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Lack
of Financial Literacy Hurts Students |
Posted:
08.01.07
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Brison Harvey, a senior at Southern Garrett High School
in western Maryland, argues that high schools need to prepare
students for big financial decisions through required financial
literacy education.
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 For
the first time since the Great Depression, Americans are spending
more than they are saving. It's just one of many personal finance
trends that points to a dark economic and social future.
More than one third of workers don't save for retirement. College
students, unable to manage rising credit card debt, are increasingly
joining the two million Americans who file for bankruptcy each
year, and they are more likely to drop out for financial reasons
than academic ones.
Is it a surprise that public schools aren't teaching future adults
the skills they need to make the simple decision to save or spend,
let alone understand the essentials of a free-enterprise economy?
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Schools falling
short |
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Parents believe that schools are teaching students money management
concepts, when in most cases they are not. Only nine states require
a financial literacy component for graduation, according to a
CitiGroup report.
The quality of financial education is so low that the average
score on a questionnaire administered by advocacy group Jump$tart
Coalition for Personal Financial Literacy was an abysmal 52.4
percent, with only one in five students claiming to have learned
financial literacy in school. News like this should send a strong
message to education officials and politicians. But they continue
to ignore the problem.
I can't blame schools, though they would be wise to make financial
literacy a graduation requirement for students. School administrators
are understandably busy, desperately trying to meet the No Child
Left Behind Act's Adequate Yearly Progress goals. That law attempts
to close the achievement gap in math and reading, but legislators
must understand that there are gaps in other segments of education,
including economics education, where all students fare poorly.
Still, I am surprised to see other students who fail to understand
the simplest of financial terms. While attending student leadership
conferences, I've seen our nation's brightest students struggle
to recognize key economic terms, such as the CPI (Consumer Price
Index), and fail to grasp introductory financial concepts such
as the supply-and-demand curve.
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Students
need tools to plan for the future |
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At my own high school, it's no better. I see students who lack
the basic knowledge to make decisions about money. 'Saving' never
enters their minds; all they want to do is spend. My friends talk
about getting paid on Friday, then wonder why they have nothing
left on Monday.
They don't realize that they will soon have to make decisions
-- about credit cards, college loans and car loans -- that could
have a much larger impact on their lives than seeing a movie or
purchasing a new video game or designer clothes.
Ben Bernanke, who oversees the U.S. central banking system as
the chair of the Federal Reserve Board, recently told students
at a high school in Washington, D.C., that in order to achieve
personal goals, students "will need to understand the fundamentals
of budgeting, banking, saving and investment." But students
can't do this without help.
I only began to appreciate the fundamentals -- the value of investing
and the language of finance -- when, as part of an economics class,
I participated in The Stock Market Game, a scholastic contest
where prizes go to students who show the highest ROI, or 'Return
On Investment.'
It helped me think about money as something that could be invested.
It taught me the importance of saving in any form; whether it
means buying bonds, investing in the stock market or simply adding
extra cash to my savings account.
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The government's
responsibility |
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The leaders of today must answer a simple question: Should we
require our future citizens to learn about financial concepts?
Undoubtedly, we should.
The current National Strategy for Financial Education, as stated
by the Financial Literacy & Education Commission (part of
the US Department of the Treasury), provides a solid foundation
for financial literacy; however, the National Strategy for Financial
Education does not include strong efforts towards making financial
literacy an important piece of public education.
One of President Bush's education policy goals is to "prepare
high school students for success by promoting rigorous and advanced
coursework," but schools can't take measured steps toward
teaching financial literacy without clear federal legislation.
With the No Child Left Behind Act reauthorization debate set to
begin, Congress now has an opportunity to improve the nation's
financial woes.
A new act should increase support of state grant programs and
current projects, such as Excellence in Economic Education and
the Jump$tart Coalition, and mandate financial education in schools.
It is time for Congress and the White House to step up and recognize
that we all need to be financially literate in order to become
productive citizens -- if not the leaders who make economic choices
in business and government. If our Congressmen can make these
small modifications, the rewards will be incredible. And that's
a good ROI.
--
Brison Harvey, 16, is a senior at Southern Garrett High School
in western Maryland. He plans to study communications in college.
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American schools and financial aid should be only for legal citizens of the United States. There should be no exceptions to this.
