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Exploring Approaches to Financial Literacy Counseling

Exploring Approaches to Financial Literacy Counseling
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  Providing financial literacy resources should be an essential outgrowth of a school’sfinancial aid debt management counseling, as required under Title IV. Deliveringfinancial literacy integrally links student aid to both the general needs of students andthe academic mission of the institution. It is also helps the financial aid office todevelop key connections with the school community. Eploring Appr   oaches to F 7 26 | Student Aid TranscriptNational Association of Student Financial Aid Administrators  Education.” The site explains that “TheGateway serves as global clearinghouse on󿬁nancial education, providing access to acomprehensive range of information, data,resources, research and news on 󿬁nancialeducation issues and programmes around theglobe.” It also contains several reports on󿬁nancial literacy issues, including their 2005report, Financial Literacy: Analysis of Issuesand Policies.).  Video Resources Video is increasingly becoming a popularmedium for 󿬁nancial literacy information asa complement to text-based material. Of particular note are several recent PBSdocumentaries, including:• Secret History of the Credit Card: part of the PBS investigative series, Frontline: • In the Mix: Financial Literacy On theMoney: •To Our Credit: •The Ascent of Money: Based on the 2008book by, Niall Ferguson, this programtraces the historical development of theconcept of money: Free Resources Abound Many U.S. government agencies offer󿬁nancial literacy information for free: theU.S. Department of the Treasury, the U.S.Department of Labor, the Social SecurityAdministration, the Securities and ExchangeCommission, the Federal Reserve, andseveral Federal Reserve banks around thecountry all provide excellent resources. Statedepartments of banking, 󿬁nance, or treasurytypically offer resources, and other stateagencies, such as departments of labor, mayalso do so. State guaranty agencies, requiredto provide resources under the HigherEducation Act, often have effective materialsand programming. Despite the July 2, 2010,mandate to shift to Direct Lending by theHealth Care and Education ReconciliationAct of 2010, guaranty agencies remain a veryviable resource for 󿬁nancial literacyresources, programming, and services.Non-pro󿬁t and community-basedorganizations also develop and deliver󿬁nancial literacy resources andprogramming, sometimes in combinationwith for-pro󿬁t groups or governmentalentities. Other countries around the world provideexcellent resources as well, particularly incountries with strong social democraticsocio-political systems. For example, theOrganization for Economic Cooperation andDevelopment’s (OECD) website,(www.󿬁 houses their“International Gateway for FinancialAlthough many schools have developed󿬁nancial literacy programs directed atstudents, the aim should be to reach thewider school community. The 󿬁nancial aidof󿬁ce is uniquely positioned to develop󿬁nancial literacy resources andprogramming, given its involvement in󿬁nancial issues and counseling. The 󿬁nancial aid of󿬁ce does not need todevelop extensive programming on its own,however; 󿬁nancial literacy resources areplentiful on the web. Various governmentagencies and departments, as well as non-pro󿬁t organizations and community-basedorganizations offer these resources for free.This could be done by developing a websitewith hyperlinks, or by creating a publicationthat lists resources, web-links, and othersources of information. The availableresources run the gamut from basic resourceson money, credit, and the implications of borrowing, to utility in the development of web-based planning tools and downloadablebudgeting worksheets. While some resourcesare designed to be used in a formal educationsetting others provide effective self-education. nancial Literacy Counseling By David R .Smedley Student Aid Transcript | 27Volume22Number1  Interactive Education Beyond video content, the real strength of the web and computers in improving󿬁nancial literacy lies in interactive softwareon relevant topics, such as planning andmanaging budgets, banking credit and󿬁nancial transactions, etc. Some examplesinclude: • Microsoft Money• Moneydance Personal FinancialManager• Personal Budgeting• Quicken• Simple Home Money Management• U.S. Department of EducationCollege Savings Calculator (These are just examples of some availablesoftware; this list does not constituteendorsement by the author or NASFAA.)Many of these software programs offeronline budget worksheets, 󿬁nancialestimators, and other tools that may appealto a user who is technologically adept.Most students these days are heavyconsumers of telecommunicationshardware, any strategy that leverages thosemedia should provide useful. The Downturn Yields Updates Much has been written about the recent󿬁nancial crisis, notably Andrew RossSorkin. Too Big To Fail  (Viking, 2009),Sebastian Mallaby.  More Money Than God:Hedge Funds and the Making of a New Elite (Penguin Press, 2010), and BrittanyMcLean and Joe Nocera (Portfolio, 2010).  All The Devils Are Here: The Secret Historyof the Financial Crisis. While all of these are instructive andoffer insights into many aspects of the󿬁nancial services industry not otherwiseknown, little is said about the student loan industry, particularly private loans.Something that clearly explains how privateloans work, from funding to lending to theborrower to repayment, begs fordevelopment.Another outgrowth of the economicturmoil has been a renewed focus on therelationship between money managementand religious convictions. A number of recent books have addressed thisrelationship, and some denominations have Some Recommended Readings andResources on Financial Literacy The College Board. Financial Tip Sheets: 󿬁nancial-aid/tip-sheet  Federal Reserve: Fed 101: Federal Reserve Bank of San Francisco. FinancialLiteracy Resources:  NeighborWorks® America - NeighborWorks®Campaign for Home Ownership. AnnotatedBibliography of Financial Education Materials(2007).  Organization for Economic Cooperation andDevelopment. Financial Literacy: Analysis of Issues and Policies (OECD, 2005).Handbook to Consumer Protection Laws: American Institute of Certi󿬁ed PublicAccountants: www.360󿬁 Association of American Medical Colleges. MD2:Monetary Decisions for Medical Doctors: aamc.󿬁 International Gateway for Financial Education: www.󿬁 _1%2C00.html  US Department of the Treasury. Comptroller of the Currency: US Financial Literacy and EducationCommission: US Department of Labor Women’s Bureau.Wi$eUp: Financial Planning for Generation X&Y Women: US Securities and Exchange Commission. TheSEC’s Roadmap to Saving and Investing: Federal Deposit Insurance Corporation: U.S. Federal Trade Commission: Privacy Rights Clearinghouse: The author is developing a bibliographiclisting of resources for future publication. For a more complete listing of resources andrecommended readings, please contact him task forces and committees tostudy the relationship between moneymanagement and theological principles aswell as the consequences of debt for thosepursuing church vocations. One lendinginstitution with a tangential relationship toa denomination has won major nationalawards for its 󿬁nancial literacyprogramming, which is delivered withinindividual church organizations. Privacy and ConsumerProtection Remain Crucial No discussion of 󿬁nancial literacy iscomplete without covering issues of privacy and consumer protection.Knowing what a credit score is and how itaffects a consumer’s purchasing powershould be a critical component, as shouldguidance about avoiding identity theft.The U.S. Federal Trade Commission andthe Privacy Rights Clearinghouse provideexcellent resources on these topics. There Is Help Out There As schools consider the delivery of 󿬁nancial literacy resources and services,they do not necessarily need to developtheir own programming. Simply pointingto the plentiful innovative and engagingresources available is an excellentcomplement to any 󿬁nancial literacy effort.Using readily available resources saves theinstitution funds that can be targeted toother needs, while at the same timeleveraging educational resources,developed with tax dollars, to reach agreater audience. David R. Smedley is Associate Director ofCompliance and Training for The GeorgeWashington University Office of StudentFinancial Assistance. He may be reachedat dsmedley@gwmail.gwu.eduThe author wishes to acknowledge Dr.Carolyn Teich Adams, Temple Universityand Rev. Louise N. Johnson, TheLutheran Theological Seminary atPhiladelphia for discussions inpreparation of this article. 28 | Student Aid TranscriptEXPLORING APPROACHES TO FINANCIAL LITERACY COUNSELINGNational Association of Student Financial Aid Administrators T  USA Funds Consultants — Strategiesfor Managing Cohort Default Rates  The new three-year cohort default rate calculation will put your debt management and default prevention programs to the test. USA Funds® consultants can work with you to assessyour debt management, default prevention and student retention strategies and suggest enhancements that can improve results. To locate your USA Funds consultant, visit and select “Contact,” or call USA Funds at (800) 766-0084.
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