Why financial literacy should be part of the U.S. school curriculum

Today, as many as 44.7 million Americans collectively hold over $1.7 trillion in student loan debt, according to CNBC. That is an average of $32,731 for each individual.

These numbers are a reminder of the importance of financial education for young people. As a high school student in California, I believe that learning basic concepts such as debt and credit will become valuable life skills in the long term. In California, schools do not require personal finance classes, and with limited proper resources, it becomes challenging for all students to access them. Therefore, if personal finance is mandated in the classroom, it should be accessible to every student, regardless of their background. Furthermore, I argue that the legislature and leaders in our nation must work together to prioritize financial literacy. To combat this issue, I have created the High School Financial Literacy Foundation, a non-profit organization that provides educational resources on financial literacy, including articles, training courses, and lesson plans, for high school students seeking to learn financial concepts, practice money management, and build strong financial decision-making and economic-reasoning skills.

As a society, we need to emphasize the significance of providing the youth generation with a substantial financial literacy foundation that will empower them to build strong money management skills and habits. Financial literacy has lifelong benefits and can allow young adults to have a successful financial future. Thus, if proper financial education is provided at the high school or even middle school level, we are bound to have a financially stable and responsible adult generation.

While financial literacy can reduce the likelihood of using payday loans for young adults and increase asset accumulation, it can also affect how students finance their college education. One report shows a shift from higher-cost borrowing to lower-cost borrowing for college students exposed to financial literacy in high school. These students are 3.3 percent more likely to apply for federal assistance and 5.3 percent more likely to take out a direct federal Stafford loan. This rise in applications for aid leads students also to be 3.3 percent more likely to have grants. In the same study, they are 21 percent less likely to carry a credit card balance and reduce higher-cost forms of borrowing. Conditional on borrowing, students reduce their private loan balances by roughly $1,500. These findings demonstrate how personal finance graduation requirements can provide practical benefits that encourage students to build strong financial decision-making and economic-reasoning skills, resulting in better life outcomes.

We can not expect young adults to solve complicated personal financial matters, such as whether to buy life insurance or loan money to relatives or friends, if we do not equip them with the skills to make these decisions. Therefore, we should implement comprehensive personal finance classes into the current educational curriculum.

An early understanding of concepts such as debt management, interest rates, compound interest, opportunity costs, and budgeting could help students manage the loans that they need to fund their college education or maintain financial stability during uncertain times. These fundamental skills will be beneficial and practical in the long term.

To that point, financial literacy advocates have found extensive research that proves a positive correlation between financial education and its outcomes. One study conducted by the Finra Investor Education Foundation compared three states that require financial education with three that did not and found that credit outcomes improved in the states with coursework requirements. Moreover, three years after a “rigorous financial education program” was carefully implemented in Georgia, Idaho, and Texas, there was a rise in credit scores and a decrease in the probability of delinquency among young adults.

The world we live in is more complex than ever. We can now send and receive money through mobile payment apps such as Venmo, invest in the stock market through free-trading apps like Robinhood, and budget through online services such as Mint.

While the same lessons still apply, young adults have more easily accessible ways to spend and accumulate debt without ever seeing paper money change hands. By removing physical barriers to spending, for example, subscription services and online shopping, people are more likely to lose control of their finances. Therefore, as community and business leaders, educators, and students, we share a responsibility to empower the next generation with the financial education they need today to make the best decisions tomorrow.