Should Schools take the Blame for Lack of Financial Competency?


The number of states in the US that ask for high school students to complete at least a single course in economics had dropped dramatically in the past two years. A new survey conducted by the Council for Economic Education showed that mandates for personal finance education in the upper grades are still stagnant. They discovered that there are currently twenty states that require student to take an economic course in high school.

Since 2014, there are only sixteen states that have economic related questions in their standardized testing. This is nine less that the twenty-five back in 1998. The Council for Economic Education also discovered that only seventeen states require students to take courses in personal finance.

Nan Morrison, CEO and president of the Council for Economic Education stated that he’s disappointed to witness no additional states require the courses in personal finances to be something their students learn. Currently, there are now 45 states that include finance topics in their k-12 standards, versus twenty-four back in 1998. There are thirty-seven states that ask these standards get implements as well, which is fourteen more than it was in 1998. However, there is no consensus on when and how these topics need to be taught. There are schools that ask these standards start in grade school, while others believe it should simply an option they offer in high school.

Data does show that those who took personal finance courses have better credit scores and lower debt delinquency rates. Most notably, people between the ages of17-22 in Texas, Idaho, and Georgia seemed to fare the best.

  1. Michal Collins, professor of consumer finance at the University of Wisconsin-Madison, believes that students can develop better financial habits when teachers are trained to teach personal finance and have the ability to hold their students accountable. He found in his studies that finance education is taught in school, it lowers the chances of students falling behind on their monthly payments by three months or more. Previous students of a school in Idaho, for example, noticed their delinquency rates fall by about 2% in their young adulthood while those in Texas noticed a 5.8% drop.

Collins also believes that millennials are more likely to struggle to manage their money. For example, they may carry a large balance on high-interest credit cards, and use payday loans more often. They are also more likely to make the most money mistakes in general.

On the opposite on the spectrum, those who have taken economics in school do better. These young adults are more likely to make their payments on time, keep up with monthly expenses, and have a better understanding of how to manage their money.

Other than a lack of experience and age, young adults don’t understand enough financial skills because they may receive little education from home. According to a Paris-based Organization for Economic Co-operation and development, a study conducted in 2012 involving over 30,000 students from eighteen countries found that 15% of students in America failed to meet proficiency requirements in financial literacy. The OECD dated showed that these students normally perform, on average, ahead of Russia and behind Latvia. A student needs to be exposed to as much financial literacy as possible, and once they learn good habits, they can set themselves up for success in the future.

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