Public Schools Responsible for Preparing Students for Financial Life, Say Experts

Why do 1.3 million U.S. college students graduate annually carrying student loan debts? Why do 30% of college and university students drop out after the first year? The National Financial Educators Council is concerned that lack of money management education in junior high and high schools may be the culprit. In June 2016 the NFEC interviewed a group of financial professionals to gain perspective on this important issue.

Is it because college is too expensive? “No,” answers Stanley Tan of “In fact, there are over 600+ colleges that cost less than $4,000 per year…EXCLUDING financial aid.” And it’s not because the government is giving out too little aid, either, claims Tan: “In 2015, the federal government gave out $128 billion to 12 million students. To put that into perspective, each student gets $10,667. The average four-year public colleges cost $9,410 per year. If you work 20 hour/week at a $10/hour wage, you’ll get $10,400.”

So why do students still graduate with student loan debt, and why are dropout rates so high? According to Danny Kofke, author and Resource Sales Consultant, it’s because “schools are irresponsible when it comes to teaching our youth about managing money.” Rather than offering money management classes, “We teach them things such as the periodic table and the plot of Beowulf – which most will never use – but neglect to teach things such as how to balance a checkbook and budget your money,” Kofke adds.

Public education not only should prepare students for college, but also prepare them for life, contributes Laura Canales of CPABOISE Accounting and Financial PLLC, a long-term supporter of teaching financial literacy. “In my accounting practice I see the results of people not having any exposure to financial concepts all too often,” Canales says. “They don’t understand income and expenses, they can’t budget, they don’t understand how the income tax system works, they compare their financial situation to others’ situations without understanding why they’re different – the list goes on.”

In the opinion of Trevor Ewen with Pear of the Week, “It’s a mix of schools and parents who should be in charge of ensuring students are prepared for the financial challenges of adult life.” While schools are well-equipped to teach the basics of debt, investing, or accounting, “Schools have a much harder time with lifestyle philosophies critical to sound personal finance,” adds Ewen. “These are the kind of things parents are much better equipped to teach: concepts such as living below your means, saving for retirement, investing in yourself, and how to evaluate risk.”

As Howard Dvorkin, CPA and Chairman of, adds, “I’ve never understood why schools teach economics but not personal finance. Or why we teach our children geometry but not compound interest. High schoolers learn about the broad strokes of capitalism versus communism, but they don’t know the basics of APR or what ‘debt-to-income ratio’ means.” Americans now have more than $1 trillion in student loans. “That’s approaching a national disaster,” suggests Dvorkin, “So obviously, our educational system isn’t helping. One of the purposes of a good education is ‘good citizenship.’ That doesn’t just mean learning the differences between the three branches of government. It also means learning how to be fiscally responsible.”

To add further perspective regarding the student loan debt problem, Robert Collins, Vice President of Financial Aid at Western Governors University, explains that students typically do not consider the amount of financial aid they actually need in the context of other sources of income (scholarships, grants, etc.). Thus they fall into the trap of borrowing all the money they have available to them, rather than limiting their scope of loan debt to actual costs. He argues that students and parents should be thinking much more strategically so they can keep their debt load to a minimum.

“We still hear from graduates in their 20s and 30s who have no idea how interest works when paying off student loans,” comments Andrew Josuweitl, CEO of Student Loan Hero. “Yet we expect these young people to make smart financial decisions and manage tens of thousands of dollars in debt. Because we’re not teaching personal finance basics, we’re doing a huge disservice to our students.” These professionals clearly agree that public schools bear an important responsibility to provide financial education for youth.


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