[Feature] College Students Mentor Each Other About Money

In Spring 2014, Kasaundra Jones had to choose between paying her college tuition at St. Catherine University in St. Paul, Minnesota, and the payment on the new car she bought when she entered school the previous Fall: a 2013 Hyundai Elantra GLS that cost a little under $22,000.

“I have always paid a little over $1,000 a semester, until I hit a rough patch that resulted in me having to take a summer class to catch up to where I should be. Then I received a letter saying I owe $7,000 to the school,” says Jones.

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“Most of the money I had coming in was from my grandfather. He would send funds to pay my bills and a little extra. I had an on-campus job, but I didn’t know how to budget, and I wasn’t conservative with my money,” says Jones.

Jones’ bank accounts were either at zero or overdrawn. Getting collection and overdraft notices were commonplace. Her grandfather was also having a difficult time keeping up with her financial needs.

Knowing something had to change, Jones went to St. Catherine’s financial literacy office, which is home to the school’s money management program and its peer-to-peer money mentoring service. It was there that she was partnered with Tiana Danforth, a trained money mentor of the same age and in the same grade as Jones.

“She constantly gives me answers to things I am totally clueless on, and that my grandparents (her legal guardians) don’t even have the answer to,” says Jones.

“I helped Kasaundra understand that when a bill goes to a collections office, there will be interest and fees,” says Danforth. “In addition, I helped her work out a debt repayment plan and a spending plan. She worked out that she would borrow a lump sum from her grandfather and pay him back in monthly increments. She would save interest and avoid the constant late penalties she was receiving, saving everyone money in the long run. In addition, she would give up her new car and get something with smaller payments,” says Danforth.

Danforth is one of four money mentors in St. Catherine’s peer-to-peer money mentoring program. The students get training at the school’s financial literacy office and earn $10.75 an hour.

“When we were first hired for the position we were trained by Wells Fargo, a credit counselor from Lutheran Financial Services, and therapists from St. Kate’s counseling center. From there we have been continuing to learn on our own and have attended different informational meetings from financial institutions such as Thrivent,” says Danforth.

“Students respond well to sister students,” says Kathy Czech, assistant director of financial literacy and student employment at St. Catherine.

In fact, a study by the National Education Association found that when tutors were explicitly trained in the tutoring process they were far more effective, and the students they were tutoring experienced significant gains in achievement.

“Social support is crucial to the behavior change process. Peer-to-peer money mentors are a great vehicle for providing that support. This process will enable mentors to provide encouragement and helpful tips to assist fellow students in adopting more positive financial behaviors,” says Sara Johnson, Ph.D., co-president and CEO of Pro-Change Behavior Systems, Inc.

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Getting Down to Basics
“The peer mentors sit down and show students how to look up credit reports, and show them how to improve their credit score. They also go into classrooms and fill in for a teacher that may be gone for a day and teach money matters in class,” says Czech. “Last year, we had 72 one-on-one appointments and 16 workshops on the basics of money management and budgeting, credit basics, fraud protection, creative couponing, and more,” Czech adds.

“It’s also a good developmental program for students who are interested in counseling or going into financial planning. The student worker format also allows us to provide this service and juggle our budget,” says Czech.

Danforth says many of the questions she gets are about budgets. “I can give them plans and papers, but I try to give them something tangible. ‘You need to put this money into a separate savings account for emergencies … You need to put this money in this account to pay your bills.’ I try to make it real things so that they can see themselves living it out.”

Danforth also gets plenty of questions on student loans. “People need to understand them. Understand how to get them, how they work. In some cases students don’t need as many loans as they sign up for.”

Apples and Trees
Danforth credits her interest in money and helping people to the role modeling she received from her mother (an accounts payable specialist at Polar Semiconductor Inc.) and her grandmother when she was growing up in Eagan, Minnesota, – a suburb of St. Paul.

“My mother is very good with money; she’s frugal in that she knows how to live within her means. My grandmother always taught me to save 10 cents out of every dollar and all of my birthday money,” says Danforth.

“It was just the two of us – my mom and me living together. We get a little support from my dad, but mainly, we live on my Mom’s income. I knew I would have to pay for college myself. I hold three jobs and have taken out as many loans as I can. My friends say I’m cheap because I don’t spend much on clothes and things like that, but I learned early how to stick to a budget.”

Danforth understands how important it was for her to have good financial role models growing up. “A lot of people can’t go to their parents. They may not be there, or they may have poor money management skills. Students want to do better. I focus my mentoring on first-generation students of color. They want to do better than their parents,” she says.

More than Dollars and Cents
While students learn basic financial concepts from each other in peer-to-peer mentoring, the programs also serve a significant role in helping them cope with the stress and anxiety surrounding financial issues, particularly in this era of tremendous student debt loads.

The Federal Reserve says Americans are carrying more than a trillion dollars in student loan debt. Meanwhile, the Gallup-Purdue Index found that half of all black graduates reported taking on at least $25,000 or more to complete their undergraduate degrees between 2000 and 2014, compared to 34% of white graduates. Research also shows that financial strain leads to depression, anxiety, and ill health.

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“We’ve partnered with counseling psychology doctoral student Paolo M. Hernandez Barón to create a consultant role to train our peer team to provide them with tools to consider how financial situations affect stress, anxiety, health, and overall well-being,” says Morgan McMillan, assistant director of financial literacy at Indiana University.

“I’ve seen students come in agitated, angry, very stressed, or not understanding their student loans. The peer mentors do a phenomenal job and students leave the office no longer agitated and thanking them. We’ve worked hard to teach our mentors that they can’t treat everybody the same, and that they have to figure out each individual,” says St. Catherine’s Czech.

A Growing Movement
St. Catherine is one of a growing number of colleges and universities across the country offering peer-to-peer financial mentoring.

In 2009, The White House Initiative on HBCUs selected Morgan State to partner with the FDIC and offer its Money Smart financial education curriculum, using 16 peer ambassadors to train and engage students in financial literacy workshops.

Phil Schuman is the co-chair of the National Summit for Collegiate Financial Wellness, which has a stated mission “to unite educators with a passion for student financial wellness, regardless of their functional areas of work within higher education.”

In 2014, Schuman and Bryan Ashton, assistant director within the Student Wellness Center at The Ohio State University, overseeing financial education and outreach efforts, started the national summit due to “the rapid growth in people trying to put financial education programs into their institutions, and thought it would be good to share best practices,” says Schuman, also the director of financial literacy at Indiana University – one of the major players in the peer-to-peer money mentoring space.

“There aren’t hard numbers on how many schools are focusing on financial literacy and the peer-to-peer aspect, but in the first year of the conference we had 160 people from 110 institutions, and in our second year there were 210 people from 130 institutions. We’re very excited as we gear up for our third conference at Ohio State in June,” he adds.

That’s What Friends are For
If you have a child or loved one in college, you should encourage them to go to their student aid office and see if the school offers financial literacy support or has a peer-to-peer program. You can go to the National Summit for Collegiate Financial Wellness website at www.nscfw.org for more information.

Jones says the most important things she learned from Danforth about the importance of having a ‘financial buddy’ were:

The Need for a Support System: “Many people have issues with things like money that they never had to deal with until college. Having Tiana helped me take action and make positive changes in my behavior.”

Self-Esteem: “I do feel better about my financial situation and everything since Tiana has helped me. With this confidence I plan ahead and have gotten a jump on so many things.”

Better Outcomes: “It’s important to have a mentor/friend so that you’re not waiting along, not knowing what to do until that very minute when it’s too late to do anything about the situation.”