Shah: Not a Dime a Dozen
Personal finance skills must be taught in high school.
Money matters, and some college students quickly learn the value of saving it. But money management does not enter mainstream conversations or the classroom nearly as often as it should. Only 17 states require high school students to take a financial literacy course, and that number has remained constant since 2014. As a result, students entering college often lack knowledge of topics such as financial aid and budgeting; this lack of knowledge correlates with lower credit scores and higher debt delinquency. All 50 states should therefore require high school students to learn personal finance skills before they graduate.
The national landscape of money and personal finance has changed dramatically over the past decade. The Credit Card Accountability Responsibility and Disclosure Act of 2009 created broader protections for students with credit cards, but now more than ever, students need to be aware of their financial balance. Tuition costs for many public colleges have grown as cuts in state funding over the last decade continue to hurt schools. The rise of apps such as Venmo, which allow for peer-to-peer payments, can lead to fraud and privacy concerns that students may be unaware of. However, results from the 2015 Programme for International Student Assessment showed that while 88 percent of 15 to 24 year olds in the U.S. have a bank account, 22 percent of them are not even at the baseline level of proficiency in financial literacy.
And how much are they to blame? As it stands, a portion of high school students in select states are benefiting from financial literacy classes that set them apart from other, equally qualified peers. This is unfair to those who were not fortunate enough to live in those states or to have knowledgeable parents to teach them what they need to know about money management. After all, financial literacy is important for all of society, not just select households.
A required semester-long course on (college) financial preparation would help counter this illiteracy. It would not need to be a comprehensive course on money management; instead, it should focus on addressing the issues applicable most to high school students applying to colleges, such as the Free Application for Federal Student Aid, scholarships, summer jobs and the cost of living while in college. These skills could be learned in a separate workshop or integrated into currently existing economics or mathematics courses or even workshops and assemblies.
Taking online courses such as the Kids Finance Initiative or through the Center for Mathematics and Quantitative Education at Dartmouth’s Financial Literacy Initiative must improve one’s knowledge about personal finance, but these skills are best taught in high school curriculums. Online courses have some merit. A study from the Brookings Institution has shown that students less prepared for college are also less likely to do well in online courses. For lower-performing students who are also highest at risk, higher dropout rates and lower grades were associated with the online course as compared to the in-person course option. However, having these courses in high school classrooms may better address issues surrounding peer pressure and mindless spending. While mobile education and blended learning, which combines digital media with traditional classroom teaching, can be helpful for reviewing course material, it should not be the basis for financial education, especially if all students are to make it to the finish line — and stay there.
One may argue against in-person financial literacy courses due to their expected costs. Yet investing in financial success for students at a young age will lead to improved financial outcomes later in life, which will lead to a healthier economy overall. If a separate elective or a mandatory course are too expensive, lessons could be incorporated into subjects that are already being taught. For example, personal finance skills could be taught in an economics lesson about the 2008 recession, where students learn about how the economy affects the job market. In a psychology lesson about stress, students could learn about rational and emotional financial decision making. Learning can be very effective when the topic is taught across different disciplines, and personal finance lessons could benefit greatly from this treatment.
To make sure students are gaining the financial skills they need, schools could administer a standardized test, such as the Council for Economic Education’s Test of Financial Literacy or the National Financial Educators Council’s Financial Foundation Decisions test. Ultimately, financial literacy is truly tested outside of the classroom, not inside of it. However, without foundational knowledge built inside the classroom, many students will flounder, especially in today’s “swiping” culture in which people often make spontaneous and unnecessary purchases.
Many adults have argued against financial literacy courses, asserting that high school students are too young to understand or that they don’t want their kids to worry about financial matters. A 2011 Charles Schwab survey showed that parents are only slightly more likely to discuss smart money management with their children as they are to discuss dating and sex. But nobody is too young to learn about managing money, especially when a majority of full-time college students pay for college with the help of financial aid. Financial skills are practical and personal; they set up a foundation for short-term and long-term health, both monetary and physical. As high school students apply and choose a college, get their first jobs and receive their first paychecks, personal finance courses can help them take control of their cash, credit and lives. For these reasons, taking a personal finance class should be required for high school students in all 50 states.