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If Only I Had Known...A Tale of Debt Dragons and the Heroes that Beat it

A day spent observing seniors in a high school test-run, the Debt Dragon tool helps better understand what their student debt totals would be based on their choices in schools, lifestyles and scholarships was eye-opening. Realizing now what I didn't know then was a bit frustrating, but seeing how Debt Dragon could help countless others in my shoes a few years earlier makes me proud of the credit unions that are innovativing with this tool

When you’re young, vivid daydreams can occupy all the space in your head. Yet when you grow up, the clouds you once soared can seem farther away. The princess you saved from the towering castle? Just an imaginary past. Your shiny armor is now rusted in the effort to fight off a scaly financial dragon. Had I been exposed to better tools when I made my education choices, my journey toward the future I wanted and the financial reality I could live with would have been so much easier. 

Debt makes everything real

According to Filene’s research, 7 in 10 students graduating from college have student loan debt, averaging over $30,000. Seventy-seven percent of students that graduate college under the age of 40 regret not planning out how to manage their student loan debt. Meanwhile, 50% don’t even know what they borrowed, and 28% didn’t realize they even had student loans.

These numbers are alarming; credit unions should be concerned about their members who may soon face the burden of student debt. With support and cooperation from Credit Union Student Choice, Filene recently had the opportunity to test its Debt Dragon prototype at a Wisconsin high school. The theory of this prototype tool is that with it, students and family members can avoid insurmountable burdens of debt by better understanding the impacts of debt before they take it on.

Seeing it in action showed me how important the concept is

As I walked among the 20 students in Room 128 of Jefferson High School that day, tuition costs over $50,000 sprung up on computer monitors like wildfire.

I heard one student exclaim, “My total is way more than yours! Why? Let me see what you did!”

His friend whipped out his calculator to help the panic-stricken classmate, the student quietly added, “I may have to change up what my plans are, I didn’t know housing would cost that much.”

As a senior in college, it seems like yesterday I was in their shoes, walking the same crowded hallways. In the fall semester of my senior year of high school, I remember looking at what seemed to be a hundred websites to decide which course of action to take depending on what school I could afford. I wanted to go to a small, private school, I knew that much. Not a cheap endeavor as many of you know.

For me, there was nothing more gut-wrenching than figuring out I’d have over $160,000 in student loan debt to pay off once it was all said and done if I had attended my dream school. Even more if I wanted a graduate degree, or got married to someone who also had thousands of dollars in student debt. That debt dragon would have been unconquerable.

If I could’ve used Debt Dragon four years ago, there would’ve been such a burden lifted off my shoulders. A couple clicks would’ve given me instant results, showing me how each decision I made could affect my long-term debt, before, during and after college.

The program would have given me actionable steps to reduce that unnerving number. Whether it was housing rates, books, or scholarships, Debt Dragon could equate it all down to the last dollar. My journey would’ve been less stressful and so much more convenient. Without Debt Dragon in my hip pocket at the time, I just happened to get lucky and find my way into a situation that worked out. Many students today don't end up that way. But those exposed to Debt Dragon sure have a better chance now.

These students didn't realize how lucky they were in that class

Across the board, every student found Debt Dragon to be a valuable tool in choosing not only a college, but a way to start piecing together facets of financial literacy (whether they knew it or not).

One student said, “Oh my God, my number just doubled” when referring to what they thought they’d pay for that college’s tuition. In this instance I realized the impact that Debt Dragon could have on all credit union members who implement it in their communities. Many Americans still need better resources and targeted education to help them understand the most important issues affecting their finances, and I witnessed Debt Dragon to be the solution.

A TIME article by Roger W. Ferguson Jr., President and CEO of TIAA-CREF, states that people who are not exposed to any financial literacy outlets tend to borrow more, accumulate less wealth, and pay more in fees related to financial products. Moreover, these same people are less likely to invest or know the terms of their mortgages or loans, and more likely to have trouble with debt.

Seeing students respond to numbers is what it's all about

I heard from many that this program is what put everything into perspective for them; that without the Debt Dragon session, they would be clueless. Not only that, but they liked that Debt Dragon:

  • was easy to maneuver,
  • was accurate,
  • equated almost every aspect of college debt, and
  • had tips at the end on how to decrease that debt.

With this program, Filene hopes that students and their families won’t have to face a debt dragon without any insight. This is to get a conversation started in younger generations--discussing matters of student-loan debt even before scheduling a college tour. The more educated younger credit union members can be, the more educated choices they will make in the future.

Any improvement in financial literacy in your credit union’s community will have a profound impact on your members and their ability to provide for their future while avoiding the pitfalls of debt. Have Debt Dragon be your next big move. Check it out for yourself and dream of your community with fewer debt dragons to conquer--because it's possible.

Contact Marnie Gerkhardt, Innovation Manager, about this initiative or schedule a call with her via the magic of calendly.