Thank you to Dottie Vollmer, a Peer Financial Educator, for sharing her expertise with our educator community in this recent podcast (duration: 17 minutes). Dottie counsels college students as a member of the MoneySmarts team at Indiana University. In this podcast, she shares what she has learned in her work with college students on budgeting, student loans and credit cards and answers such questions as:
What are the biggest misconceptions about money that college students have?
What budget items do college students have the most difficulty cutting?
What do you know now that you wish you knew in high school?
The data reveals that students are generally clueless about the costs of higher education and how they’re paying for it. Nearly half of students underestimated their debt loads by at least $1,000, with 25% of students underestimating their debt by $5,000 or more.
We need to teach our students to be savvy consumers. How can we do that? I have a few posts titled “What’s the Catch” in which students analyze a financial product and come up with reasons they should be wary of it. My inspiration in the middle of the night was to string together a few of these posts and have students “solve” them in class today as an activity I called “Financial Detectives.”
Each student in class got a handout (WhatsTheCatch?) and laptop to conduct web research.
5 minute countdown clock to encourage students to work efficiently to solve each of the mysteries before time expired (since there were four scenarios most chose to assign one to each group member). I added three minutes and all teams were done by then.
Total time to complete the activity: 35-40 minutes moving at a crisp pace.
You see a Stanford International Bank advertisement on the Wall Street Journal site. This Bank is offering “risk-free” interest rates of 6% on a savings account while other banks are only offering 3%. You read the small print and see that the bank is located in Antigua. After some initial research, you discover that they have thousands of customers and billions of dollars in deposits. What’s the Catch?