In several studies released last year, experts linked student overborrowing of having a lack financial literacy. Borrowers — both parents and students, alike — simply don’t understand what they are getting into debt-wise. This is speaking not only in terms of the amount of money that will need to be paid back but also how student loans work as well as the ramifications for default.
According to U. S. News and World Report, politicians, academics and students alike have all criticized the ballooning cost of college and its contribution to the existing mountain of outstanding student loan debt. But students furthermore suffer from a lack of financial literacy that will leaves them unable to navigate the complex maze of financial aid apps and loan options, further contributing to their money troubles even after they will leave school.
National student loan debt now tops $1. 1 trillion, with the average student accruing more than $26, 000 in debt upon graduating. And more than 1 / 2 of this outstanding debt is not getting repaid because borrowers are struggling financially. Many have said these types of statistics are the result of a higher education system that has become increasingly inaccessible and unaffordable. But it also stems from a much deeper issue: students don’t know what they are getting into when they take out loans, and they don’t know what their options are when they have to pay them back.
But when students aren’t aware of or even are confused by different pay back options, those who are struggling financially occasionally just stop paying. After nine months of doing so , they arrears on their loans, which can affect credit scores, lead to wage garnishments, and if left unresolved for long enough, can even take a bite out of the their Social Protection checks, according to Lauren Asher, leader of the Institute for College Gain access to and Success.
1 Canadian company is taking a creative approach to teaching financial literacy in order to students as early as high school. Ignov8 has launched a crowdfunding campaign to help obtain its game app — “ Freedom Quest” — off the ground. The company believes the app is ”
a new, innovative and related way to drastically improve the financial literacy knowledge of a whole generation. ”
The developers of Freedom Quest say that it is an experiential game in which players are place in real life situations while having fun, while offering a safe learning environment in order to students — i. e., simply no real money at stake — for a subject that often isn’ t taught at home, in high school or college. The interactive nature of the app appears like it has the potential for giving the materials greater stickiness than a standard pre-borrowing, loan counseling session might.
When I asked a company representative if college-bound or current students could benefit from the app, he mentioned he felt Freedom Quest may help students to:
• Learn about credit cards, credit scores and how they will affect your financial plans in the future;
• Learn and create a habit of paying off debt, which becomes very useful after graduation; and
• Learn the importance of saving for the future at any age.
Who knows if Freedom Quest is an answer to student overborrowing, yet it’ s certainly an innovative method that speaks to a generation that will grew up with earbuds in their hearing and touch screens at their fingertips. Given the ballooning student debt problem, new ways to tackle the issue should always be welcomed.
The post Financial Literacy Game App May help Students Avoid Debt appeared first on Affordable Schools Online .