Grading States: The Financial Literacy Crisis
With student debt at an all time high, people around the U.S. are still asking ‘why not teach personal finance in school?’. Around the country, it is becoming more of a reality that young adults are entering the “real world” with a serious lack of financial literacy. While states such as Florida and Virginia now require a personal finance class in curriculums, others are missing out, and it is showing. For the third time, the Center for Financial Literacy at Champlain College, released their report card. This system grades how each state is handling the financial knowledge of their high school students and the results may surprise you.
The last report card released by the center was in 2015. Sadly, there was only a slight improvement over the past two years. Most recently, 22% of states in the country eared ‘F’s’ whereas in 2015, the percentage was 24. This staggeringly low enhancement should speak volumes to the education system in our country. In a previous blog post, I mentioned of the major gap between our student’s financial literacy compared to countries around the world. This report card continues to solidify just how behind the curve our youth are when it comes to personal finance.
Unfortunately, the grades (like school grades A-F) saw little improvement for all other letters as well. Receiving and ‘A’ grade only went to 10% of the states, both this year and in 2015. Falling right in the middle was the ‘C’ grade, which also only improved by 2% as did the ‘pretty good’ grade of ‘B’.
The basis for the grading system revolves around the number of hours each state requires personal finance topics to be taught during the year. Sadly, only 5 states scored and ‘A’ because they require well over 15 hours of classes for students in finance. Due to the fact that some of the schools “allocate less than one-quarter of a half-year course in high school to personal finance topics”, the ‘B’ recipients became divided. This means that although they scored well, the time dedicated to educating in finance was very minimal.
The Center for Financial Literacy at Champlain College urges states to continue fighting for required education courses in personal finance. Young people often come across their first major financial decision and are lost. Many of them often turn to their parents for help but not all have that ability. Gaining experience and knowledge early on could help to bridge the gap and lower the amount of debt young people in our country are encountering.