Why is the Education System Neglecting Financial Literacy?
These excuses are not good enough.
Despite having scoured the web intently, I am yet to find a satisfactory answer to this very simple question.
Why is financial literacy, a skill that is arguably universally necessary to maneuver effectively through adulthood, neglected by the modern educational system?
In the United States, the 2020 NFCC Financial Literacy Survey found 27% of citizens admit to not paying their bills on time, and around 30% do not save for their retirement. Outstanding student loan debt has more than tripled in the last 15 years. In fact, over 87% of Americans believe that they could still benefit from financial advice and answers to everyday financial questions, even as adults. Yet, in 2019, less than 17% of US high schoolers were required to take at least one semester of personal finance.
Results show that when students receive financial education, they borrow more sensibly, shifting from high-cost to low-cost financing. For instance, there is an increase in applications for aid, the likelihood of receiving a grant, and acceptance of federal loans, which are all low-interest means of borrowing. At the same time, financial education decreases the risk of holding credit card balances. For students from lower-income families, financial education reduces their need to work while enrolled, which correlates with a higher probability of graduation.
PROPOSITION: All high schools should require students to complete at minimum one semester of personal finance a graduation requirement.
With such overt benefits, the lack of initiative on setting financial education as a mandate was fairly shocking. So I went looking for answers. Here are some of the arguments I found scattered across different forums, in my quest for rationality.
1. The family should be responsible for teaching this to children
Apart from the dubious lack of consistency in this contention (couldn't you say the same about any academic requirement in this case?), it is wistfully unempathetic. It should be self-evident that not all students have a stable, supportive, or educated family unit that they can depend on for such critical knowledge. To consign the duty of the education system to the family is to trivialize the purpose of having schools in the first place.
2. They can get professional help if they need it as adults
Unfortunately, this idealistic outlook doesn't quite play out in reality. Despite the range of issues adults face with money management, only 1% of Americans acquire the help of a financial advisor. Asking people in difficult monetary situations to pay for professional advice comes across as counterintuitive, meaning many refuse to address their financial troubles until they hit rock bottom.
3. The principles are obvious — spend less and save more
Tens of millions of Americans living paycheck to paycheck. Most individuals stand to massively benefit from properly knowing how to manage a budget, balance a bank account, learning about the time value of money, inflation, loans, credit cards, and credit scores. Such an impassive oversimplification disregards the innumerable obstacles that exist for many people on the path to fiscal responsibility.
4. Money is too abstract and difficult to understand for teenage students
Currently, around 35% of Americans age 16–19 are active members of the workforce and most students manage their allowances from parents. It would be patronizing to suggest that high school students are unable to comprehend money and learn about financial ideas while so many are already balancing budgets and holding jobs. Additionally, the concepts of personal finance are no more abstract than those within mathematics, science or humanities, and expectedly more applicable.
5. Teachers don’t have enough knowledge themselves to teach students
Even in the unlikely scenario where a school is unable to obtain a teacher that is directly inclined towards financial education, there is a huge pool of resources available online, recommended by the National Education Association, that offer comprehensive lesson plans specifically for this purpose. In truth, the notion that there are a limited number of teachers who would be comfortable teaching the subject further indicates the extent of the problem and prescribes a more aggressive effort to educate.
6. There is no consensus on the best practices of personal finance so teaching this subject may create controversy
This dispute is inherently misleading in the implication that personal finance education somehow dictates instructions for students to follow regarding the way they handle their money. The aim of teaching financial literacy is always to inform and explain. Even with potentially contentious issues such as investments, choices are discussed rather than endorsed and the curriculum ensures an appropriate portrayal of both benefits and risks.
7. A personal finance course should not be a requirement as long as it is offered as an elective
Providing a course to improve financial literacy should be the first step for all high schools. However, with the financial plight that is entrenched in our society, leaving such matters to chance or discretion is simply insufficient. Implementing a financial literacy course requirement has shown to be the only policy that positively correlates with student engagement in productive financial practices, higher future credit scores, and lower delinquency, significantly outshining the elective case.
Slowly but surely
Thankfully, the movement is slowly gaining traction, with 21 states currently requiring high school students to take a personal finance course, an increase of 4 since 2018. Moreover, almost 70% of students have some access to some financial education as an elective.
Nonetheless, the fight is far from over. We continue to witness fewer states conducting personal finance testing and, even now, the number of schools that mandate it as a graduation requirement is woefully low.
It is undeniable that education reform is a long and arduous process. Still, in the midst of a global financial meltdown, there has never been a more important time to make the effort.
“Difficulty is the excuse history never accepts.” ―Edward R. Murrow
It is imperative to combat the latent injustice of failing to teach basic financial skills to the youth, and realize that financial education enables empowerment for everyone down the road.
