Students fare poorly on financial knowledge test

October 31, 1993|By Knight-Ridder News Service

Like the rest of society, U.S. college students have a lot to learn about financial basics, says the Consumer Federation of America.

When 2,010 students -- full-time juniors and seniors -- were given a 38-question multiple-choice test dealing with consumer basics, the average score was only 51 percent. A person should score about 25 percent simply by guessing.

In the test, only 22 percent knew that the "annual percentage rate" was the best indicator for measuring the cost of a loan, and only 33 percent knew that credit-card interest rates were set by banks and other lending institutions -- not by Visa, MasterCard or the federal government.

In general, test scores for different groups -- such as men vs. women, business majors vs. liberal arts majors -- did not differ significantly.

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A life-threatening illness can destroy a family's finances, as well as wreak emotional havoc.

To help relieve some of the financial burden, a growing number of life insurance companies are allowing terminally ill policyholders to collect part of their death benefits early -- while they are still alive.

This so-called "accelerated benefit" is being offered by more than 150 insurers. To help spread the word, the American Council of Life Insurance has published a free booklet called "What You Need to Know About Accelerated Benefits."

To order a copy, write to 1001 Pennsylvania Ave., N.W., Washington, D.C. 20002-2599, or call (800) 942-4242.

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