Reading, writing & personal finance

By Mary Jo Feldstein
Of the Post-Dispatch
05/22/2004

Thousands of area schoolchildren are getting lessons on personal finance from credit card company executives - a program some experts described as ironic and outrageous. Others say the lessons teach kids early about money and financial responsibility.

Through a local partnership with the nonprofit Junior Achievement organization, employees at MasterCard International Inc. are teaching more than 5,000 grade school students from Cahokia to Lake Saint Louis about economics, jobs and purchasing power.

Junior Achievement and school organizers say the events show how public education can benefit from the good will of Corporate America.

But some experts say schools should not fill class time with credit card company employees lecturing about money management.

"It just smacks of having the fox guard the hen house," said Craig Israelsen, an associate professor of consumer and family economics at the University of Missouri at Columbia. "MasterCard says, 'Long-term we're just happy to put the word MasterCard in a kid's memory bank.'"

MasterCard senior vice president Rob Reeg spent a recent Thursday talking about occupations, salaries and education to eighth-graders at Thurgood Marshall Academy, a charter school at 4300 Goodfellow Boulevard.

Then Reeg and a fellow MasterCard employee showed advertisements for cars and apartments to explain how much of adults' income is spent on the basics.

Reeg, also a Junior Achievement board member, was one of about 125 MasterCard employees who taught May 13 as part of the "JA in a Day." This is the first year for all-day sessions, an effort to get more MasterCard employees involved in Junior Achievement.

In addition to the executives, 140 MasterCard programmers, analysts, accountants and other workers are teaching children in hour-long lessons over several weeks, a program Junior Achievement and MasterCard established years ago.

This year's effort by MasterCard, which has its main area offices in O'Fallon, Mo., was the largest volunteer initiative local Junior Achievement officials have ever seen.

MasterCard employees make up only a portion of Junior Achievement's 4,000 area volunteers. The local chapter, Junior Achievement of Mississippi Valley Inc., is the fifth-largest in the country.

Reeg and his colleague, Heather Cedar, both clad in navy blue MasterCard polo shirts, began the day talking about their jobs. Cedar, director of manuals and publications, said her job "is to make sure that people are using MasterCard for their payments rather than ..."

"Cash or checks," chimed in one student.

"Yes," Cedar said.

Despite the plug, MasterCard and Junior Achievement say the program is not self-serving for the company. The lessons are created by Junior Achievement and most never mention credit.

"This is not a curriculum about telling people how to use credit cards; it's a curriculum telling people how to use money," MasterCard spokeswoman Linda Locke said.

School partnerships

Several experts, however, said the partnership shows what happens when a materialistic culture meets a money-starved education system.

The direct buying power of kids is expected to exceed $51 billion by 2006, making them a coveted demographic for businesses. At the same time, schools are being asked to provide more knowledge with fewer resources.

The convergence leads to more partnerships between schools and corporations, some of which blur the line between educating and marketing, said Lynne Schrum, a professor of education at the University of Utah.

She compared the MasterCard partnership to having a Coca-Cola banner on a school's basketball hoop or math textbooks that use McDonald's in word problems.

"I'm suitably outraged," Schrum said. "These things do make an impact on children, and if you stack them on top of each other, it's just an overwhelming message."

Taedra Rutlin, the school counselor who helped organize MasterCard's visit to Thurgood Marshall, was excited that any company wanted to teach her students about money management.

Many students at Thurgood Marshall come from low-income families who might not know how to teach their children about credit cards, interest rates or even checking accounts, she said.

At Huffman Elementary School in Cahokia, reading and math specialist Sue Henderson has struggled to find parents or other community members willing to volunteer.

Since the teaching materials were created by Junior Achievement, Henderson said, "It didn't cross my mind that there was another agenda here."

Reeg said he got involved to teach youngsters about the value of education and how it contributes to financial success, not to talk about credit cards.

"We want people to be successful in their financial lives," Reeg said. "If someone has to declare bankruptcy, that doesn't help the banks or MasterCard."

The credit trap

To personal finance expert Suze Orman, the problem is MasterCard's not talking about credit.

"They should be teaching about the horrors of credit card debt," said Orman, an author and radio show host.

Credit card companies might not make their money off bankruptcies, she said, but they profit from the millions of Americans who make minimum payments each month and get crushed by double-digit interest rates. Orman said it's ironic that an industry that profits from people who can't pay their bills is teaching children how to manage money.

Debt is catching up to some families. More than one-third of individuals who owe more than $10,000 on their credit cards live in households with incomes less than $50,000, according to research by the VIP Forum, a research firm based in Washington.

And younger cardholders are more likely to charge what they can't afford, said Amar Cheema, an assistant professor of marketing at Washington University's Olin School of Business.

Growing numbers of debt-ridden college students prompted many schools to restrict the number of credit card companies on their campuses. Some are banning them altogether.

But Cheema said it's the overuse of credit cards that makes the presentations by MasterCard and Junior Achievement so important.

"It would be unrealistic to assume that students in today's schools do not know about credit cards," Cheema said. "It's important for them to learn how to use this spending tool. Then they might actually stop and think about their means."

And, he said, MasterCard also benefits.

"If MasterCard does this, then maybe they'll be more likely to become MasterCard customers instead of Visa or American Express customers," Cheema said.

 

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