Students Need to Learn Personal Finance
One of the greatest financial crimes against humanity is the student debt crisis. How did we get to a point where student loan debt has eclipsed $1.7 trillion? Here’s how the story goes:
Children are educated in the schooling system for 18 years in order to be set up for “success” by taking out tens of thousands of dollars in loans to potentially receive a degree, just to land an entry-level job to begin the journey of working up the economic ladder.
This model works out well for many, say computer science and chemistry majors, but what about those who aren’t really the college type, or those who enjoy art history or sociology? Or, those who feel societal or parental pressure to attend college despite their internal inclinations otherwise?
Clearly, there is a lot of room for error, and most will tell you that their college degree has virtually no impact on their job and that most employers don’t care about your degree as much as your experience.
The main reason why college degrees are so expensive today is due to the government’s heavy involvement in education, for both public and private schools. In addition to this, many young adults (aka 18-year-olds) are blissfully unaware of the financial impact college has on their ability to save or invest in their early years, regardless of their major.
The student loan debt crisis could be mitigated in part with personal finance education. This is something that is foundational to existence on earth and can help our students achieve financial freedom, not government dependence.
Many students, regardless of economic status, do not have parents stressing the importance of personal finance, and how costly college actually is, both in the short and long term. Some parents don’t have the bandwidth or background knowledge to teach their children personal finance.
If students had a fundamental understanding of how to make a budget, save, invest, minimize student loans, understand mortgages, retirement, and writing checks, they would be much wiser leading into the thought of financing their own education.
Our educational system should teach these fundamentals before they go to college, as college is extremely expensive and students can make these decisions virtually on their own. There is an emotional and social appeal to getting a degree, but there are financial consequences.
Many students don’t fully consider the consequences, myself included, and that is why we are seeing the ballooning crisis impacting our early years professional years.
Teaching these students basic, sound, financial wisdom will set them up for success more than anything else taught in school, and will give many more students the confidence to opt-out of college if they lack direction, focus, or the means necessary to finance it.
This will help the individual students as well as society, as more people will be better stewards of their earnings, taking on less debt, and investing more resources into the productive sectors of our economy.
Students need personal finance, and they needed it yesterday. Let’s teach our students how to think critically about their financial and educational goals before we push college on them. That way, students can be set up for sound financial habits and long-term success when classrooms are in the rearview mirror.