rankings take ample care of that, and dedicated students will thrive at any of these fine schools. But with boutique private colleges coming under heavy criticism for spiraling costs, our payback numbers certainly raise questions about the actual “return” on an educational investment.

“Return” is more than the financial benefits you receive from an education, and putting that aside to look just at the dollars creates an interesting comparison. But this shouldn’t be the only factor or the deciding factor when choosing a college. There is a tendency for business-minded folk to measure everything through “ROI” (return on investment) or to look purely at numbers through a “cost/benefit analysis.” Decisions based on pure financial anlysis don’t necessarily result in happiness or satisfaction with long-term goals.

Here are the top 5 public schools, liberal arts schools, and Ivy League schools based on SmartMoney’s “payback ratio.”

Top 5 public schools

1. University of Georgia: 338%
2. Texas A&M: 315%
3. University of Texas, Austin: 306%
4. Georgia Tech: 263%
5. University of Washington: 225%

Top 5 liberal arts schools

1. Washington and Lee: 145%
2. University of Richmond: 130%
3. Lafayette College: 115%
4. College of the Holy Cross: 114%
5. Bucknell College: 114%

Top 5 Ivy League schools

1. Princeton: 132%
2. Dartmouth College: 131%
3. Yale University: 127%
4. Harvard University: 124%
5. University of Pennsylvania: 124%

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Getting Paid Back for a College Education: 15 Top Schools

Last year, I asked in high schools should require money management classes. My point of view is that such classes should be optional and/or lessons in personal finance can be incorporated into other classes throughout middle school and high school. Not everyone agrees with me, however, considering the state of financial distress many in this country face.

A commenter wrote in to describe his experience with a specific money management curriculum called Real Money, Real World, part of the Your Money NOW program sponsored by the Ohio Treasurer of State.

Schools can devote as little as 90 minutes or as much as a grading period to the program.

It works like this: Students get jobs and salaries based on their current GPA (the higher your GPA, the better paying job you get). Several booths are set-up with different signs relating life events. Students go to each to add children, housing, entertainment, cars, etc into their budget. At the end, they have to have a balanced budget.

I helped out at one of these events at my local high school and it was great to see these kids doing the math and complaining how much kids cost or how they can’t buy the clothes they want because their job doesn’t allow it.

The program sounds like a good start. I particularly like this resource: a description of the savings you could experience [pdf] by maintaining a credit score of 680 rather than 580.

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Real Money, Real World: A Resource for High School Personal Finance Classes

When I was applying for colleges for my undergraduate degree, a scholarship agent came to our house. I think he was referred to us by a friend of mine, and even then I wondered whether this was the time of arrangement where someone gets a referral bonus. The scholarship agent entered our house with a several fairly large binders, supposedly containing information about thousands of scholarships, and I could be a match for many of these. The agent asked about my interests and activities and turned to the appropriate pages in the binders.

I may be somewhat fuzzy with this memory; my parents were handling the financial considerations of my college experience. I believe this consultation cost somewhere around $200, and I don’t think there was anything gained from the meeting. The scholarship agent couldn’t complain, though. By showing up with his binders and meeting with my parents for a couple of hours, he was a few hundred dollars richer.

This was a year or two before “The Web” would become accessible to those with Mosaic and an internet account. This was several more years before a wealth of information about scholarships could be found online. The dissemination of scholarship information was apparently accomplished through traveling agents, moving from referral to referral. Besides a scholarship from the local university where my mother worked, most of my education was funded by loans, either taken by me or by my parents.

Here are three tips from SmartMoney for scoring more financial aid.

Plan ahead. College-planning specialists have grown to more than 1,200 in number since the National Institute of Certified College Planners was founded, in 2002. They offer ways to boost aid eligibility (deferring income, for example) and take advantage of tax benefits. NICCP.com has a list of specialists; check with the Certified Financial Planner Board of Standards to ensure they’re also certified financial planners.

Was the agent who came to our door a “Certified College Planning Specialist?” At the time, I wasn’t paying attention to the details, so I don’t know. I’d be willing to bet that such a designation didn’t exist at that time. The CCPS is a type of financial adviser that focuses on planning for college. If you already have a financial adviser, would it be worthwhile to hire a specialist?

Dig for scholarships. By last count there was over $3 billion in private aid available, with $100 million going unused annually. David Rye, author of The Complete Idiot’s Guide to Financial Aid for College, says people don’t realize it’s there. Employers and churches can be sources of scholarships, and you can search on sites like Petersons.com.

My memory, which often resembles swiss cheese, is hinting at a scholarship a friend from college received. I seem to remember that she received funds every year from the Daughters of the American Revolution even though she had no genealogical ties to the organization.

Follow up. If the school’s aid offer is insufficient, The National Association of Student Financial Aid Administrators recommends writing a letter, especially if there are recent changes in the family finances. If the need is real, says NASFAA’s Justin Draeger, they won’t “turn their backs on you.” Be sure to provide evidence, such as tax returns, to support your claims.

It can’t hurt to ask for more, especially if you can prove a financial need. It also doesn’t hurt to have schools compete over you. If there are two schools on equal footing, and one offers more financial aid, don’t hesitate to let the other school know. Perhaps they can match the offer.

If I have children, I’ll be going through this process again, only I plan to be more involved. Costs for college and private school are advancing much faster than anything else other than health care, and competition for scholarships can only get tougher.

Image credit: talaba
Score More Financial Aid [SmartMoney]

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Three Tips for More Financial Aid

A week ago, U.S. Senator Patty Murray introduced legislation proposing an investment of $250 million to support personal finance education in public schools and colleges. Education is the key to improving the financial stability of future generations, and parents have the strongest side of responsibility. While the general media doesn’t encourage fiscal responsibility through excessive commercialism, this message may not be balanced by education at home or in school. The problem is that many parents don’t have the ability to pass on solid knowledge because they didn’t receive good habits from their own parents. The cycle has to be broken somehow, and public education is a good start.

The public school curriculum is already packed with essential education in science, math, humanities, languages, and arts. Adding a separate personal finance requirement to the curriculum would require cutbacks in other areas of education, and I cannot support that. Alternatively, schools can incorporate money management into other classes or offer elective courses.

This legislation would provide needed funds for teaching financial literacy in whatever manner appropriate and necessary.

Of the $250 million in grant funding, $125 million will go to support classes in local colleges that students, working adults, and seniors can access to learn crucial financial basics. Another $125 million will go toward K-12 schools to teach financial literacy, help teachers incorporate financial lessons in other subjects, set new financial literacy standards, and develop innovative afterschool programs.

A public school that receives a grant under this program would be required to implement teacher training programs to embed financial literacy and personal finance education into core academic subjects, administer financial literacy assessments on at least an annual basis, and implement financial literacy activities within core academic subjects.

The bill was introduced and referred to the Committee on Health, Education, Labor, and Pensions, chaired by Senator Ted Kennedy.

Senator Murray Acts to Improve Financial Literacy Programs in America’s Schools and Colleges
S. 2671

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New Bill to Provide Grants for Financial Literacy Education

The Catholic Diocese of Brooklyn is concerned that the recent rash of foreclosures, if it continues, will degenerate the neighborhood into its recent crime-ridden past. To combat this possible future, the church has now begun offering “Housing Crisis” workshops alongside its Sunday school religious lessons.

Are pastors and Sunday school teachers extolling the values of living within your means, buying only what you can afford, and negotiating with creditors to manage your mortgage payments? No, the church is bringing in housing experts, unaffiliated I would assume, to speak to the congregation.

This program seems to be a good idea on the surface. I don’t think the religious setting would cause too much conflict. I think secular schools and other community institutions would benefit — and it would benefit their communities as well — by offering adult education courses following this example.

A Sunday school lesson in mortgages [Marketplace]

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Learn How to Handle Your Mortgage… In Church

Existence of music education in one’s curriculum is related to higher incomes and more education later in life, according to a new study by Harris Interactive.

Three-quarters (75%) of American adults were involved in some type of music program while in school. Half (51%) were involved in chorus while 42 percent had some type of formal instrumental lessons. Just over one-third (35%) were in a school instrumental ensemble, such as an orchestra or band while 14 percent were part of an informal group, such as a garage band and 12 percent had formal vocal lessons.

Music education is associated with those who go on to higher education. In looking at what groups may have participated more in music, education shows the largest differences. Two-thirds (65%) of those with a high school education or less participated in music compared to four in five (81%) with some college education and 86 percent of those with a college education. The largest group to participate in music, however, are those with a post graduate education as almost nine in ten (88%) of this group participated while in school.

Music education is also associated with higher incomes. Three-quarters of people (74%) with household incomes of $34,999 or less and 72 percent of those with incomes of $35,000-$49,999 participated in music, compared to 83 percent of those with incomes of $150,000 or more.

The findings are interesting, but it’s important to note that the survey doesn’t prove a cause-and-effect relationship, just correlations between music education and higher education and between music education and higher income.

Music education was obviously a big part of my life, as my original career choice was to become a music teacher. Its funding often sits second chair to “core” subjects however, and I’m disappointed when untapped talent or interest can’t be explored because schools have no money for instruments.

Those with More Education and Higher Household Incomes are More Likely to Have Had Music Education [HarrisInteractive]

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More Education and Higher Incomes: More Likely to Have Had Music Education

Earlier this year, I shared my opinion that personal finance classes should not be required in high school thanks to an overloaded general curriculum and dubious results. My opinion is that basic money management is better taught — if in school at all — in the earlier years.

The Citi Foundation sponsors a financial education program, offering a curriculum appropriate for kindergarten through eighth grade as well as adults. High school students might be able to relate to the lessons for adults. The curriculum includes lesson plans, handouts, and tips for teachers. The program is quite comprehensive.

Here are the suggested lessons for third through fifth grade:

“What Matters Most?” How many times in a single day do you use the words needs and wants? Do you know the difference in the two words? Do you have the same wants and needs as your best friend? You just might be surprised. Continue with this activity to learn more about wants and needs.

“Is It Really Worth It?” What makes you buy things? Do your friends encourage you to buy things that you really do not need? Continue with this activity to become a “Smart Shopper”.

“Where Does My Money Go?” Have you ever wanted to do something or buy something – but you didn’t have the money you needed? What happened to your money? Continue with this activity to learn how to manage your money.

“Which is Better – Piggy bank or Savings Account?” Do you have any pennies or nickels in your pocket? Take a coin out and look at it. Have you ever wished that the nickel you are holding would become a quarter or even a dollar? Continue with this activity to learn how you can save money and make it grow.

The included lessons plans are conceived well and can easily be related to state and federal educational standards. The adult/high school lessons are mildly interesting and would be appropriate for a short elective but not a replacement for any other required course. Citi offers lesson plans aligned with the National Standards for Financial Education (from the Jump$tart Coalition for Financial Literacy) and the National Council for Economic Education, covering banking services, money management and credit. The full list of lessons is extensive.

For an example lesson plan, take a look at this lesson on prime and subprime lending, whose timing is appropriate.

I tend to be skeptical when it comes to corporations increasing their involvement in public education, whether explicit like Coca-Cola’s junk food exclusivity deals or subtle like Citi’s promotion of the financial curriculum.

Is there a conflict of interest? These lesson plans are developed by the non-profit foundation arm of a financial company. If these lessons are properly indoctrinated into the minds of today’s youth, the eventual outcome includes more assets under banks’ and brokers’ management. The success of the financial services industry depends on the public knowledge of these services. Citi has a vested interest in spreading the word about good money management habits, which include the use of banks like CitiBank. On the other hand, the industry is well poised to provide some of the best information about the skills necessary for the financial survival of future generations.

If you don’t like corporate involvement, there is another choice for curriculum information. The National Endowment for Financial Education is “the only private, nonprofit, national foundation wholly dedicated to improving the financial well-being of all Americans,” and their High School Financial Planning Program. From what I can tell from GuideStar, this organization has no corporate contributors.

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Financial Curriculum: Classes About Money Management

Among the high-powered analysts and hedge-fund superstars, obtaining an MBA is losing its attraction. Even degrees from the most prestigious schools like Harvard and Wharton are viewed as a waste of time and money if the student could be earning hundreds of thousands of dollars a year as a stock analyst or millions as a hedge fund manager.

At funds that manage $1 billion to $3 billion, people with just a few years of finance experience will make $337,000 this year, Mr. Zoia says, and those with five to nine years of experience will average $830,000, up 6 percent from last year. These estimates include analysts and researchers but not portfolio traders, who can make much more because they sometimes share in profits.

This seems obvious. If you’re making six or seven figures a year, taking time off of your job for a two-year full-time program is a bad move financially. If that program is expensive, the loss is even greater. In fact, such a move would be seen by future employers as poor financial decision. I can understand why the MBA would be overlooked for a job in which financial analysis is a component. In many cases it shows a poor grasp of cost-benefit analysis.

Not everyone is making six figures when they decide to enroll in a business school graduate program. Also, for someone switching careers or considering entrepreneurship, the MBA can be a gateway. While the article contains some good points for those in high-performance finance careers, there are millions of other perspectives out there.

Just like all college degrees, MBAs are more common. This commoditization causes devaluation. Having a masters degree in business once set someone apart from the crowd, but now it is the crowd. If your goal is to set yourself apart from other people, say, in competition for a career, there are other ways to stand out. According to the article, having a superior stock trading record is a surefire way to rake in big bucks.

Before deciding to undertake any graduate or postgraduate degree — particularly if it involves leaving salary on the table — figure out what your goals are. If your goal is to finish life with the most money, more school (particularly business school) may not be the best option. If lifelong education is part of your personal mission, go for it. If you want a degree only for its potential boost in income, you may have to look at the latest data to determine if your chosen industry perceives the degree as the asset you are hoping it is.

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The Declining Value of the MBA

College classes have already begun around the country, and it’s not too late to start listening to Ben Stein. He has some great advice for those matriculating. His son is just starting college, so I would imagine Ben has been giving this topic a lot of thought lately.

Make friends with your teachers. While seeing your teachers socially was unacceptable in high school, as adults, the teacher-student relationship takes another form. I had no problem with attending barbecues hosted by my professors, going out for meals, or just relating on a more personal level. We discussed sports and books, music and logic.

Ben goes on to address ways to become friends, but they all pertain to situations in class. While I was in college, a lot of the real relating took place outside of the classroom, but that may be more a result of the type of degree I was pursuing.

Do your assignments neatly, correctly, and timely. Ben Stein mentions that college is about learning to budget your time. Looking back, I wish I had done this better. My time commitments pushed me in a number of different directions and I was always finding it difficult to fir everything I wanted to do inside of the day. I still have this problem now.

I find it hard to believe that people have to be reminded to spell correctly. I’ve encountered horrible spelling from my classmates as a graduate student, and I just don’t understand what the excuse is. Grammar is one thing; there are times when the correct grammatical rules to apply are confusing. Poor spelling is inexcusable. I am sure I’ve made spelling errors in the past, but I would be embarrassed if I spelled as poorly as some of my classmates.

Be well-rounded. I applaud Ben for writing this. Many times, people are encouraged to pick one topic and become an expert without much thought to the larger world around them. Ben Stein wants people to study history, geography, Shakespeare, poetry, literature, biology, physics, and mathematics. Of course, I would add visual and performing arts to his list. All of this teaches more about human understanding than would any business psychology or human resources class.

You probably won’t call upon these subjects in your daily life when you enter the workforce, but they’re vitally important in teaching you how to think. And learning how to think is, above all, the main challenge you face in school. It’s true that you have to know certain basic facts, but you should also know how to approach a problem, break it down, solve it, and write about it. That’s why it’s important to take English composition, and take it seriously.

Join a fraternity or a sorority. Social groups can be positive or negative, so be choosy about which groups you hang out with. My fraternity, which was new on campus when I joined as a freshman, was more of an honor society or service group during the first few years. We didn’t have a house so there are no movies that quite exemplify our dynamic, but we became decent friends as we did as much as we could to follow the fraternity’s national “purpose.”

As Ben notes, the good thing about a group of friends is the support they can provide when it is most needed. Chances are there will be some time during your time in college when you need that support.

Neatness counts. Image is always important.

If you wear sloppy clothes, be clean inside them and have your thoughts especially well-ordered to offset your appearance. You’ll need to work twice as hard so your teachers know you’re smarter on the inside than on the outside.

Don’t smoke or drink to excess. Anything in excess is bad. Aim for moderation and limit any unhealthful habits.

Play a sport. Is marching band a sport? I guess it depends on the marching band.

Have a roommate you like. Personally, I preferred having no roommate and spending most of my time in the dorms with my girlfriend. I never had to worry about disturbing anyone. I did live in a special interest dorm, where everyone on the floor was interested in the same thing. For my floor, that was music. In return for living in the nicest dorms on campus, for which we had to apply separately from the standard housing application, we had service responsibilities to the community. I enjoyed this type of environment.

Try to have a significant other. I am a strong supporter of this idea, but I would suggest not staying with the same significant other for your entire college experience unless you are sure you are going to get married. College is a great time to learn about yourself and determine you compatibilities.

Develop good work habits.

College is where you learn to allocate your time, get your assignments done, and develop a good rapport with your fellow workers (students) and your bosses (teachers), and make them all your friends.

Ben notes that in all likelihood, you’ll spend the rest of your life working. This is the reality, so it is best to make the most of it. I didn’t work as hard as I should have while I was running around leading various organizations. I put my priorities elsewhere when I should have worked for more balance between classwork, practicing (I majored in music education), activities, and socialization.

As a leader among my peers in high school in college, this hasn’t translated as well to the working world as I would like. While I’m happy with my experiences, and changing anything about my personal history would change my identity, there was possibly a little room for improvement when it came to getting the right things done at the right time.

Chances are you won’t get everything exactly right. Ben Stein’s tips will get you started in the right direction.

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Ben Stein’s Tips for New College Students

Last year, I began sharing the details about my experience with the University of Phoenix’s online campus. I completed an MBA through this program, and experienced the best and the worst of what the school has to offer. Nowhere is the wide range of possible experienced more clear than in dealing with the university’s “learning teams.”

To freshen up on my experience, please read the decision, admissions, course logistics, and the curriculum, as well an aside about the university’s purchase of naming rights to a professional sports stadium.

The basis for a significant portion of the assignments throughout each course is the “learning team.”

The teams are usually assigned by the facilitator during the first week of each six week course on the basis of similar degree focus or time zone, but some facilitators allow the students to suggest their teammates.

Throughout the remainder of each course, the learning team would be required to meet several times a week. For the online courses, this was accomplished using the chat room feature of whichever instant messaging software the team could agree on. Early on in the degree, it was also required for the teams to submit to the facilitator a chat log of the discussion, but somewhere along the lines, this requirement disappeared.

Each six-week course required, in addition to the papers written individually, three team hypothetical business case papers, business case simulation reflections, and in the case of some courses, problem sets. In order to get everything done, it usually meant you would be spending several hours a day working with your team members or working on the team assignments and submitting them for review by other team members.

This is project management on steroids. It’s a reflection — albeit intensified — of real working conditions in the corporate world. Working closely with three to five other students to complete quality work over the internet is an interesting experience, and there were many obstacles to ensuring that level of quality, especially during the first year.

When working with randomly assigned team members, some of whom have nothing in common, differences in work habits become apparent. Some students wanted to control all aspects of the assignment while others wanted to do as little work as possible. Part of working as a team is adjusting to the strengths and weaknesses of others, all of which is intensified due to the style of communication that was foreign to many people.

In the first few classes through working in teams, I discovered a number of people who should not have been attempting to earn a master’s degree. I’m not trying to be judgmental, but a certain level of familiarity with the English language should be a requirement for earning a bachelor’s degree, a prerequisite for the master’s degree. I am not referring to individuals who have spoken a non-English language their entire life, I’m referring to native English speakers who cannot string two sentences together or create a paragraph with a concrete main idea. I won’t hesitate to mention the creative spelling, punctuation, and grammar I encountered. This made editing and proofreading papers containing contributions from all team members one of the most difficult parts of group assignments.

This issue of “skill level” largely disappeared by the time I was attending the more important management decision making courses later in the program. In fact, in my “Cases in Decision Making” course, my team consisted of some of the most intelligent and experienced individuals I’ve “met” in the world of business.

The “learning team” approach to education is something that is missing from many traditional master’s degrees. You certainly get more from your education by working with your peers than you would if you’re just sitting in the back of a lecture hall and working on all assignments individually. I’m glad the team experience was a part of my education at the University of Phoenix despite its immense frustrations at the beginning.

It certainly gave me a lot of experience working with and getting results from people who don’t want to be there, shouldn’t be there, or have a wide range of personalities and strengths, just like I do now at my day job. It also provided me with exposure to high-level executives of a variety of companies, large and small, from whom I was happy to learn.

This learning team experience is at the same time one of the best and worst aspects of the University of Phoenix MBA program. I’m glad I stuck with the program to the end for the opportunity to learn from intelligent and hard-working businesspeople, and looking back I see the value in learning how to manage a team of people not committed to excellence, but it was a rough experience most of the time.

I don’t miss waiting up at the last minute — 2:00 or 3:00 am Eastern time — for the last team member to submit a portion of the particular assignment so I could finish combining all contributions and turn a mish-mash of style, voice, and interpretive grammar into a cohesive, readable paper.

This is Part 5 of a series about my experiences with the University of Phoenix Online. Here is what has been published so far.
* Part 1: The Decision
* Part 2: Admissions
* Part 3: Course Logistics
* Part 4: Curriculum
* Part 5: The Team Experience
* Part 6: Administration
* Part 7: Finishing Up

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My MBA at the University of Phoenix Online, Part 5: The Team Experience

In England and Australia, it is more common than in the United States for a student to take a year after high school to travel or experience the world before entering college. According to SmartMoney, it may not be such a bad idea.

The argument is that students who take a break from institutionalized education will come back to college — if they come back — with a fresh outlook on what they want to do with their life, their passions, and their attitude for learning.

This concept comes at a great expense. Delaying college for one year can mean increased tuition costs of 8% or more. In addition to higher education costs, the cost of the gap year can be large, depending on the activities the student chooses.

Delaying college for a year will also likely mean delaying the start of a career. The missed earnings in what would have been the first year of income, thanks to compounded interest, can mean hundreds of thousands of dollars forgone by the time retirement rolls around.

All things considered, I might have liked taking a gap year. For all I know, during that year, I might have changed my mind about my career path, which at the time was music education with the goal of becoming a high school music teacher.

‘Gap Years’ Can Be Smart Move for High School Seniors [SmartMoney]
Photo credit: malias

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Taking a Gap Year Before College: Good Idea?

A couple of weeks ago, I wrote about options for going to college without going into debt, in response to an article about the near impossibility of doing so.

Commenter “t” shared his or her experience:

I also chose the state school route. I’m lucky enough to have grown up in a state (washington) with an outstanding public university (it wasn’t really luck, it was a conscious decision on my parents’ part), and I went to the best university in the state. With good grades and test scores, I got even that paid for – a state tuition waiver for my HS grades, and a series of scholarships and research jobs that came with stipends.

One thing I didn’t know and just lucked out on was that by applying for so many scholarships, I not only got things paid for, but I developed a great resume. When it came time to apply for graduate training, that made a huge difference – not only did I get in with full funding to every program I applied to including the three most competitive programs nationally, but I even got a 10k signing bonus to sweeten the deal.

Another streak of good luck attached to this strategy: at a large state school, you typically have first rate professors, and a mix of highly motivated students (so you have plenty of peers to challenge you) and less motivated / more distracted students (so your professors aren’t yet sick of students who all want extra attention, and are instead still happy to have you show up with further questions / ask to work in their lab).

I was really unsure when I made my decision to go to a public university when all the rest of my peers were going to private universities – but it’s made all the difference. I would do it the same way again in a heartbeat.

Get good grade in high school, apply for lots of scholarships, and live where the state college system is inexpensive and provides a good education.

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Go to College Without Going Into Debt: An Example

According to the Motley Fool UK, the Consumer Credit Counseling Service (CCCS) has stated that unless parents are in the fortunate position to provide their children with “absolute financial support” during higher education, that students must accept debt as a fact of life. (Students Must Accept Debt, Motley Fool UK.) The rising cost of a college education contributes to this, of course, as does the necessity of a degree for the “best” career paths — those with the highest earning potential.

In general, individuals with a college education will earn more over their lifetime (though there are notable exceptions), justifying the extra expense up front. The best of both worlds is then to limit the expense where possible, and therefore the debt, and still earn that worthwhile degree.

Here are some options beyond loans for students whose parents are not in the position to provide “absolute financial support.” If these can be combined, the student will have less exposure to debt.

Get scholarships. It is possible for scholarships to pay for your entire college education, but not easy. Most scholarship programs require students to excel in a certain area, academic or extracurricular, and the chances of exceling at enough different areas is low. Some scholarships are based on your ethnicity, as well. If you’re a minory, you may be in luck. Start with the College Board’s Scholarship Search.

Find grants. Grants are the next best things to scholarships. In general, the funds are more limited, and are based mostly on need rather than academic prowress. Grants are also used to encourage students to undertake certain disciplines. For example, as teaching is often an unattractive profession — this comes and goes in phases — grants (and loan forgiveness) are occasionally offered to those studying education. Here’s a good overview of what may be available.

Attend a low-cost college. Attend a public university rather than a private university. Still, rather than a public university for four years, spend two at a community college and finish the degree at a public university. Take into account that the connections you make at college and the degree you receive, in some disciplines, may have an effect on the first job you receive out of college. That first job — if you continue your entire life on that same career path — can affect your earnings over your lifetime. (My first job was for a non-profit organization earning about $550 a week. I could have done that without a fancy bachelor’s degree from my private land-grant university.)

Take advantage of work-study programs. If you qualify, a work-study program is a way to earn income that can be used for paying college and living expenses while still earning the degree. This is my less favored option, as to make the most of the educational process, the stress of a job can be distracting from the true goal of the four years. Not all college jobs are created equal; A minimum-wage job at the university library, would not be too distracting at all, unlike a higher-paying job at the local strip club (not endorsed by the Federal Work-Study program).

Corporate sponsorship. My current company offers significant tuition reimbursement — enough to cover public university tuition in many cases — for those employees earning the bachelor’s degree. Other corporations provide the same benefits. There may be a requirement that the degree be in a field related to the company’s business or the division. For example, a financial services company may require a degree in business, accounting, finance. If you work in the company’s human resources department, you may need to earn a degree in human resources to qualify for reimbursement.

The company will pay the school in advance of each semester, so you do not have to deal with loans at all — though college aid advisors recommend getting a federal loan and using the reimbrusement to pay back the loan immediately. This ends up costing more thanks to origination fees. It also opens up the chance of not using the reimbursement to pay off the loan.

Other options. If I remember correctly, I could have gone to Princeton University for free, if I had been accepted. That benefit would be awarded to me because my mother worked there for the time I was going to college. I didn’t apply to Princeton as they surprisingly do not have a strong undergraduate music program and I probably didn’t have the GPA. (I later discovered, as an undergraduate playing in ensembles when home over the summer with Princeton graduate students, that I might have received a better education and had exposure to better peers in my chosen field than where I was.)

It’s going to take a combination of all of the above to completely avoid debt when it comes to paying for higher education. I believe it can be done, but in some cases, such as working and maintaining eligibility for scholarships, may put too much of a strain on the student.

I’d like to hear stories from anyone who has managed to graduate with a bachelor’s degree without incurring any debt. What choices did you make and were there any sacrifices? Please feel free to share.

Photo credit: jasonhe

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Go to College Without Going Into Debt: Impossible?

If you are a student, the New York Times will now allow you to have access to their premium content (TimesSelect) for free. Technically, you don’t have to be a student. All that is required is an email address with the “edu” top level domain.

Some universities offer “edu” email addresses to their alumni as well, so if you’re lucky enough to have one of these addresses, you can still access TimesSelect for free. Visitors to Freakonomics have noted that many current students located outside the United States do not have “edu” email addresses. Unfortunately, they will miss out on this offer.

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Read the New York Times Online for Free

Upromise is a loyalty rebate program which rewards its members by investing a percentage of purchases into accounts for education expenses, namely 529 College Savings Plans. Just register your credit cards and your supermarket membership cards and the different rebates are credited to your account to be invested at a later date. These rebates are in addition to any you may receive from your credit card.

The primary intent with Upromise is to use the cash back savings and investment to pay for your children’s education. Some lenders also allow you to apply Upromise’s balance directly to your own student loan.

Personally, with no children, I prefer to receive my rebates in the form of cash back. Upromise doesn’t publicize this option much as they would prefer you invest directly in the accounts from brokerages who have negotiated a partnership with the company. Hidden deep within Upromise’s website are the instructions for requesting a check for the balance of your rebate to be sent to you within 12 weeks. Here are the instructions, out in the open, for everyone to see:

You can withdraw your Upromise contributions at any time during your membership. To withdraw company contributions from your Upromise account, submit a letter in writing to Upromise requesting a withdrawal from your Upromise account. The letter must state your full name and exact amount that you would like to withdraw, up to total amount available in your account, pending contributions are not eligible for withdrawal.

For the protection of our members, we require that your letter either be notarized or contain a Signature Guarantee if the withdrawal request is in excess of $200. A Signature Guarantee is a guarantee you can obtain from a financial institution, such as your bank, that your signature is yours and that it is genuine.

Withdrawal letters should be sent to:

Upromise
ATTN: Customer Care
P.O. Box 55555
Boston, MA 02205-5555

Checks are sent once per calendar quarter, so you should typically receive your check within 12 weeks of your request being received.

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How to Withdraw Money from Upromise

A while ago, I started a series reviewing my experience with the University of Phoenix Online. I attended this school through its online master’s degree program and I earned my MBA several months ago. So far, I’ve discussed how I decided to go this route, their admission philosophy and policies, and what it’s like attending a course online.

The next part, a review of my curriculum is long past due. I’ve procrastinated this section as I originally intended to take a quick look at each course and write about the merits of each. This was a daunting task hindering me from continuing the series. I’ve decided to take a different, more general approach.

The bottom line is that there were only a few courses from which I feel I gained useful knowledge. The first course was a three-week, 1 credit course called “Managerial Communication.” The class allowed the students to get their feet wet with the format, which for some students was quite foreign and a major change. It forced us to rethink the techniques we’ve learned throughout our lives for effective learning. My prior experience with technology and online learning helped make it a quick transition for me, but others were not as successful. Here are the “highlights” of the rest of the curriculum.

• Human Relations and Organizational Behavior: the theory behind behavior I’ve observed in the workplace, and how to manage people and projects.
• Statistics: I’ll still need to use reference materials if my job every required statistical analysis, but the classes was good practice.
• Accounting: I’ve been “in accounting” for a while but never had an overview of its theories and practices, just learned on the job. The class added some technical knowledge, but not much practical ideas.
• Finance: These classes were helpful in terms of reading and analyzing financial statements and preparing budgets and forecasts.
• Project Management: I did pick up useful tools and techniques for running projects, something which I didn’t have extensive experience on the job.
• Information Management and e-Business: Nothing I didn’t already know from my own experiences, these classes added very little.
• Cases in Decision Making: This class did a good job of bringing together everything from the two years of classes and running decision-making scenarios.

My path at the University of Phoenix involved a curriculum of 46 credits for a general MBA. The University’s program description is a little different as it provides this information:

The MBA consists of 39 credit hours and includes three proficiency courses (MBA 501, MBA 502, MBA 503) which may be satisfied using an undergraduate business degree, undergraduate coursework or graduate coursework. Students may also waive an additional nine credits using graduate courses and may qualify for a 21-credit hour residency.

During my time enrolled, the University updated the curriculum several times. In the middle of my degree pursuit, I dropped to part time employment at my job to teach music full time in a high school for six months. (This time also coincided with a hiatus on Consumerism Commentary.) I paused my degree for a year, and when I returned, there were several changes to the curriculum and to my overall experience, but I’ll get to that in Part 5.

This is Part 4 of a series about my experiences with the University of Phoenix Online. Here is what has been published so far.
* Part 1: The Decision
* Part 2: Admissions
* Part 3: Course Logistics
* Part 4: Curriculum
* Part 5: The Team Experience
* Part 6: Administration
* Part 7: Finishing Up

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My MBA at the University of Phoenix Online, Part 4: Curriculum

If you’re an undergraduate student at Princeton University, you may be happy to hear that tuition for the 2007-08 year will hold steady at $33,000, or only $3,000 more than a seminar with the Maui Millionaires.

Don’t get too excited, tiger. While tuition isn’t increasing, the costs for room and board will be substantially higher. Total cost to attend Princeton on campus next year will be $43,980.

Princeton was able to keep tuition costs at bay thanks to donations and strong performance in their endowment, now totalling $13 billion. At a safe withdrawal rate of 4%, that’s $520,000,000 each year that the University could withdraw and use for scholarships or programs.

According to Wikipedia, Princeton University has the fewest students graduating with debt. That’s an interesting statistic, but it’s provided without a source.

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Princeton University Holds Tuition Steady

Earlier this morning, the Carnival of Personal Finance was posted at City Girl’s Financial Blog. There are a lot of good articles this week, so take a look.

What interested me the most were three very different reactions to an article on Yahoo monetizing the worth of a Bachelor’s degree at $23,000 a year. Mac’s Money finds fault in the calculation as it uses an unfair comparison, Free Money Finance acknowledges education is a great investment with wicked returns, and Wenchypoo brings politics into the discussion.

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The Carnival is Up!

Last week, I started a short series looking at Money Magazine’s 25 rules to grow rich by. I’m breaking down the advice within the article into five separate blog entries here; you can find part one here and part two here. Here are the next five tips, with a bit of my own commentary thrown in when appropriate.

11. If you don’t understand how an investment works, don’t buy it. Don’t bother with futures options, and don’t let your broker talk you into them, unless you have done some indepent research and you know what you’re getting into.

If a stranger wants a few thousand to invest in his new business, you’re not oging to give him the money without determining what it will be used for, checking his business plan, and making sure there’s a good chance he’ll be able to pay back as promised. The same theory is true for any type of investment, especially those beyond the basic stock or bond.

12. If you’re not saving 10% of your salary, you aren’t saving enough. Saving 10% can be difficult for people with little education, making minimum wage, and living in a high expense area. Some people will need to save much more than 10%, particularly if they started saving later in life and are trying to catch up before retirement. For those extremes, 10% is not appropriate. But for others, it’s a decent starting point. Of course, the more you can put away rather than spend, the better.

13. Keep three months’ worth of living expenses in a bank savings account or a high-yield money-market fund for emergencies. If you have kids or rely on one income, make it six months’. Creating an Emergency Fund is usually the first step once one decides to get financially in gear. Everyone will experience some kind of emergency eventually, so it’s good to have cash stashed. This way, there is no need to rely on credit card or emergency 401(k) loans to help.

One way to painlessly create an Emergency Fund is to handle the deposits automatically.

14. Aim to accumulate enough money to pay for a third of your kids’ college costs. You can borrow the rest or use some of your income to help out when your child is in college. First things first: make sure you are set before you save for your kids’ education. That is the approach that most financial planners suggest.

I’m not quite sure I agree due to the strong emphasis I place on quality education and my belief that too many “real world” jobs can distract students from focusing on school when their brains are the most impressionable for higher-level learning (high school and college). Parents should provide as much financial support for college as practical.

Tuition prices are only increasing, and doing so at a rate much higher than “official” inflation. A high debt burden when exiting college can dissuade students from taking on degree programs that are not predicted to be the most lucrative. It’s important that there continue to be people in the world studying and becoming experts in literature, art, music, education, history and social sciences.

15. You need enough life insurance to replace at least five years of your salary – as much as 10 years if you have several young children or significant debts. I have no life insurance. There’s no one depending on my salary other than myself at this time. Thus, life insurance hasn’t been on my list yet. This rule of thumb sounds good to me, but if anyone has any thoughts on life insurance to share, please feel free to educate me by leaving comments below.

This series will continue with Part 4 in the next day or so. I’ll also finish writing the series on my experiences with the University of Phoenix Online soon. There is much to be said, so it’s taking some time to put all of my thoughts together.

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Money Magazine: 25 Rules to Grow Rich By, Part 3