College Students Are So Bad With Money, the Government Says Financial Literacy Should Be a Required Course
College graduates in America are saddled with a mind-boggling $1.5 trillion in student-loan debt. Not only do these obligations haunt former students for years after they have entered the workforce, influencing employment decisions and purchasing power, among other things. The companies that make educational loans often come in for criticism on a number of fronts — these are the 10 student loan services with the most complaints.
The crushing effects of this financial burden have not been lost on a number of the Democratic presidential candidates in the 2020 election, and they have floated proposals on how to help mitigate it. Elizabeth Warren, for instance, proposes a plan that would wipe out as much as $50,000 of student debt per person; Beto O’Rourke has suggested forgiving debt for students who move to economically struggling parts of the country.
A government group, though, has a different idea. The Financial Literacy and Education Commission — which includes representatives of the Treasury Department and the Department of Education — espouses mandatory financial literacy courses and fully transparent financial-aid offer letters.
Students in general — there are presumably exceptions, including those studying economics — are notoriously clueless about financial matters. One study found that only 28% of students could correctly answer three questions about inflation, interest, and risk diversification, while in a survey of 25,000 students, only about half were able to give the right answers to more than two questions on a six-question quiz on finances.
This is an unfortunate situation, given that the price tag for higher education has soared over the last half century, as considering will bring home — at least compared to the cost of college the year you were born.
The government commission calls for financial literacy course to be required at institutions of higher learning. It also wants financial-aid offer letters to include “an itemized and sub-totaled cost of attendance,” among other information and asks for “broad adoption” of debt letters, informing students of their annual debts and future repayment amounts and options (these are now required in only a dozen states).
These measures, according to Mark Brown, chief operating officer at the Department of Education’s Federal Student Aid office, will empower students and their families “to make better and more informed decisions about their education.” And that includes what courses to choose — these are the highest and lowest paying college majors in America.