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personal finance for college students
Idaysy Briones, left, gets help filling out a federal financial aid form from fellow Valencia College student and “financial learning ambassador,” Karina Concepción. Credit: Timothy Pratt

KISSIMEE, Fla. — Idaysy Briones sat next to Karina Concepción in a room full of 19- and 20-year-olds, somehow able to concentrate on the federal financial aid form on the computer screen in front of her as cell phones buzzed and talk turned to weekend plans, in English and Spanish.

For Briones, the first in her household to go to college, filling out the federal government’s form that determines student eligibility for grants and other financial help took about an hour with Concepción’s help, plus several calls home for additional information, en español.

But it was easier here than if she had tried to do it herself or with her parents — who helped her fill out the form the year before, her first at Valencia — or a financial aid advisor, she said. “My parents would ask me, ‘You don’t know the answer to this?’” That was more stressful, she said.

Concepción is one of the “financial learning ambassadors” at Valencia College in central Florida — students who help fellow students understand the labyrinthine details of paying for college and balancing other life expenses, which many are alarmingly ill-equipped to do.

The idea is simple: “Students would rather listen to someone who’s in their own shoes or in a similar situation tell them about their finances,” said Elizabeth Coogan, senior advisor in the federal student aid office of the U.S. Department of Education.

Related: Tangled process of applying for financial aid deepens college affordability crisis

They also need a lot of help. In a national “financial wellness” survey conducted by Ohio State University, nearly a third of 18,795 college students could correctly answer only zero, one or two out of five financial questions, including ones on take-home pay and credit scores. A separate study by the loan company Sallie Mae found that nearly a quarter of students don’t pay bills on time, nearly half set aside no savings, 40 percent spend more than they have, more than a third don’t read their credit card reports and more than a third don’t pay off their full credit card balance every month.

”Students would rather listen to someone who’s in their own shoes or in a similar situation tell them about their finances.”

Nearly 60 percent of students don’t know how long it will take to pay off their loans, more than a third don’t know the interest rates they’re paying, and nearly 60 percent regret taking out as many loans as they did, a survey of graduates by Citizens Bank found.

In yet another survey, by the education technology company Everfi, students reported being less knowledgeable about how to manage money than almost anything else they’re called upon to do in college.

All of this comes at a time when spiraling tuition has driven 41 million people to borrow money for their educations — and when one in four are behind on their repayments or in default, according to the federal Consumer Financial Protection Bureau.

“Students are making life-altering financial decisions, with minimum understanding, at a time of maximum distraction,” said Jeff Webster, assistant vice president of research and analytical services at a Texas-based student-loan guarantor called TG.

Not surprisingly, 72 percent of students feel stressed about their finances, and nearly 60 percent worry about having enough money to pay for school, the Ohio State survey reported.

Related: Been accepted into college? Now it’s time to start negotiating for a better price

As college financial aid officers and other administrators seek ways to recruit and retain students  amid these obstacles, the idea of having students help each other solve financial  problems has been catching on.

Nearly a quarter of students don’t pay bills on time, nearly half set aside no savings, and 40 percent spend more than they have.

“Interest is huge” in the concept, said Bryan Ashton, assistant director of student life at Ohio State, which has its own peer-to-peer program called Scarlet and Gray Financial Coaching.

The number of such initiatives has grown to about 50 campuses, he said, and his office fields about 100 inquiries a year about the approach.

The annual National Summit on Collegiate Financial Wellness will include a session on peer-to-peer counseling programs for the first time this year. And a handbook on financial literacy for community college students published by the Federal Reserve Bank of Boston also highlighted the model.

Many students seem to like it.

personal finance for college students
Lance McNeill, a “financial learning ambassador” at Valencia College, talks to fellow students about how to handle their personal finances. Credit: Timothy Pratt

On a spring day late in the semester, the bright sky and slight breeze seemed to invite anything but talk of interest rates and loans at Valencia College’s Osceola campus here. But 45 students filed into an auditorium to listen to Cristian Rodríguez and Lance McNeill, two of the college’s 19 financial ambassadors, talk about how to manage their money.

Related: Government data single out schools where low-income students fare worst

In a presentation accompanied by slides and video, the two began by asking their audience to build a foundation for thinking about money by considering the difference between what they want and what they need.

Rodríguez talked about the “neurological effects of shopping.” To get the point across, he asked: “How many of you have tried cocaine?” Perhaps because the room was mostly filled with students, a few hands went up. The “ambassador” explained how dopamine works on the brain, comparing how cocaine and shopping both can trigger it.

He and McNeill also explained how interest rates work for loans and credit cards. Heads nodded.

After about 45 minutes, the students filed out and collected the free pizza that had helped to lure as many of them to the event as possible.

“Hearing savings talks from a younger voice is different” — and easier to listen to — said one, Angelica Bustios. She gets enough federal aid to cover the associate’s degree she’s seeking, she said, but wants to transfer after that to the University of Central Florida, which will cost more.

“I need to learn to save … and not go for my wants instead of my needs,” Bustios said.

Financial literacy experts said peer-to-peer counseling offers an alternative to the way many young people learn about complex financial matters: online.

Related: Some investors, universities see a return in fronting students’ tuition

“Having in-person advising is key,” said Rory O’Sullivan, deputy director of Young Invincibles, a Washington, D.C.-based policy and youth-advocacy organization.  “You’re not going to find this kind of information in 140 characters.”

“Students are making life-altering financial decisions, with minimum understanding, at a time of maximum distraction.”

The programs help universities and colleges, too. For one, schools are looking to  lower loan default rates that reflect poorly on them, and students’ increased financial knowledge may help with this issue. The peer counselors are also cheaper than hiring full-time professional advisors. Some programs, like the one at Ohio State, are run on a volunteer basis; at Valencia, the financial ambassadors are paid from federal work-study money. And the University of South Florida compensates its student counselors up to $11 an hour.

“It’s making the best of limited resources,” Coogan said.

Whether or not this works is still unclear. Since the idea is still new, several schools said they haven’t yet gathered information on outcomes and data is scarce.

A survey of students before and after their peer counseling sessions at Ohio State showed “an increase in awareness of their current financial situation, an awareness of debt, and that stress might also go up,” said Ashton.

At Valencia, the student loan default rate has dropped from 20.3 percent in 2011, when the financial ambassadors began their work, to 14.9 percent in 2013, the most recent year for which figures are available, said Ilia Cordero, assistant director of financial aid services. It’s not possible to say whether that improvement is entirely due to the program, Cordero said.

“We’re challenged by a lack of hard data on what is working” with financial literacy programs, Coogan said.

But she said she still considers the idea among “best practices.”

Back at Valencia, Idaysy Briones offered her own take on the value of getting help from her fellow student.

“She was more calm, and you feel more comfortable because she knows what you’re going through,” Briones said. “Also, she’s Latino. If I didn’t know how to say something, I could say it in Spanish.”

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