Pushing financial literacy will save students in the long run
Paying bills, getting loans, calling the bank and managing and spending money is nothing new to the average college student. However, it is questionable how many students feel confident in their ability to do these things themselves after leaving home. The likely answer is not many, considering the rise of financial illiteracy in the United States — which is hardly shocking considering that in Texas you may not have to take Algebra II to graduate from high school in the next few years.
According to the Government Accountability Office, financial literacy is the “ability to make informed judgments and take effective actions” when dealing with the present and future use and management of your money. Students who came from Texas’ public education system may have had a lesson here or there dumped into their economics class but didn’t, for the most part, have the luxury of actually taking a finance class. In many private and parochial schools in Texas, these classes are rarely emphasized if present at all.
Biomedical engineering freshman Vladan Vukovic said he remembers his high school economics class touching on the subject, but it was never the primary focus.
“Had it not been for my parents educating me on the matter, I probably would be totally clueless on the subject,” Vukovic said. “I know tons of people who are. They got credit cards and didn’t manage their finances and now have worse debt than 40-year-olds.”
Vukovic also said high school information would not have been enough to help him deal with his own bills, pay for college and haggle with insurance.
Yet rather than trying to make public high schools introduce a new program that would inevitably lead to rushing, cramming and inefficient add-ons to already-existing classes, we can instead incorporate them into the curriculum here at UH.
In the state of Oklahoma, as a result of legislation passed in 2007 and becoming effective this May, students are mandated to demonstrate a knowledge of taxes, banking, investing, insurance, loans, identity theft and about eight other areas in order to graduate high school. Students will now be financially literate upon entrance to a university — a skill that has been lost on many college-bound students as well as current college students in the United States.
“Oklahoma has some of the strongest standards in the country,” said Amy Lee, the executive director for the Oklahoma Council on Economic Education. “Where other states require four or five standards regarding earnings, savings and investing, Oklahoma has fourteen.”
In Texas, we, like all states, have an education code that specifies the requirements for school curriculum and how schools should consider going about to meet these standards. Chapter 28, sub-chapter A of the Texas Education Code briefly discusses what will be done about teaching students financial literacy.
It says that no later than January 31, 2012, Texas would “identify essential knowledge of personal financial literacy” instruction that will include teaching students methods for paying for college. This supposedly began at the start of the 2013-2014 school year, and most public schools, which didn’t create a class for the subject, included it in the economics credit.
Thomas L. Harnisch with the American Association of State Colleges and Universities wrote an extensive paper on educating youth on financial literacy, the repercussions the U.S. is facing now as result of financial illiteracy and what methods can be implemented to alter this trend.
His paper, “Boosting Financial Literacy in America: A Role for State Colleges and Universities”, says financial illiteracy is a rapidly growing problem in the U.S. The country has high levels of debt and low levels of economic security for its citizens. He further notes that this is an issue that needs to be brought back to the forefront of concern. Harnisch proposes that higher education institutions should have a hand in implementing new financial management and literacy programs. He believes that because universities generate more chances for creating these classes and because the nation as a whole is in need of more sophisticated financial knowledge, it should be the responsibility of these institutions to educate students for the future.
Vukovic said he agrees. He said he knows many undeclared students, and as part of not having a major, many students are required to take study-skills classes, among other things. He said it would be a great idea to “replace these seemingly pointless classes and instead of teaching kids who already know how to study ‘how to study,’ use that as an opportunity to create financial education programs instead.”
It makes sense that while attending college — the hub of educational training that will prepare us for the future — we would be educated not only in the 100-plus hours of our major but also in financial literacy. We should work financial literacy in as a new part of the curriculum. Managing finances, budgeting, paying for bills and understanding how to keep up with a credit score and how to approach a bank to borrow money are paramount and prevalent in everyone’s lives. Rather than take a class on how to prepare for an exam, take that course on financial preparation.
Only time will tell, but I hope this is something that is seriously considered for students of the future — as it is a subject that will forever be present in each student’s future.
Opinion columnist Juanita Deaver is an anthropology freshman and may be reached at [email protected]