CSUN offers education on credit card management and financial planning

Christiaan Patterson

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Photo Illustration by: Christiaan Patterson/ Staff Reporter

At the age of 35, business finance major, Adrineh, who chose not to give her last name because of confidentiality reasons,  has already filed for Chapter 7 bankruptcy.

“We bought a house five or six years ago when the prices were high and we started renovating the house,” she said. “At the same time I stopped working full-time because I have chronic back issues.”

With the financial downturn in 2008, Adrineh said the new expenses and health issues could not have come at a more inconvenient time for her and her husband, Collin, who found themselves spending more money on credit card payments than they were generating from their income.

“At one time we were paying 25 (credit) cards a month. We had 25 bills to pay,” Adrineh said.

She added that her overwhelming bills made it impossible for them to have any semblance of a social life.

“We didn’t want to file bankruptcy but two or three months ago we ended up filing,” Adrineh said. “It was hard because you’re life changes suddenly. You have no support.”

Students across the country are finding themselves in similar circumstances due to debt from student loans, personal shopping or simply living outside their means.

According to a study done by Sallie Mae in 2009, the average debt of a graduating college senior was more than $4,000.

Of the students surveyed, 84 percent indicated they needed more education on financial management topics.

Gayane Jerome, developer for CSUN’s financial literacy program, said when it comes to credit cards, students are definitely overspending based on the pilot survey they sent out earlier this year.

Jerome said the first step in making responsible financial decisions would be differentiating needs and wants.

“Is a car a need? Yes. But is a luxury car? No. That’s the first step to making them understand,” she said. “That will make it easier to set up their goals.”

One of the main contributors to students’ financial downfall comes in a very small package. For students, credit cards can often be seen as the ticket to building a healthy credit score, when used responsibly. If not used properly, credit cards can detonate your credit score for years and even lead to bankruptcy.

An investigation done by the Huffington Post last October revealed that before the latest legislation enacted by Congress went into effect, credit card companies were able to make money off student debt. At the time, contracts stated colleges were to provide the contact information of all students to the banks and some even gave universities extra money if students carried over a balance every month.

Colleges and credit card companies are under contract to provide funding for the school in exchange for advertising to students.

Art Madera, management major, learned how to become a responsible credit card user by making all the wrong decisions.

Madera said he received a student credit card at the age of 18, which had a limit of $500. The card was maxed out almost as soon as it was in hand. From that first card, Madera had several other offers for more cards. After a few years, he had about ten, some with $10,000 limits. There was no thought of paying them back right away since he needed the cash immediately.

“I had no education on credit cards. I was dumb,” Madera said. “Some students are responsible but most aren’t. I didn’t know how I was gonna pay it back but I wanted it. By only making the minimum payments it will just bury you in debt.”

Eleven years later, Madera has only paid off half the cards he owes by using a debt consolidation service, which he said was not a huge help. At its peak, his maximum debt was well over $10,000. With all the charges he rang up over the years, Madera’s credit score is very low. Now, every time he uses a card, he pays it off right away.

“Years ago, credit card companies gave ridiculous limits to students,” Madera said. “It was so easy. Why were these companies giving that amount to such young people? I even thought they were stupid.”

He said he believes this kind of debt is both the consumer and credit card companies’ fault. It wasn’t until last year when he took an economics class that he finally saw how these credit cards truly work.

One course offered at CSUN that specifically centers on educating students in financial planning is taught by Dr. Miguel Fernandez, family and consumer sciences professor.

Fernandez said the very idea of considering bankruptcy is an indicator that you are over extended and there are some significant problems that need to be addressed.

“It would impact your future. Sometimes employers will screen and run a credit check on individuals to pick up on their character by looking at their expenditures. If you already file for bankruptcy before graduation, the type of employers and the type of jobs you are going to get are a lot less,” Fernandez said.

Along with offering courses in financial planning and education, CSUN also offers financial literacy workshops for students.

Jerome said the program has launched a CashCourse online that goes into budgeting, overspending, and credit card management in addition to other tips for student finances.

Also in the works is a series of workshops held on campus in April that will include sessions on credit cards, identity theft, budgeting, credit scores and credit reports and eating healthy on a budget.

“We are collaborating with the counseling center to do another workshop on your relationship with your money. There’s a lot more to your spending than just ‘I’m going to go spend.’ Another angle(we are) looking at is the peer pressures of spending. One person can afford and one can’t, yet they are doing the same thing,” Jerome said.

Jerome said the program is especially directed to the freshmen class.

“Seventy-six percent have not taken a personal finance class,” Jerome said. “Hopefully we will catch students before they get to that point.”