Propagating Bad Financial Judgment Down the Family Tree
I have written in the past about the relentless march of the financially clueless. As far as I know, being clueless in matters of personal finance is not genetic. Nevertheless, we should never underestimate the ability of today’s parents to teach their children all of the wrong lessons about managing money.
Anyway, the first student (Rosie Young) was living off grandma’s trust fund. The other student – Kayleigh Salstrand – was not so lucky:
She was sitting next to another freshman, Kayleigh Salstrand, 18, from Lake Tahoe, Calif. The two had apparently not discussed money before; Ms. Young was surprised to learn that her friend was on financial aid.
Ms. Salstrand, the daughter of a bank employee and a stay-at-home mother, said she pays about $8,000 (she took out a loan to cover it); the rest is offset by a $39,000 grant from Sarah Lawrence and other aid.
“It is a little crazy that college should cost so much, but I am really happy with my experience here,” she said. “It is absurd, but it is what you have to do. Be in debt for the rest of your life.”
I highlighted my favorite parts of poor Kayleigh’s lament, which actually fit together in a sad way. The daughter of a bank employee apparently has been brought up to believe that a “happy experience” justifies being in debt for the rest of your life. So, what the heck, Kayleigh is financing her self-designed education with $8,000 in yearly loans, giving her an early start on a debt-driven life. Banks lend, people borrow, life in credit-addicted America goes on. Absurd or not, that’s what Kayleigh has been taught to think.
The other $39,000 of Kayleigh’s college costs is provided as a “grant” from the college. Guess who is funding those grants? That would be trust fund babies like Rosie Young, who are paying full tuition, with grandma’s money. Spreading the wealth comes in many forms – another questionable lesson learned. The reporter neglected to ask Rosie if it bothered her (or her grandmother) that some of her tuition money was being transferred to Kayleigh in the form of grants.
So if Rosie and Kayleigh have children, what will they be taught about managing money? I’m not optimistic.