Struggles with paying off mounting credit card debt, while still hoping to save extra cash for the future, are plaguing students across Westchester and Fairfield counties, according to a Patriot Bank survey.
In the survey, which polled students in Westchester, Fairfield and surrounding counties, the Stamford-headquartered bank found that 66 percent of college-level respondents had a credit card and more than 41 percent of those students are having a difficult time paying off that debt.
“They’re seeing that they may not be able to carry their debt, along with apartment living and having a car, as easily as they thought they would,” said Patriot Bank Executive Vice President Judith Corprew.
Seventy-nine percent of college-aged respondents said they have a savings account, while 12 percent said they have mutual fund investments and 42 percent have already initiated a retirement plan. For high school students who responded to the survey, 76 percent have a savings account and 43 percent have a college savings plan.
Of the college students surveyed, 60 percent said they regularly set aside savings, while 40 percent reported that they do not save at all. Those rates are slightly lower for students in high school, with 56.5 percent of respondents to the survey reporting that they save money for the future.
“What I see when I’m reading this (survey report) is that there are students coming out of their house and they may have been taught to put a little bit of money away, but they’re not totally prepared for what it means once you’ve signed your name or slid that card,” Corprew said. “You’re now responsible for that debt.”
Along with amassing credit card debt, school loans continue to be a concern for many college-aged students. Of the college survey group, 41 percent reported that they have taken out student loans.
When asked how long it would take to pay off their student debt after graduation, 16 percent of respondents said less than 5 years; 22 percent said between 6 to 10 years; 7 percent said from 11 to 19 years; and 11 percent said it would take more than 20 years to repay.
“It’s scary,” Corprew said. “You could be paying for (your student loans) almost like a mortgage for another 20 years.”
About 56 percent of high school students surveyed expect to apply for a student loan, while 13 percent were still undecided whether they would require such college loans. More than one-fifth of high schoolers expected they will not need to apply for a student loan, while 9 percent said that they did not have plans to attend college.
According to the consumer site NerdWallet, more than 1.4 million potentially eligible students and their families failed to fill out a Free Application for Federal Student Aid (FAFSA) application last year or did so incorrectly. The site also estimates that almost half, or 747,579, of those students would have been eligible for some of the available $2.7 billion in U.S. college financial aid left on the table last year.
“Students and parents need to educate themselves about FAFSA because the financial stakes are so high,” said Corprew, who heads community partnerships at Patriot Bank. “Providing young people with tools to make smart money management decisions is critical.”
Patriot Bank officials said the survey findings highlight the importance of teaching students fundamental financial skills like building a budget, understanding and controlling debt and planning for the future.
“Focusing more time and attention on teaching high school and college students to be financially literate is a building block to success and financial independence,” said Richard Muskus Jr., president of Patriot Bank. “Lacking these skills can be become a lifelong burden.”
Starting in spring of this year, Patriot Bank unveiled its latest series of financial literacy educational programs, which included dozens of events with students, military veterans and community and nonprofit groups aimed at improving financial literacy.
“We worked with veterans who went straight into the service out of high school without ever learning financial fundamentals, which put them at a disadvantage when it was time to re-enter the civilian world,” Muskus said.
The bank has also partnered with financial literacy firm Banzai Inc. to offer the company’s web-based educational curriculum to students in 15 schools in the neighboring New York and Connecticut counties. Patriot Bank, which has seven branches in Fairfield County and two in Westchester, has sponsored the program at no cost to students or school districts.
Banzai is an interactive online program that gives students a firsthand look at managing their own finances, providing them with real-life experiences without the risk of any real-life consequences.
The 21st-century teaching tool was distributed to schools chosen by their economic demographic in Stratford, Stamford, Norwalk, Bridgeport, Mount Vernon, Port Chester, White Plains and Yonkers.
In both Connecticut and New York, students are not required to take courses on personal finance prior to their graduation from high school.
“When we educate our young people by giving them this important financial know-how, we are empowering them to be our future leaders, creators of new businesses and an integral part of our nation’s economy,” said Mount Vernon Mayor Richard Thomas, who helped lead a financial literacy education program at Mount Vernon High School for more than 100 students.