Earlier this summer, when Beth Kobliner, author of the bestseller Get a Financial Life, was interviewed on the Fox Business Network, she said something that struck me as a bit extreme. She said that college graduates—even those coming from the Ivy League—enter the workforce without understanding basic personal finance concepts, including how to rent an apartment.
Financial illiteracy is rampant, and they'll ask questions like, 'Gee, I want to rent an apartment. How do I get a loan to rent an apartment?' I'm like, 'You don't get a loan. You have to use your income. You have to work and use your income.' Basic, basic concepts they just don't know about money.
I didn't have the impression that college graduates are quite so misinformed. In fact, I thought that most of them understand how to build their credit, take out a lease, and save money. So I asked Kobliner to explain her comments. Does she really think college graduates are so clueless?
She said that a student at a prestigious school really did ask her how to get a loan to rent an apartment. "I don't think the majority of students are like this, but it was surprising to me that anyone super smart would think that," she says. While the financial crisis and tough job market have forced students to educate themselves about money, Kobliner says some students still think they can take out loans to cover living expenses until they can fund their lifestyles with their own earnings.
What do you think—is Kobliner right about the state of personal finance knowledge about recent college graduates? Do people in their early 20s still think they can live indefinitely off of credit card debt, or has the financial crisis showed them otherwise? I'd like to believe that most people have a general working knowledge of how to rent an apartment and live within their means, but maybe I'm being overly optimistic.
For more, read: "Beth Kobliner: Young People Have Opportunity."