College Prep Financial Literacy Standards

The National Financial Educators Council has developed a draft of ‘College Prep Financial Education Standards’ and calls upon industry experts to participate in the completion of these guidelines. The overall goal of the Standards is to provide a clear personal finance curricula framework for educators that ensure specific lessons are taught to college bound students prior to signing student loan documents.

In collaboration with industry experts, the NFEC has outlined an initial draft of the Financial Education Standards for college bound students to serve as a framework for those teaching future college students personal finance. The NFEC seeks additional input from those passionate about improving the financial capabilities of our youth to refine these standards. Share your experience, creativity, knowledge and personal finance expertise to influence college bound students personal finance guidelines.

The current Federal Student Loan program has high school students make decisions that will significantly impact their finances before they receive any personal finance training. The student loan market has ballooned in size to over $1 trillion that is already negatively impacting the U.S. economy. The NFEC is mobilizing to proactively address this problem.

We seek your input on the College Prep Financial Education Standards to encourage responsible borrowing that protects our country and give youth the opportunity to achieve their personal American Dream. Please review the initial draft of the Standards below. Leave any comment that you think will help refine these guidelines. *When leaving a comment please identify it with the topic heading and standard number. Example – Credit & Debt, #3

 

Psychology

1. Understand the impact of money on one’s life. Become motivated to learn how to manage money effectively, and develop the ability to identify and recognize the emotions involved in making financial decisions.
2. Understand and recognize one’s personal relationship with and thoughts about money to build financial literacy.
3. Demonstrate an understanding of how personal choices and feelings affect financial well- being, as well as other areas of life. Develop the ability to recognize and describe these choices using various examples.
4. Develop personal financial and lifestyle goals and successfully recognize the importance of maintaining said goals to becoming financially literate.
5. Identify how lifestyle choices relate, directly or indirectly, to money.
6. Identify the role of emotions in making financial decisions and build an understanding of the connection between money and emotions.
7. Recognize the importance of becoming a good money steward and how this correlates to long-term financial well-being.
8. Demonstrate the responsible traits needed to establish and maintain lifelong financial well-being.
9. Understand and recognize how personal financial decisions impact one’s life and the community.

 

Credit & Debt

1. Understand the importance of building a positive credit history.
2. Demonstrate proficiency in reading credit reports. Understand how a credit report can impact financial well-being.
3. Identify and recognize key elements that go into calculating a credit score, as well as the organizations that maintain credit information.
4. Understand how to build a positive credit history and improve credit scores.
5. Recognize the importance of monitoring a credit report to avoid fraudulent activity.
6. Develop an understanding of how to obtain, evaluate, and dispute items on credit reports.
7. Understand how identity theft can affect a credit report, as well as how to protect oneself from credit fraud.
8. Develop knowledge of credit card payment policies to positively impact credit scores and build credit history.
9. Build an in-depth understanding of the various types of debt and differentiate between positive and negative debt.
10. Differentiate between credit card and debit cards. Identify and understand various situations in which a credit or debit card should be used.
11. Understand how lenders qualify potential borrowers.
12. Demonstrate the ability to prepare a loan application for qualification.
13. Identify and understand how to compare the cost of purchasing items under different credit options.
14. Reach proficiency in the use of financial calculators and other tools to calculate the cost of borrowing money.
15. Understand the consequences of “bad” debt and learn to improve various debt situations.
16. Apply systematic decision-making to evaluate loan options for various products, such as student loans, automobile loans, home loans, and credit cards.

 

Accounts & Budgeting

1. Understand the importance of budgeting to achieve personal financial and lifestyle goals.
2. Understand how to differentiate between a want and a need when making purchases.
3. Identify and recognize money management mistakes and understand how to take proper corrective action.
4. Develop an understanding of the actual and proposed costs of owning or leasing a car.
5. Develop an understanding of the actual and proposed costs of owning or renting a dwelling.
6. Demonstrate proficiency in maintaining a personal budget that reflects one’s current and/or future financial situation.
7. Understand and recognize how to anticipate and adapt to circumstances that affect personal finances.
8. Demonstrate an ability to identify common spending traps. Understand how to live within your means.
9. Demonstrate proficiency in basic banking procedures; specifically account setup, finance management, and banking automation.
10. Identify and recognize personal spending habits that will affect future lifestyle and financial goals.
11. Develop an understanding of how landlords qualify tenants and an understanding of the completion of a standard lease agreement.
12. Develop a budget for college and a budget after college that estimates student loan payments.

 

Income

1. Understand the impact education can make on ones income.
2. Understand how economic and social trends can affect career and income potential.
3. Identify and recognize passions and strengths; learn to locate potential career options that align with those passions and strengths.
4. Develop a plan for acquiring the skills and experience needed to achieve career goals.
5. Understand how taxes affect paychecks and the difference between net and gross income.
6. Demonstrate knowledge of how to change careers while remaining financially sound throughout the transition.
7. Identify and understand the steps required to attain promotions and raises.
8. Understand the differences between jobs, careers, and entrepreneurial endeavors, and recognize the benefits and disadvantages of each.
9. Identify various income source that can help reduce student loan debt while they are in school.
10. Demonstrate the ability to research the income potential associated with various college majors.

 

Skill Development

1. Understand the relationship between continued skill development and future opportunities.
2. Demonstrate the ability to locate potential career options that align with one’s passions and strengths.
3. Develop a plan for acquiring skills and necessary experience to achieve career goals.
4. Demonstrate the ability to strategically evaluate the job marketplace and create a job plan based on economic conditions.
5. Understand the various ways one can attain skills.
6. Demonstrate the ability to calculate the potential return on investment from a higher education.
7. Identify the skills necessary to enter one’s field of choice.
8. Understand the value of one’s skill sets and know one’s worth in the global workforce.
9. Posses the ability to set skill development goals and create a timeline to build identified skill sets.

 

Risk Management and Insurance

1. Identify the various ways one can manage risk.
2. Demonstrate ability to identify and manage risk.
3. Demonstrate an understanding of the concept of insurance and the potential benefits insurance policies offer.
4. Understand and identify various types of insurance, the protections they provide, and the risks associated with not having various forms of insurance
5. Identify and understand the categories of insurance they may need in the near future.
6. Demonstrate the ability to locate an insurance company and insurance agent.
7. Possess the ability to identify factors that affect insurance premiums.
8. Demonstrate the ability to navigate the claims process.
9. Understand the key features of insurance policies including coverage amounts, deductibles, premiums, and other facets.
10. Understand preventive measures that should be taken in college to prepare for life after college.
11. Clearly understand the risk and reward involved with incurring student loan debt.
12. Understand the risk involved with various decisions that will impact their ability to repay student loan debt.

 

Business Relations

1. Demonstrate the ability to know the right people to reach out to on campus and off to discuss student loan debt matters.
2. Demonstrate the ability to build business relationships and networks.
3. Understand the importance of participating in internships while in college.
4. Understand the information necessary to effectively network with professionals in the field they aspire to enter.
5. Understand the importance of finding and working with a mentor to build professional skill sets and obtain unbiased advice.
6. Demonstrate the ability to determine whether financial advice is accurate, objective, and in their best interests.

 

Long-Term Planning

1. Demonstrate an understanding of how cash flow and net worth impact one’s long-term planning.
2. Demonstrate the ability to calculate the net worth and/or cash flow one needs to live a desired lifestyle.
3. Develop and create a long-term personal financial plan that includes repayment of student loan debt.
4. Understand the initial steps necessary to preparing for their financial future.
5. Understand the connection between money and personal relationships.
6. Possess the ability to effectively communicate with loved ones about money and financial goals.
7. Demonstrate the ability to use an online calculator to plan out their long-term financial goals.
8. Demonstrate how near-term decisions can impact future opportunities.
9. Apply systematic decision-making to student loan debt and long-term financial goals.
10. Create a personal financial plan that takes into consideration lifestyle goals.

 

Investments

1. Understand the definition of investing and the relationship of investing to the student loan decision process.
2. Understand basic investment principles.
3. Identify and understand the risk and reward potential of taking on student loan debt.
4. Develop knowledge of the steps necessary to make informed investment decisions.
5. Demonstrate the ability to calculate compounding interest and understand how early implementation of this principle helps people achieve their financial goals.
6. Understand opportunity cost and how it impacts investment decisions.
7. Create and develop a plan to build the financial foundation one needs before investing.
8. Demonstrate proficiency to calculate return on investment.
9. Understand how to calculate the monthly savings and rate of return necessary to reach one’s investment goal.
10. Develop and create a long-term financial plan that does not rely on social welfare programs.
11. Demonstrate an understanding of the cost, fees, or commissions associated with student loans.
12. Develop an understanding of the various student loan programs available.
13. Possess the ability to student loans based on interest rates, terms and transaction costs.
14. Demonstrate systematic decision-making to create a personal financial plan.

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