Financial Literacy Training May be Best Way to Improve College Graduation Rates
According to College Atlas, although 70% of Americans today study at a four-year college, fewer than two-thirds actually finish. Among the more than 600,000 freshmen entering college each year, at least 30% of students will drop out after the first year. And the number one reason why students drop out is financial constraints: 60% of dropouts received no help from their parents to pay tuition.
Why are today’s students of higher education so likely to face financial problems? The National Financial Educators Council posits that it may be due to lack of financial literacy training during K-12 education. In a series of interviews, professionals in the financial industry were asked their opinions about this important question.
Are public schools irresponsible for not teaching children about money? “Yes, absolutely,” says Stephen Lesavich of Coconut Avenue, Inc. “It is my opinion that all high-school students should be required to take a least a basic financial education class. Many high school graduates have never been taught to even balance a checkbook. Many have never had to cash or have even seen a check or payroll check, as the students use electronic banking and their mobile devices for payments.” Lesavich suggests lack of knowledge impedes handling even the most basic of life necessities. “I would say most high-school graduates do not have a single clue about even the simplest things such as creating a simple budget and have no real idea what it actually costs to pay for housing, pay for food, utilities, etc. They do not know what their income and liabilities/bills are each month…
The responsibility spans the educational spectrum, says Shahar Ziv of Acing Your Finances, who teaches personal finance classes at Harvard College. “Responsibility for teaching personal finance lies across the education system, starting in K-12, but extending through college. College is about getting an education, but that doesn’t just mean academics. With record high student loan levels, students today are more stressed than ever,” Ziv explains. And financial stress permeates other aspects of students’ lives, he adds: “Not only does helping students develop financial capability affect their wallets, but it also impacts retention, productivity, and wellness.”
Scott Vance of Trisuli Financial Advising offers a unique perspective. “It is such a basic part of life,” Vance comments. “Schools will boast, ‘I have XX AP courses,’ [or] ‘we have XX courses which can provide college credit;’ in my mind that is irresponsible. I don’t care how many college AP courses you attend in high school – if you can’t pay your bills while attending college, you probably won’t make it through. I just retired after 20 years in the army,” cites Vance as an example: “It would be immoral for me as an officer to send a soldier into combat who is a superb marksman when he cannot complete the basic task of loading ammunition into his rifle.”
Scott Tucker, owner of Scott Tucker Solutions, Inc., mentions the role of teachers in this cycle. “Our teachers are a product of our schools,” Tucker says, “So if they didn’t get an education in personal finance, which most didn’t, and if school curricula doesn’t include personal finance today, which it usually doesn’t, then the problem is self-perpetuating.” Starting personal finance classes with students during K-12 and extending financial literacy training throughout the college years may be the single best way to improve those retention and graduation rates.
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