Students learn finance

Dundalk High School youngsters learn banking by operating a branch of local credit union in cafeteria

October 17, 2006|By Tyeesha Dixon | Tyeesha Dixon,Sun reporter

Dundalk High School junior Kayla Hylock opened a savings account during her lunch period two weeks ago. And she didn't have to leave school to do it.

Dundalk High and First Financial Federal Credit Union of Maryland have teamed up to start what they and trade association officials call the first student-operated credit union in the Baltimore area. The Owl Branch opened Oct. 3 for students and staff in the cafeteria.

It's a way for Dundalk High to address the low financial literacy of young people, something other schools are doing by adding personal finance courses. Almost 6,000 high school seniors averaged 52 percent on a national personal finance quiz in December.

The quiz was part of a survey that covered students in 37 states at 305 schools by the Jump$tart Coalition for Personal Financial Literacy.

"For our kids, the opportunity's critical for them," said Jason Bellamy, Dundalk High's business education department chairman and adviser for the Owl Branch, which was named after the school mascot.

"Most of them don't have bank accounts. They go to check-cashing places and go through their parents."

The program's goal is to help students better manage their money and offer professional financial experience for those running the branch. Keeping students debt-free is a goal.

With a minimum deposit of $5, students and staff can open checking and savings accounts. The branch does not offer loans.

"We just want to teach the kids of Dundalk High some financial literacy," said Robert Windsor, president of First Financial. "A lot of people don't know how to save."

Windsor said he is confident the branch will be successful because other U.S. schools have adopted similar programs. He said First Financial plans to open another school branch next year.

One expert said programs such as Dundalk's provide a way for students to learn about money by emphasizing saving, rather than spending or borrowing.

"There are only benefits because those credit unions will teach students about banking without aggressively marketing debt that will get them in trouble later," said Stephen Brobeck, executive director of the Consumer Federation of America.

"Unfortunately, so many young people start off their banking experience with a credit card, which they're not taught how to use properly, and they end up with unaffordable debt."

Brobeck said credit unions - unlike banks - can offer student-operated branches because they are nonprofit. He said the student-run programs are beneficial because they offer real-world experience.

"It would be controversial for a for-profit to have that kind of association with a state institution like a school," he said.

"But what we think is most useful is actual banking."

In Wisconsin, more than 50 schools have student-operated credit union branches, said Christine Olson, director of communications for the Wisconsin Credit Union League, a trade association of about 270 credit unions.

Olson said student-run branches in Wisconsin began to flourish about four years ago as part of a state initiative to increase financial literacy. One high-school student branch employee, who opened an individual retirement account in high school, recently appeared in a video clip for the league.

"It's amazing how fast they learn," Olson said. "We forget that young people want to be more independent."

First Financial's Windsor said the Dundalk program also offers job options for student workers who will be trained bank tellers at the end of the school year.

"We're hoping that after graduation they may apply for employment with First Financial," Windsor said.

First Financial, which is based in Lutherville, has eight branches in the Baltimore area. The credit union started in 1953 as TABCO Federal Credit Union. Because the Owl Branch is part of First Financial, the students' deposits are federally insured as they would be at a full branch.

Five seniors run the student branch as part of a graded business internship honors course, said Bellamy, their adviser. The students are all in the Dundalk High's career marketing program.

Student tellers say they put in many hours and sacrifice lunch breaks, but are enjoying the experience.

"It's actually been great," said teller Amanda Sampson, 17. "It's better than being in the classroom."

Despite the students' training from bank officials, some of their peers have expressed concerns about security and confidentiality.

But Windsor said the program was designed to keep customer information safe. Student tellers have no access to the credit union's computer system, and all banking information is logged at the nearest full branch, on Pulaski Highway.

Students and teachers agree that the program has worked well.

In the first two days, Bellamy said, the branch opened about 30 accounts. One faculty member said having a bank at school offers not only a good learning experience for students, but also is convenient.

"I think this is an amazing opportunity for students," said Melissa Holicky, counseling department chairwoman, who set up a Christmas Club account at the Owl branch two weeks ago. "Plus, I think the benefit for me is nice."

Hylock, the junior who opened a savings account, had a savings account with Wachovia, but closed it because she likes the convenience of the school branch and because she can have a checking account before turning 18.

"It's just easier because it's at school," Hylock said.

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