An article in the Sunday Parade magazine earlier this summer claimed that one in five teenagers don't know that if they take out a loan they'll have to pay it back with interest. In O magazine, Suze Orman refers to a Nellie Mae survey showing lots of kids in major money trouble with their college loans. Did we maybe suspect as much?

StudyBuddy uses money to teach math, and that's usually efficient. So far, there's never been a parent with a kid who didn't know how to spend money. Yet it often ends there. Our kids today rarely get to handle money in any serious family endeavor: they're not likely to be sent to the store for grocery shopping as prior generations were. Most of them, here, are fortunate enough not to be in real want for basic necessities. So money becomes an abstract.

Over and over again, I've found parents are shocked when I tell them money isn't real to their kids. Sometimes they want suggestions, and I get to put out the idea of letting the kids actually compute the interest on the mortgage, the rates measured as we pay for gas, electricity, and water. I ask them not to forget the annoying surcharges the banks and phone companies use. I suggest actually rewarding kids (with privileges, not money) for doing the detailed footwork to check all these charges, and including them, at least as observers, when tough decisions are being made.

The Parade article suggests getting in touch with Boys & Girls Clubs (415-445-5437). That's because the Charles Schwab Foundation has set up a program they administer called Money Matters: Make it Count. It's a 10-hour series of classes for kids 13-18 taught by volunteer employees from Charles Schwab giving kids the basis skills to handle money effectively.

Suze Orman's article is suggesting you actually add your kids to your own credit card account when they're 15 or 16, while you still make the rules. Structure it tightly: set a limited number of dollars available to them; schedule a meeting together once a month to go over the bill together. "If they don't have the cash to cover their charges," she says, "then you have a great opportunity to teach them about the cost of running a balance." This translates as: mom-and-pop's bank charges high interest!

An alternative she suggests is getting them a secured card: it looks like a credit-card, but is secured by money already paid. There's no way they can spend more than is already on the card.

The Nellie May survey Orman mentions gives details on students defaulting on college loans. This is a very sad phenomenon most families don't understand thoroughly. StudyBuddy has run into it a couple of times when a college student who has dropped out and defaulted on loan payments wants to return to college and finds out there's no way. There's also, at that point, no way to get help.

Unlike other debt, student loan interest is NEVER dismissed, even in bankruptcy cases. It just continues to build. A student who has defaulted is not in the running for any other help either. Students who take on a college loan, and later find themselves in financial trouble, need to talk with the lenders immediately, re-negotiate the best plan they can get, and stay on top of it. Student loans for college can be a good deal: but like death and taxes, they'll never forget you. Parents, you're not responsible for the kids' debts. Teach them, feed them, and encourage them. Just don't bail them out! That's how to help: honestly.