We have written extensively on student loan horror stories involving six-figure debts and for-profit diploma mills ruining the financial lives of graduates and misleading them by promising success and prosperity after graduation. In other cases, students may borrow thousands of dollars while under the impression they will soon be in line for lucrative jobs and unaware of the potential financial consequences if their plans do not work out. Some former students and graduates have reported feeling blindsided by their debts, and if given the opportunity, they would go back and make different choices.
What is undisputed however, is that society is failing to teach teenagers and young adults personal finance skills. We cannot expect students to make informed decisions on spending money if they lack personal finance knowledge.
In many cases, students will not have the financial means to attend college without using loans, and it would be unfair to argue they should be denied the opportunity to receive an education. On the other hand, there may be ways to teach high school students how to be financially savvy before attending college so they can reduce the amount of loans they will have to utilize.
This dilemma raises an interesting question. Can teenagers benefit from being taught personal finance by parents or public schools?
Should Financial Literacy Courses Be Required in Public High Schools?
Organizations like the National Endowment for Financial Education have been pushing hard for public high schools to adopt mandatory personal finance courses. The curriculum developed by the organization covers topics such as goal setting, decision making, budgeting, money management tips and investing. Some states are implementing similar courses with the goal of helping students budget money during college and adulthood.
Do these courses lead to better financial outcomes? According to a study conducted by Discover, 60 percent of students who took personal finance courses during their senior year of high school had budgets. In comparison, 46 percent of students who did not take these courses budgeted their expenses. Additionally, 32 percent who have taken these courses have invested money, compared to 17 percent who did not take these classes.
Teaching young adults the finer points of compound interest, budgeting, investing and saving may translate into better decisions with money during college. However, it may be years before we know the definitive impact these courses have on student loan decisions. Presently, only 17 states require these courses for public high school students (including Missouri).
Many people are going to have to use student loans to afford college. Our society should give these students the tools to make informed financial decisions so they can lessen the amount of debt required to achieve an education.
The Kansas City bankruptcy attorneys at The Sader Law Firm can help students find the best ways to tackle excessive higher education debt.