Survey: Americans financially illiterate

A quarter of Americans think their debt is "unmanageable," according to a Harvard Business School survey, and experts are suggesting financial illiteracy may be the cause of many students' money woes.

The February survey of 1,000 people by Harvard, Dartmouth College professors and TNS, a marketing and research survey company, found that 11 percent of those surveyed did not even know if they had a "large" debt.

"In the past, you could not survive in this country without being able to read or write," Dartmouth College economics professor Annamaria Lusardi said. "In today's world, if you cannot read or write financially, you will not succeed."

She said the survey did not have enough participants to provide data on the differences in financial literacy by age, but said young people are among the most "illiterate."

She said college students can solve the problem through further education.

"Students have a great opportunity," Lusardi said, suggesting all students should take economics and finance courses and "exploit the opportunities" to learn while in college.

Greg Johnson, executive director of Bottom Line, a Boston-based organization that assists students from low-income families with college admission and graduation issues, said last year the group started a one-day financial literacy program for their students.

Johnson said just one mistake could mean dropping out of college for students lacking financial knowledge. Students need to educate themselves about loans and credit cards, he said.

"Often there is no room for error, especially for students with parents who are unable to bail them out financially," he said.

Johnson said Bottom Line often advises students to avoid colleges with high tuition costs because of the heavy debt students can have after graduation.

The responsibility for college students' debt should be placed on students and the credit companies that take advantage of them, said Americans for Fairness in Lending student representative Matthew Goldman in an e-mail.

Goldman, a Boston University College of Arts and Sciences junior, said loan companies "love to prey" on college students and said students should be aware of what could leave them with large amounts of debt. Goldman said third-party lenders "attempt to wiggle their way into the hearts and back pockets of vulnerable students," with promotions and give-aways.

Though lender education is important, federal regulation of the lending industry is necessary for the economy's well-being, he said.

"Self-regulation simply does not work," Goldman said. "In fact, it is detrimental to the American dream."