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Comment – Changes to student loan terms damages financial education for young people

 

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This week the Parliament debated the UK government’s decision to retrospectively change the terms of student loan repayments.

Martin Lewis OBE, founder of MoneySavingExpert.com, urged students, graduates and parents to get in touch with their MP to ask them to attend and show their opposition to the retrospective changes. As he and many MPs have pointed out, a commercial firm would not be able make such alterations to a financial product. See a sunny post-debate video from Martin, here.

First time undergraduates in England who started university after September 2012 repay student loans at a rate of 9% of everything earned above £21,000 a year after they leave – and instead of rising with inflation the threshold has been frozen. According to the Government’s own figures this will leave more than two million graduates paying £306 more each year by 2020-21 if they earn over £21,000.

 

MyBnk Comment

“Our financial education charity believes such a move damages efforts to teach young people how to manage money and make informed decisions.

In Sixth Form classrooms across the UK, we told young people the terms of repayment and this played a role in their eventual choice to take a student loan.

We do not blame or point fingers, we teach young people how to navigate the system and the government has done great work by making money lessons compulsory in the secondary national curriculum. But by changing the terms, it makes our job harder, harms trust and could dissuade many from engaging with products and contracts, i.e. cause financial exclusion.

It is a retrograde step at a time when the financial industry is trying to rebuild trust in products and the state offers welcome new initiatives like auto-enrolment and NISAs. These mixed messages are not what young people need to make informed choices. ”

Guy Rigden, CEO MyBnk.

 

Our work

MyBnk’s specialised financial education programme, Uni Dosh, shows Sixth Formers how to afford university life and has armed thousands with money skills to prevent debt, and dropout – covering tuition fees, bursaries, independent living and banking. We also look at why young people want to go, the motivations, pay offs and pitfalls.

Student finance and the like is not compulsory on the National Curriculum and many teachers lack the expertise to teach it. A lot of the young people we meet are even unsure if university is for them and costs and confusion on fees are abound. Through our work, stories and outcomes like this happen.

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Report calls for financial education for young care leavers

 

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A report by the Children’s Society has concluded that UK local authorities should provide financial education for young care leavers.

The Cost of Being Care-Free study examined the scale and quality of money lessons for young people leaving the care system. Participants of our Money Works sessions took part in a focus group, we supplied case studies of how our specialised sessions helped them transition to independent living and contributed to a special Westminster roundtable event.

MyBnk works in partnership with scores of UK Leaving Care Units and won the Leaving Care Award from Children & Young People Now magazine.


Findings include:

  • care report46% of local authorities do not provide money lessons. 28% use workshops, such as those provided by MyBnk. 12% says it offers 1-2-1 help.
  • 87% of care leavers say they can’t manage money, open bank accounts or deal with bills due to poor support.
  • Young people tend to remain stuck in low paid jobs as training or further education risks regular income.
  • A recommendation was made that care leavers should be exempt from council tax, one of the main debt drivers. North Somerset Council has recently done just this.
  • Just 14% appeal any benefit sanction. 2,000 were effected last year.

We welcome these insights and are deepening our work in this vital area. Want to bring money and business to life for your young young people? Get in touch at info@mybnk.org.

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MyBnk on Share Radio

 

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MyBnk CEO Guy Rigden was on the airwaves this month explaining to listeners how we bring financial education and enterprise to life for young people.

We discuss our programmes, methodology and style with Share Radio’s Simon Rose.

Tune in!
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Keeping Newham’s young people debt free & uni ready!

 

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Young people at Rokeby School and Brampton Manor Academy have received money management lessons to help them save and afford university.

Our financial education experts armed hundreds of local 11-18 year olds with budgeting and banking skills via so they can understand student finance and make informed decisions about their future.

The Uni Dosh project, supported by Prudential plc and the Chartered Accountants’ Livery Charity, is helping thousands of young people in London’s poorest areas.

MyBnk lessons have the UK’s highest effectiveness rating, according to the Money Advice Service.

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“The lesson was really helpful and I enjoyed all the activities especially learning how to budget. Uni has always been 50/50 for me and this session has given me much needed positive information to make a decision.” Patrick Stammers 16.

“Great workshop, great fun. I found it very interesting, and it allowed me to shake of the negative stigmas of Uni, like, it’s too pricey for me and what I’m actually going to study for!” Sheheena Meens, 16.

“Great info, great good trainer! I learnt a lot of interesting facts about Uni. I was unsure about Uni because I didn’t know what I was entitled to or the support out there. It’s not all about debt.” Mo Ghailan, 17.

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We have a range of funded workshops available to schools and youth groups. Teachers and youth workers are urged to contact info@mybnk.org for more information.

 

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Impact: Financial Education – From leaving care and anti-bank to new lifestyle and savings account

 

Money Works logoDoes it work? Can you prove it? Since inception, MyBnk has demonstrated a commitment to the monitoring and evaluation of financial education for young people that is unrivalled in our sector. For every session we collect impact data from teachers, facilitators and young people. Participants complete baseline and end line questionnaires and go on to join focus groups.

Eight months after his Money Works workshop, we caught up a young care leaver on a Tottenham Hotspur Foundation education course.  The four-part programme arms young people with survival money management skills to help them move into independent living and confront money worries.

Javed, 17

IMG_4493Every year thousands of young people make the move from care to independent living, 1 in 3 make this transition before the age of 18.

“Budgeting isn’t easy when you’ve got so much to pay for and such a small income. If you get into debt you can end up needing to take out a loan, and then you get stuck in a vicious circle.”

Javed’s sessions are designed to build knowledge and skills in key areas such as budgeting, banking and borrowing – exactly the abilities young care leavers will need to live fulfilling independent lives.

Before the sessions he expressed distrust of banks and was not shy about showing it! This stemmed from him not understanding concepts such as interest and APR, believing they were deliberately trying to confuse him and rip him off with charges.

Eight months later…

“The workshop has made me analyse my current situation and made me realise have start budgeting. It has made me think that I need to value money and I can’t continue living the lifestyle I live. I have opened a savings account and plan to build money up for my future. I believe it is key for young people to have programmes like this because many children in care are not taught things such as budgeting and managing money.” 

What did the youth worker think?

“The programme has been really informative for these young people. As they are care leavers they are different in that they have to become financially independent at a much younger age so learning about things such as debt and borrowing will help them get into less financial difficulty as they move into their own property.” Nicky Alagbe.

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MyBnk Comment – APPG Financial Education Effectiveness Inquiry

 

MyBnk welcomes the latest publication by the All Party Parliamentary Group (APPG) on Financial Education for Young People.

The report sets out a range of sensible proposals for enhancing young people’s financial capability throughout the UK and we thank the APPG’s members, Suella Fernandes MP who chaired the investigation and contributors, who like ourselves, made representations to the board of inquiry.

Two years on from achieving limited statutory status for money lessons in England’s secondary schools, MyBnk has cautioned against a ‘job done’ mentality and continued to highlight difficulties and opportunities in helping young people manage their money and make informed decisions. This report reaffirms the importance of financial education for young people, supports and elaborates on such insights and puts forward pragmatic recommendations.

Its proposals to strengthen the breadth and depth of provision, make financial education compulsory at primary level, whole school and cross-curricular coordination, improved teacher training, introducing impact measurement, testing and signposting best practice are all steps in the right direction.

However, our experience in delivering financial education to more than 130,000 young people in 750 schools and youth organisations, underlines that success depends critically on the expertise of those that teach. The whole school curriculum is vast and, unfortunately, once the money lessons box is ticked, it can slip down the priority list for many schools.

Priorities

A new Initial Teacher Training framework, to be introduced later this year, offers the chance to enhance financial education in schools whilst equipping new teachers with the skills to teach it well. We believe unless and until a ‘gold standard’ for teacher training and a holistic whole-school approach is adopted, practical solutions and outside support will be required, including direct provision from experts, trained for example, by MyBnk.

The report expresses concern that the government has not specifically resourced financial education in schools, but argues schools should use Pupil Premium and that the financial services sector should regard financial education as central to corporate social responsibility to fund such provision. Our view is this is a recipe for inconsistent and variable provision.

The recommendation to evaluate and share practical approaches to effective financial education through the work of The Money Advice Service is a good one and we will work closely with them. Once a range of effective approaches is available we would urge the government to revisit consistent funding of effective financial education.

For more, please see our Policy section which includes our summary response and full submission to the APPG inquiry.

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Impact: Financial Education – From pre-uni money worries to a first saving account

 

Uni DoshDoes it work? Can you prove it? Since inception, MyBnk has demonstrated a commitment to the monitoring and evaluation of financial education for young people that is unrivalled in our sector. For every session we collect impact data from teachers, facilitators and young people. Participants complete baseline and end line questionnaires and go on to join focus groups.

A year after his Uni Dosh workshop, we caught up with a Sixth Former from Bishop Thomas Grant School. The two hour specialist programme provides would-be-students with the full picture of the true cost of university life and gives them the skills, to pay the bills.

Frederick, 18.

FredWith a conditional offer to study Drama, Frederick was fearful about how he would afford the living costs associated with university and unsure of the financial support available.

“There is a lack of information and depth about what uni will actually be like. I bash the keyboard at home but just don’t know where to go for practical help. I’m really worried about the cost of living.”

Our Education Officer helped Frederick and his class explore loans, bursaries, banking, debt and part-time work. This included activities, games and videos drawn from youth culture to stimulate the cost of independent living, inform their decisions and create an action plan for their first year at university.

What happened next?

“MyBnk showed me how and why to save. I found out about type of loans which was available and essential information about university. Uni Dosh allowed me to understand the importance of saving money and gave me an insight of what it’ll be like on my own – having to pay for things like food, essential things, housing and more. Things I’d never thought of before.

This workshop helped me because I think carefully before buying something I know I want, but don’t need. I’m more aware of the cost of items. Before, I just bought it, no matter how much it was and I couldn’t go out with my friends and had very little money.

 

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My job pays me £9.15 per hour and I work weekends. I get paid weekly in which I get £109.80. Before the workshop I used to spend the money on payday which left me with only £30 in my account. This was difficult afterwards because I would be invited out but I wouldn’t have enough money to go. Since I’ve been told about savings and how to control my money I put £59.80 into my savings account every Friday. This way I don’t spend money on items in which I don’t need and it leaves me with £50 in my account in which lasts the whole week.”

Request a session to book our Uni Dosh programme for your young people.

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MyBnk Blog – Queens Speech 2016: Financial education well placed to improve life chances of young people

 

Our latest MyBnker blog is from our CEO Guy Rigden who examines the implications of the Queens Speech 2016 on the financial wellbeing of young people.

guy“This week’s Queens Speech is very much welcomed by MyBnk and could be a big step forward in the forging of a financially literate and enterprise driven generation.

Long expected items were confirmed regarding the Money Advice Service and new minimum wage levels for 16-24 year olds, and commitments made on young people in care and incentives to save. Much of the programme for government is helping to shape an environment that improves the life chances of young people, though there are, as always some concerns.

Young savers torn between saving for a home or a pension were offered help to do both in the Lifetime Savings Bill. A cash bonus worth up to £1,000 a year will be added to every £4,000 saved into a Lifetime Isa.

We are pleased that it will be available to those aged 18 years and up, unlike other schemes such as the new National Living Wage, where young adults have to wait until they are 25. Furthermore the scheme specifically benefits those on low incomes who would not receive a tax benefit when saving through a pensions scheme. The ‘locked in’ savings feature penalises those taking cash out before they are 60 or wish to buy a home, but should support more beneficial, long term goals.

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Almost half of UK adults have less than £500 set aside for emergencies. The new Help to Save initiative allows young people on Universal Credit to put aside £50 a month and have it matched by the state. For many, this has the potential to be a lifeline and MyBnk welcomes any incentive to save. For these new schemes to be successful, we still need to ensure young people know how and are motivated to save and understand the reasons for and consequences of financial decisions.

A new “Care Leavers Covenant” will make sure local authorities set out clearly the entitlements for care leavers – including housing, jobs and healthcare. This should include a ‘right to effective financial education’. We have been helping thousands of young people in Leaving Care Units through our award winning Money Works programme. An upcoming Children’s Society report, assisted by MyBnk, will reveal the challenges local authorities face in helping young people make a sustainable transition to independent living. There are also similarities here regarding our work for vulnerable young people and the new prison reform agenda.

Money Works logoThe merging of the Pension Advisory Service, Pension Wise and Money Advice Service into a single body was confirmed. This is very welcome but we question why an additional ‘new money guidance body’ is required; this important function could be incorporated into the merged body. Saying that, transitioning to commissioning services and backing ‘what works’ could see more young people receiving effective financial education services.

We are also pleased at the expansion of the National Citizens Service, where MyBnk provides workshops through partners such as the Big Creative. This summer we will be out in fields and youth clubs bringing money, tax and government spending to life through our revamped Sporty Money Twist programme.

On the academisation front, we acknowledge the drive for higher standards, though note that this means more secondary level outfits can to opt out of the national curriculum, where financial education is statutory up to GCSE level.

To maximise the impact of these proposals, financial literacy for young people needs to have a strong presence. MyBnk will ensure its role and purpose is centrally placed in upcoming consultations and inquiries.”

Guy Rigden, CEO MyBnk.

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Report – Building societies ‘uniquely placed’ to help young people manage money

 

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  • Building Society Association (BSA) commission report by MyBnk.
  • 54% of societies providing financial education for young people.
  • Greater focus needed on pensions and credit.
  • Localism ‘trumps’ one-size-fits-all national approach.

Britain’s building societies are well placed to help stem the nation’s personal debt crisis at a grassroots level with better financial education for young people, according to a new report by MyBnk.

The nationwide study found that while 54% of societies are already helping youths learn how to bank and budget, a breakthrough could be made in developing long-term positive money habits with a central BSA vision, effective resources and youth sector collaboration.

Tens of thousands of 5-25 year olds are benefiting from dozens of innovative society projects using intergenerational advice and trained volunteers. However, greater efforts are needed to help youths make informed decisions on areas such as pensions and credit, says MyBnk.

The BSA has already established a working group to advance key recommendations of the study, while individual societies are continuing to develop their activity alongside experts from the youth financial education sector.

UK personal debt is at a record £1.45 trillion, 17-24 year olds owe on average £12,215 each (over half of which is not student debt) and despite curriculum requirements, less than half of young people receive any form of money lessons at school.

“Many societies are punching above their weight. They know their communities, the pressures they face and have an advantage over some national organisations by avoiding a one-size-fits-all approach. If they can address issues of resource, training and expertise, the sector can fulfil its massive potential to improve the financial wellbeing of wider society.” Guy Rigden, CEO MyBnk.

“MyBnk’s research shows that the building society sector is providing some excellent financial education ranging from the delivery of workshops, online resources and running school banks. Given their links to local communities and emphasis on building long-term relationships with members, financial education is a natural fit with their businesses. There is a considerable appetite to do more. We look forward to building on the report’s recommendations to develop the sector’s financial education provision through the new working group.” Robin Fieth, Chief Executive, BSA.

Report

MyBnk examined the effectiveness and scale of the youth financial education efforts of 44 building societies and two credit unions. We also produced a road map to improve provision.

Final report with Executive Summary

See how we have helped other organisations deliver effective financial education for young people via our consultation and collaboration services.

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MyBnker Blog – Making Money Work for Young Offenders

 

We welcome the first in a series of new MyBnker blogs from the frontline of financial education and enterprise for young people. Everyday our experts deliver workshops in schools and youth groups across the UK – bringing money and business to life.

Today we hear from Education Director Sharan Jaswal on our recent work helping young offenders learn to manage their money once released.

IMG_0659It’s been an exciting few months at MyBnk as we started delivering our Money Works programme in youth offender institutes after being approached by HMP Feltham YOI to support their pre-release education programme ‘Getting it Right’.

We’re very pleased to have started this work, as it is such a transitional time for these young men. They are about to get a second chance to rebuild their lives on the outside, and their mind-set is one of setting goals and making better decisions.

Many are unable to return to their homes after their sentence and will be put into social housing with no grasp of Universal Credit and the challenges this will present them. Some are coming out to years of accumulated debt that they mistakenly thought would be written off.

Several also have young children on the outside that they’re wanting to provide for after not being able to whilst inside. The work we are doing is vital in empowering them with the knowledge, skills and confidence to take control of their finances as soon as they are released, before it takes control of them.

 

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Since December 2015, we have delivered eight Money Works programmes in YOIs, reaching 51 young offenders, 40 of whom achieved a Level 1 Personal Money Management accreditation. We’re looking forward to continue and expand on our work with young offenders, so watch this space!

After a very successful first session, Feltham are now starting to book us in monthly and have referred us to other institutes. The impact of our sessions has been significant – both the participants and case workers have been extremely pleased:

Money Works logo“Very informative – I have learnt how to manage my money properly and carefully. When I get a job it will help me be able to budget my money. I found the course very empowering and loved it! ❤” – RW, 21, HMP Feltham.

“This programme was very helpful. I now understand a lot about Tax/NI/APR/AER. I can budget much better. I understand the minimum wage. It was a pleasure to work with them. Thanks to them – they were amazing.” – TJ, 23, HMP ISIS

MyBnk were amazing! The group ran brilliantly over the two days and they managed to keep the boys engaged throughout, which is no easy task. I am really pleased with how the course ran and the professionalism of both your trainers. The boys really enjoyed the course and have already recommended it to their friends! ” – Natalie, Resettlement Coordinator, Getting it Right, Catch 22.

For more, see our recent case study from HMP ISIS Young Offenders Institution:

“After representing England at boxing aged nine, TS was kicked out of school on becoming a teenager. He then turned to, as he describes it “road life, because I wanted money”.

 

 To request a Money Works session, please complete our booking form.

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