By Amy Dockser Marcus

(MONEY Magazine) – It's lunch hour at the Kent Denver School. The cafeteria is serving chicken over rice. Backpacks lie strewn across the common area. Some students sit and do homework, others sprawl on couches and talk, a few play guitars. And in a room the size of a storage closet, two students unlock a safe with $20,000 inside and open the heavy sliding glass windows to a line of customers. The credit union is open for business.

The Kent Denver School is not your typical school. The private college-prep academy of 620 sixth- to 12th-graders sits on acre after acre of gently rolling hills that unfurl like a flag toward the foothills of the Rocky Mountains. There is an extensive library and a state-of-the-art weight-training and fitness center. Tuition is $13,500.

Nor is the credit union, a branch of Gateway Credit Union of Aurora, Colo., your typical school project. It is a flourishing financial institution with $2 million in assets, making it easily the largest of some 50 student-run credit unions in the country.

It was that remarkable number--$2 million in a bank run by a bunch of teenagers?--that brought me to Kent in September. School is like a small town, and the credit union is the ultimate small-town bank. I was curious about how being in charge of so much money might change the way students relate to one another and to their teachers. Walking around Kent, sitting at school assemblies, listening to the conversations around me, I quickly realized that what makes the credit union unique is less the assets it has accumulated than its role in the school culture. The lunchroom in high school is always a map of small nations struggling for power and constantly shifting alliances: the jocks, the cool kids, the smart ones, the beautiful people, the troublemakers. At Kent Denver the credit union shapes that universe. "Kent," Dan Miller, the head of the upper school, told me one afternoon, "is now a place where students say, 'He's a bank teller' in the same tone that they might say at other schools, 'He's the captain of the football team.'"

Money: the final taboo

Many schools these days, are struggling with how to teach kids about money. "Like sex, talking about money with kids is taboo," says Dara Duguay, the executive director of the Jump$tart Coalition for Personal Financial Literacy, which is based in Washington, D.C. and promotes financial education for youth. "It makes many adults nervous because it involves values, and many adults are not good role models with their own financial choices."

In response, a number of states, including Georgia, Kansas, New York and Oregon, require personal-finance instruction in the public schools. There is legislation pending in Congress that would give grants to organizations that offer personal-finance training to kids. Still, with so much pressure on schools to show results on standardized tests, it's difficult to get teachers to teach kids about money. "If it's not on a test, they are reluctant to give it time in the classroom," Jump$tart's Duguay said.

The credit union at Kent was started in 1984 by math teacher Donna Duvall-Serrano, who wanted her students to realize that math has a practical application in their lives. By this measure, the credit union has been an unqualified success. On one of my trips to Denver, senior Thomas Harrington, 18, described his father's surprise that Thomas knew so much about the intricacies of car payments. As the credit union's vice president of marketing, Thomas had spent part of his summer at the main branch of Gateway, training incoming student tellers, and had handled many car-loan payments. When his father wanted to buy a new car and invited him to meet with the car dealer, Thomas was thrilled. "I could talk about APR financing, credit ratings and whether it was better to buy or lease a car," he told me. "If I hadn't been part of the credit union, I would have dumbly stared at the car dealer."

The younger kids, I found, may know the words to every Britney Spears song, but they know very little about money and banking. One morning in September, a few weeks after school opened, I joined the credit union officers as they trooped down to the sixth-grade classrooms to promote the credit union. The sixth-graders may not have much in the way of assets--"We call them our $1 club," jokes Annie Rapson, vice president of operations--but they're the credit union's best source of new clients.

Dave Law, the 17-year-old vice president of finance, launched into a list of services the credit union offers, citing the competitive interest rates. But the kids' attention seemed to flag until Thomas Harrington pointed out that the candy vending machines in school take only exact change, and that credit union tellers will make change only for students who are members.

The sixth-graders peppered the seniors with questions. "Is there a limit to how much money I can deposit in my account?" "If I have an account and my friend wants to buy something, can he take the money out of my account?" "If I put $50 in my account when I'm in the seventh grade and leave it there for three years, will the money still be there when I want to get it out?"

One of the sixth-grade teachers, probably hoping to inspire the kids to do more homework, asked the credit union team if the kids on the staff have to be good at math. "You're dealing with $2 million," president Andy Fowler, 18, reminded the younger kids, so good addition and subtraction skills certainly come in handy. "Don't joke with your friends; you have to be serious, not crazy," he suggested.

One sixth-grader raised his hand with a question, an earnest expression on his face. "What if we're two things at once?" he asked Andy. "What if you're a responsible person but you also like to goof around. Can you still work at the credit union?"

Andy waited only a moment to reply. "Sure," he said, pointing at Dave Law, standing beside him and cracking a slight smile. "Dave does that all the time."

The junk-food advantage

The sixth-grader's question reflects the two different worlds the credit union straddles. It is a real credit union, subject to all the rules of any financial institution. There are 920 active accounts, ranging from $5 to more than $100,000. Most belong to students, but approximately 30 teachers, 30 student clubs, 50 parents and siblings, as well as several dozen alumni also keep money there. Gateway determines the kind of services offered, sets interest rates and does random audits, watching while Andy and Dave count every dollar in the safe. The credit union office is alarmed and everyone knows where the panic button is, in case of robbery.

The 36 students on the credit union staff bear a lot of responsibility. Besides waiting on customers every lunch hour and two mornings a week, the kids come up with two contests a year to attract new customers and increase assets, and publish quarterly newsletters. At Back to School Night, I watched the kids work the crowd of parents from a booth set up in front of the coffee and refreshments. "It's a really great way to learn about handling money," Andy told one parent, pressing a form to open a new account into her hand.

And yet these are teenagers. The tellers, all juniors and seniors, are paid $5.15 an hour--and all the junk food they can eat. Packages of Easy Mac microwave macaroni and cheese, Rice Krispie treats, gummy bears, cookies, cheese spray in a can, Doritos, Tostitos and Snickers bars are stacked against the wall, and books and papers spill everywhere. Pictures of current and former credit union officers dressed for the prom or graduation crowd every shelf.

Whenever I sat in the credit union office, off-duty tellers stopped by to gossip or have a snack. One time a student made a deposit and, after a professional "Have a nice day," the teller leaned over and said, "Call me tonight, okay?"

But with all the students' responsibility, teacher Duvall-Serrano is in charge. She has the only keys to the office, the sliding glass windows and the safe, and she insists that an adult be present while the credit union is open. When she had to take some papers to her next class, she asked me to stay.

Duvall-Serrano constantly reminds the kids of their fiduciary responsibilities, though this is not an age group traditionally known for its ability to keep secrets. Not surprisingly, teachers weigh the convenience of banking at school with their concerns about privacy. Some told me it could be disconcerting to realize that the kids know how much they earn and how much they owe on their mortgages from Gateway. "You have to expose yourself to these kids in a way you don't do in class," says football coach and credit union customer Scott Yates. But as Sidra Smith, an English teacher who recently opened an account at the credit union, points out, "they still know that I'm going to be the one grading them in class." And writing those important college recommendations.

When business is personal

At a loan committee meeting I attended one morning at 7:30, the social fault lines that run through the student body emerged clearly. Seven students had applied for debit cards. Mark Piper, the head of the loan committee, had arrived 15 minutes early to check the applicants' accounts for "flags," a notation indicating that the account is habitually overdrawn or that the owner has written bad checks. Mark also made sure that everyone applying for a debit card had opened a checking account and had adequate funds in the account.

But as the seven kids on the committee discussed each case, I realized that virtually nothing about the applicants' finances ever came up. No one mentioned if a student was on scholarship or what kind of car his parents drove. The real currency was not how much money you kept in your bank account but how many friends you had on the committee.

The first case involved a student with $100 in his checking account and $160 in savings. "He's in one of my classes, he's nice," one of the committee members said. "I play baseball with him, he's responsible," another added. The vote was unanimous to grant him a card. One boy who wanted a debit card was approved after a committee member said, "He's very organized in class." Another spoke in favor of a player on his sports team. The only hesitation came with one student they didn't know very well. "He's quiet," one committee member said apologetically. But Duvall-Serrano was his school adviser, so his application was readily accepted.

After the meeting, Mark Piper told me that in the credit union's 17-year history, Gateway has had to write off only one bad loan, for $300. The reason, Mark said, is that "we check out the kid." He explained that he saw his main job as trying to talk students out of a high credit limit that might get them into trouble. This inevitably led to problems: It was business, and yet it wasn't always decided on a strictly business basis. Some kids took it personally.

Eleventh-grader Nick Matthew, 17, is one of them. Last semester he applied for a credit card with a $500 limit and was rejected. According to Mark, a $500 credit limit was unusual and the committee felt it was too high. Duvall-Serrano suggested that Nick take a debit card or a lower credit limit. He said no. Now he uses his mother's credit card.

"I was really surprised when they declined me," he told me. "I had no previous record of spending money, so I assumed they'd give me a chance." But he was new to Kent. He'd just moved from Phoenix and been at the school only a month before applying for the credit card. No one played sports with him or remembered him from class. Today he seems more reflective than angry: "I guess the other kids just didn't know me that well."

The power of money

Alan Frosh knew everyone at Kent. Before graduating last June, he'd been a teller at the credit union, then vice president of marketing. During his senior year, he'd shuttled between his job at the credit union and meetings of the Young Americans Bank youth advisory board. Both places focus on kids, but Young Americans, founded in 1987 with money from the late cable mogul Bill Daniels, is managed by adults (although some of them do sport nose rings). In contrast, Frosh told me, the Kent credit union "is run without a lot of adult supervision." And that, of course, gives students an unprecedented amount of power.

These are not kids obsessed with stock picks or Alan Greenspan's next move; they don't run to the library to check their stock portfolios. Most let their parents do the investing, and the school started an investing club only this year. What draws the students to the credit union is not so much the money itself as the chance to wield the power that comes from controlling access to money. As a result, it's as difficult to get a spot as a teller as it is to get into one of the elite colleges to which many of the students aspire. For the 20 positions that open up every year, more than 100 freshmen, sophomores and juniors apply, fully a third of the kids eligible. The senior tellers traditionally select their own successors, as do the four officers. Discussions last for weeks and can get so sensitive that Duvall-Serrano shreds their notes about the candidates when the voting is over.

Last year was particularly tense. Andy Fowler and Dave Law both wanted to be president. Andy was always at the credit union. The other kids called him "the ultimate teller," because he knew every detail of every transaction at the credit union. In two years he had never missed a shift. But he is quiet. When I asked him what group he would place himself in he said, "None. I was a loner until I found the credit union."

Dave is his social opposite, an excellent student, captain of the lacrosse team, arguably the most popular boy in school--he's now the president of the senior class. He thrives on being the center of attention. He once did a flamboyant flamenco-style dance in front of the whole school to earn extra credit points for Spanish class.

Duvall-Serrano expected Andy to win, but Dave prepared intensely for his interview with the officers, coming up with specific new ideas, from opening up additional branches and expanding services to crafting the mission statement that now hangs outside the tellers' windows. "His interview blew us away," recalls Alan Frosh. But Duvall-Serrano felt strongly that Andy's years of commitment should count for something too. After conferring with other teachers and students active in the credit union, she made the call: She went with Andy. The boys shook hands, and the result was announced at a school assembly.

By stepping in, Duvall-Serrano told me, she wanted the kids to realize that one powerful speech should not sway the crowd. "They have a lot of responsibility, but in the end, they're still 17 years old," she said. "They don't see the big picture like I do."

But any teacher knows that the message she wants to convey is not always what the student takes away. What several kids learned, they told me, was that, in some ways, the credit union was more Duvall-Serrano's than theirs. "We run the credit union, we choose the marketing campaign," said Frosh. "Why are we considered responsible enough to handle $2 million but not to decide who gets to be president?"

At Back to School Night, Dan Miller, the head of the upper school, reminded parents that school is about more than calculus, Spanish, ceramics and English. Some lessons, he said, are not easily found in a course syllabus or a textbook. It seems to me that those are the lessons that the credit union teaches. For a Denver Kent student, the credit union isn't just a place where you cash a check. It's where you wield adult powers for the first time--and where you realize that sometimes those powers are not enough to make everything turn out as you hoped. Dan Miller hinted at this as he struggled to explain the credit union phenomenon to me. One of the things that had initially puzzled him about the school's culture, he said, was what made kids aspire to what was essentially the job of a bank teller. Only later, he said, did he realize that he hadn't understood the job description. "The credit union," he said, "is about more than the money."