Teach your students the basics of banking
Kevin Struckhoff, TG Assistant Vice President for Relationship Management and Consulting
If you offer your students financial literacy training, here’s a topic to add to your curriculum: How To Use Banks and Credit Unions. According to a 2011 Federal Deposit Insurance Corporation survey, close to half of all lower-income households are unbanked or underbanked, meaning they either don’t have a bank account or have an account but also rely on alternative financial services, like check cashing and payday lenders.
It’s likely that some of your students don’t use a bank or credit union either. Why should banking matter to students?
“Banks and credit unions give folks access to the mainstream financial systems in our country,” said Jordana Barton, a senior advisor with the Federal Reserve Bank of Dallas. “Banks are essential to people who want to partake in our society in a fuller way.”
Among other things, banks and credit unions can help students establish a credit history, they’ll need to buy a car or start a business. Banks can save students cash in terms of lower interest rates and fees. And using banks or credit unions makes students less likely to turn to predatory lenders like pawn shops, which can trap consumers with hard-to-repay loans.
“Demystifying how banks operate can lead more students to open a checking or savings account,” said Barton.
Barton, who was born in the colonias along the Texas-Mexico border, works in community development, but she spent the early part of her career as a student financial aid counselor. Her background has spurred her to look for ways to empower lower-income families and students.
“To narrow the gap between rich and poor, we have to get more students engaged in programs like college and banking,” said Barton.
Barton noted that many colleges are requiring students complete one or more classes on managing money and that banking fits under that umbrella. She also described various financial awareness campaigns from across the country, including “Bank On,” that might offer support to colleges.
“Bank On’s main purpose is to sign people up who aren’t banked,” said Barton. “Participating banks offer affordable, entry-level services to interested folks.These banks also tend to be flexible in the forms of identification they accept, including consular IDs.”
Investing in themselves
Studies show that unbanked students and families may feel intimidated by the large national chains or don’t believe they have enough money to start an account. Barton said that mentors on campus can help students become more comfortable with the idea of banking.
Based on her own experience, Barton noted that personal testimony has the most power to motivate students to use banks. “Stories of success with a checking or savings account demystify things for students and their families.”
However, there may be other roadblocks to bank use. Many first-generation students feel indebted to their families and offer their parents any money they acquire, including fainancial aid. “What you have to do is show these students that by banking their financial aid, they are investing in themselves,” said Barton.
The challenge, according to Barton, is to make clear to students that by starting a bank account they position themselves to help their families down the road. “Explaining bank benefits this way can get students and families on board.”
Kevin Struckhoff is TG Assistant Vice President for Relationship Management and Consulting, serving schools in KASFAA. You can reach Kevin at (800) 252-9743, ext. 6701, or by email at email@example.com. Additional information about TG can be found online at www.TG.org.