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U of M teaches money basics: College students need the tools offered to counter trappings of credit

by David Flaum, The Commercial Appeal

Item: Students entering college are offered an average of 8 credit cards the first week of school.

Item: About 55 percent of college students get their first credit card during their first year of college and 83 percent of college students have at least one credit card.

Item: About 45 percent of college students are in credit card debt, the average being $3,066.

For those reasons (in studies presented to the U.S. Senate) and more, the University of Memphis opened a financial information and resource center this year for students, faculty and staff. And it will be back next year, said Julie Heath, chairman of the department of economics, who helped organize the once-a-week, four-hour program. "Ever since we've opened, we've had a good steady flow of people in," she said.

The Wednesday sessions in Wilder Hall, which run through April 7, draw six to 10 visitors, a number Heath said is enough to justify continuing and maybe expanding the program when school opens next fall. The center has enough volunteers signed up to go two days a week, but thelocation is the problem - the program is using space borrowed from the admissions department.

The visitors are mostly students with a variety of problems, said Mike Rebich, a credit counselor with Consumer Credit Counseling Service in Memphis who talked with several visitors last week. While staffers from area banks - like Trey Thornton, a loan officer with BancorpSouth in Collierville - man a brochure-filled table in the lobby of he building to act as greeters, Rebich and other volunteers provide counseling. "Some have education loans, some are working part time while going to school and are trying to manage their money," Rebich said of the students he's seen. "One was falling behind on his credit cards."

And there was Cheryl Burks, a graduate student and U of M contract employee.

"I'm looking to buy my first home and wanted to get someone to give me an idea of where to begin," Burks said after talking with Rebich. She discovered she needed to look closely at her credit report. One entry was for another person's credit card that she was authorized to use – the history of that card showed up on her credit report, although she hadn'tused the card in four years. "I didn't know that goes on your debt whether you use the card or not," Burks said. "Luckily they (the credit card holder) are paying the bill."

Burks's case is unusual for the center, Heath said. Most visitors are concerned about how they're going to pay their bills next month, she said.

Colleges should offer counseling, Heath said. "Universities make it easy for credit card offerers to come on campus," she said. "The tables are out there and they have the giveaways. We make it (going into debt) easy and tempting, so the least we can do is offer some tools to manage it correctly."

But programs like the one at U of M are rare and many of them involve "peer counseling" - students advising students. That's not a good idea, said Mark Oleson, director of the 18-year-old Financial Counseling Clinic at Iowa State University, funded mostly by student government. Students often have complex financial problems, so if a student does the counseling, not a financial professional, he often gives wrong advice or doesn't know what his fellow student needs, Oleson said.

Oleson, assistant professor in the ISU human development and family studies department, has a doctorate in family financial counseling. The clinic planner is an accredited financial counselor. Oleson is skeptical about using credit counselors in programs like the one at U of M. They often push debt-management programs to generate fees or raise money for the program and that's not usually what students need, he said.

That's not the case here, Rebich and Heath said. "There's no pressure here," Rebich said. "It's simply a tool to help out." Students have immediate financial issues and credit counselors are precisely the people most students need, Heath said. "If they need additional help, the counselors give them referrals," she said.

• Bankruptcy filings in Memphis for 2002: 28,207

• 75% of bankruptcies filed in Memphis are Chapter 13.

• 2002 - The Commercial Appeal publishes a story stating personal bankruptcy filings in West Tennessee have increased 22% over the prior 12 months.

• 2001 - The New York Times prints article proclaiming "Memphis is the Bankruptcy Capital of the Nation".

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