Since individual states are in charge of the educational system in the United States, which means that they make decisions without much oversight from the federal branch, the learning requirements and standards differ across the nation. One of the common denominators, however, is the fact that parents often complain about the curriculum. Having gone through very few changes over the past decades, the areas that students must learn are almost the same as they were in the 50s or 60s. For instance, mathematics, history, art, literature and writing, and a foreign language are still mandatory in many public institutions.
While there is nothing wrong with relying on proven concepts, doing so undermines modernization. In 2019, innovation and technological developments are at an all-time high. By focusing on the same topics of art and math, per se, a lot of valuable lessons on contemporary resources get overlooked. More importantly, though, courtesy of millennials moving out and seeking their independence a lot earlier in life, the need to become financially literate has never been more necessary. Unfortunately, most schools do not even offer courses that relate to this topic. So, is it finally time to implement mandatory classes focusing on financial literacy?
Issue Escalates Fast
According to a certified financial planner, who has worked as an advisor for over 15 years, Cindy Couyoumjian, lack of financial preparedness is one of the most troubling issues that society is facing. For example, as of 2019, the total student debt in the U.S. is approaching $1.5 trillion; this is more than the nation owes through auto loans or credit cards. While the rising cost of college tuition has a lot to do with such a mind-boggling figure, it is not the only reason behind the unprecedented amount. The fact that students enter universities and start living on their own before they become financially literate has a lot to do with their debt as well.
Given that the federal government hands out a seemingly endless amount of cash based on very loose qualifications for full-time learners, acquiring student loans has become a mere formality. After getting access to the funds, however, it is not uncommon to see borrowers fall victim to irresponsible spending. Thus, the lack of finance courses in early education results in a problem that escalates extremely fast. After all, by the time someone finishes college, there is a good chance their enormous debt will lead to negative net worth.
A Short Class Could Change Everything
Another downfall of the educational system in the United States is the fact that much of the mandatory material is useless to the vast majority of the public. For instance, when students spend an entire semester learning about parallelograms, those who have no intention of becoming mathematicians will have effectively wasted a semester. Nevertheless, courses such as these are mandatory in all 50 states. Instead of focusing on the basics of filing taxes, improving credit standing, analyzing interest rates, and making asset purchases, topics surrounding geometry and trigonometry seem to take precedence. Moreover, only 20% of students take foreign language classes at the K-12 level.
Since it is very unlikely that the lawmakers will eliminate any of the aforementioned classes, Cindy Couyoumjian says that simply adding an extra class on finance would resolve the problem. Although financial literacy requires a lot more than just one semester, a few months should be enough to learn the basics. For instance, the most important lessons about taxation, credit, borrowing, investing, and saving can be covered via week-per-topic approach. Thus, schools do not have to completely revamp their curriculums to fit a ton of financial courses. Merely expanding the mandatory requirements by adding one class would be a great starting point.
Besides educating students on some basic financial topics, a class in this area would be an outstanding way to raise awareness about common mistakes. For example, even though a four-month-long class will not teach one everything about taking loans, folks could at least gain an insight into the time value of money and interest rates. That way, they would be aware of the fact that interest rates depend on factors like credit history, length of the loan, collateral, and similar. Students lacking such essential knowledge is one of the reasons why the current college debt is almost $1.5 trillion. Some other areas that educators could emphasize include tax deadlines, the importance of saving money, the fundamentals of investing, and retirement plans. Employing the mile-wide-inch-deep approach, which means covering a lot of areas quickly, would be enough to give rise to a generation of responsible and financially cognizant adults.
Setting the Minimum Requirements
Making the class non-mandatory would not perpetuate any large-scale changes. The reason why is that students have a very predictable tendency to choose the easiest alternatives as electives. So, even when a finance course exists, the number of those who will sign up for it voluntarily is low. An easy way to combat that problem is to make it a mandatory graduation requirement. Doing so will force everybody to spend at least one semester learning things that they will undoubtedly need. Cindy Couyoumjian further urges educators to set high standards by demanding that students pass a test, proving that they indeed spent a sufficient amount of time mastering the concepts.
Without coordinated action, however, it is hard to believe that any of the forthcoming changes will have much impact on financial literacy. Unfortunately, if each state gets to set their educational standards, the odds of creating a unified curriculum are practically nonexistent. Regardless, implementing at least one finance class would be a good way to head toward a future where people are financially prepared. It would also help the country minimize the staggering debt.