Kewho Min on why students should learn personal finance in college

A recent article in the Denver Post says, “College graduates are marching proudly into the adult world, but behind those confident smiles, however, are worries about debt, credit scores and money.”

If you read that and were troubled, you’re not alone. The lack of financial literacy among adults–and not just young adults–is certainly troubling; but it’s not surprising.

The National Financial Educators Council (NFEC) released statistics last month from its Financial Literacy Test & Survey Center showing a grade level of D (62%) as the average test results for all age groups who were tested for its National Financial Capability Test.

The NFEC reports that at least three states have mandated  financial education and they’re seeing some improvements. “Three years after implementing [the mandate] in Georgia, Idaho and Texas, all three states examined saw increased credit scores and lower delinquency rates on credit accounts,” writes the NFEC. “It takes time for state financial education mandates to have an effect. While very few positive effects were measured one year after implementation, by the second year after implementation, there were consistently positive results for the students.”

The Denver Post article about college grads cites a survey by Experian, saying “the majority of college graduates do not feel adequately educated about personal finance topics. The blame, according to students, lies with their institutions of higher learning, which did not prepare them to manage the student loan debt and credit card debt that many face upon graduation.”

There’s much debate about whose role it is to provide financial education. Is it a parental responsibility? A state, or even a national, responsibility? Or, as the Experian survey suggests, the role of an academic institutions who offer higher learning opportunities that, ostensibly, prepare young people for thriving careers in adulthood?

But is landing a good job the only key to having a bright financial future? Not necessarily. Proper money management and a fluid understanding of how personal finance works is equally important.

The graduates who were surveyed reported feeling “stressed, overwhelmed and worried” about their earning potential, as in not making enough money to take care of their daily expenses, which is to say nothing of the fact that many students are leaving college with a lot of debt and little to no savings.

Could financial education put students’ minds at ease? Should the financial education process happen way before students even apply for college? In which case, might some students have less debt by choosing more affordable colleges in the first place?

These are issues that sooner or later we’re going to have to seriously contend with and begin to answer.