The financial well-being of today’s college students is in jeopardy. The lack of educating teenagers and college students about the basics of financial literacy makes them susceptible to spending too much, falling into excessive debt, and being taken advantage of by various credit card companies. Economics and AP Comparative Government teacher Jeffery Silva-Brown was interviewed to get his opinion on whether it would be beneficial to offer a financial literacy course at Ukiah High School and to determine whether or not anything similar is already offered.
According to Silva-Brown, in his Economics course, “We touch a little about actual Finance at the end of the year but the course itself is all about scarcity, choices, and prioritization.” He later said, “I’d like to think that finance has to do with money, while economics helps students understand where they want to go in life while realizing that all their choices will have consequences.”
When asked how prepared students are to make well-informed decisions regarding their finances during high school and in their upcoming adult lives, Silva-Brown had this to say, “That really depends on the parents and guardians.” He elaborates on this, saying, “Students that live in a more privileged background often don’t have to worry about making intense financial decisions because they don’t experience a real sense of need. This often creates naive decision making in a world outside of their bubble.” He compared this to middle and lower-class students, saying, “Students that don’t have the same means will often be making serious financial decisions at a younger age but are more likely to be the target of high debt burdens from credit cards and technical colleges.” Silva-Brown eventually admitted that “The school could do a better job modeling the concept of choices and consequences while exposing students to some of the financial issues within society.”
According to the Congressional Budget Office, “Between 1995 and 2017, the balance of outstanding federal student loan debt increased more than sevenfold, from $187 billion to $1.4 trillion (in 2017 dollars).” Today’s students must pay off exorbitantly higher debt than past generation college attendees. Silva-Brown recommends that students ask themselves a series of questions before putting themselves in debt. Some such questions include:
- Are you taking the time to apply for all the grants you can during your tutorial period?
- Are you taking the price of tuition into account in your university choice?
- Are you attempting a valued major?
- Is there that much greater value in going to UCLA or Long Beach State, or UC Davis over Sacramento State? Basically, how much do you value a more prestigious university?
- Do you really need a college degree?
- Can you learn your skill through an apprenticeship or on-the-job training, thus avoiding super-expensive technical schools?
Silva-Brown explained, “A vast majority of my students who went to college (over 90%) paid off college debt with no problem.” However, he also admitted that “I also have a very small group of former students that went to elite liberal arts schools and are now thirty-years-old tending bars because they made a very expensive investment without knowing what path to follow. That path needs to be started earlier.”
Another factor contributing to the need for financial literacy is credit card companies taking advantage of college students. In her article titled “Why Credit Card Companies Target College Students”, Latoya Irby lists two reasons why:
- “They have a strong hunch that your parents will bail you out if you run up your credit card bill.”
- “You have a long credit life ahead of you…That means lots of years of interest payments for the credit card companies.”
Credit cards allow students to rapidly accumulate debt, exacerbating what can be crushing student loan debt. Students often don’t understand what they’re getting themselves into—for example, interest rates and the true cost of borrowing.
Silva-Brown, however, when asked if credit card companies were taking advantage of students, had this to say, “The credit card company has most of the knowledge of the consumer (college student, cash strapped, short attention span) while the consumer has little knowledge of the credit system (interest rates, minimum payments, penalties). Is it taking advantage?” He later elaborated on this, saying, “All the terms and conditions of credit contracts are usually very visible on the contract, but students don’t really know what they are reading. They see a false sense of extra income and the low minimum payment and think like a lot of young people think; short term.” Silva-Brown also said, “The method to create a more fair exchange would be to educate the consumer on how important the credit system is, and that the student actually believes that the information is valuable.”
According to the website Next Gen Personal Finance, only 18.4% of United States High Schools require students to complete a financial literacy course. This percentage is alarmingly low considering what the data tell us about student and credit card debt. A financial literacy course should include the following components and be required for high school graduation: effective budgeting strategies, tracking expenses, and interest calculating savings and creating savings strategies, avoiding or managing debt accumulation, completing annual taxes, electronic banking, and balancing a bank account. These critical life skills will equip students to approach their financial challenges with open eyes and hands-on experience, helping them to make smarter decisions with their money.
Students embarking on their adult lives should be properly prepared for financial independence, and incorporating financial literacy into the high school curriculum would benefit them in the short and long term. They will grow their skills and know where to find information for making decisions about college and credit card debt, and other major purchases, as well as building savings for the future. Silva-Brown said, “I believe that a financial literacy course should be a required course for Seniors as a semester class. At this point, students will have actual access to employment and income, and students are mature enough to discuss the serious nature of spending, saving, and investing in one’s own future.” As bestselling author and financial expert Anthony O’Neal put it, “The caliber of your future will be determined by the choices you make today.”
