With the average student loan debt in 2017 ranging between $20,000 and $25,000 and the amount of outstanding student loans exceeding $1.5 trillion nationally, it’s becoming imperative for students to understand basic finance.
Even at the high school level this need is becoming increasingly apparent. Nineteen states currently mandate high school graduates gain basic financial literacy (setting budgets, opening and monthly balancing checking accounts, and understanding interest penalties) before graduating. This is up from 13 in 2011 according to the Council for Economic Education.
If students failed to gain a grounding in personal finance in high school, often the gap was filled by classes in community college, summer programs and even state universities. Today, however, the demand for personal finance programs is strong and growing according the Financial Security Project at Boston College. So strong that even Harvard and Princeton University are offering programs to their students.
Earlier in May of this year Princeton launched an inaugural Financial Literacy Day, accompanied by T-shirts and free consultations.
The Harvard personal finance workshops are offered with less fanfare and are composed of four two-hour sessions in which instructors discuss debt, credit, retirement savings, compounding interest and other select personal finance topics. Harvard has slightly increased the number of first-generation students in its recent classes, over half of whom come from households with parents making less than $40,000 a year. They bring with them a lot of basic questions that legacy students coming from households earning more than $500,000 annually might not share.
Regardless of this disparity of perspectives, students from both strata appreciated the workshops and assistance in grappling with the daily financial issues many students face. While Harvard is now recognizing this reality, numerous schools began offering personal finance courses (some for credit) years ago.
At University of California, Berkeley, Fred Selinger has taught Personal Financial Management at the Haas School of Business for the last 8 years. Over 5,000 students have completed this two-credit course with the upcoming fall semester at capacity.
Cornell University, yet another Ivy League school, offers a Personal Financial Management course through its School of Hotel Administration. The three-credit course covers credit, retirement planning and even ventured into reviewing the 2008 subprime mortgage debacle. What many students enjoy is the application of economic principals to daily financial decisions and knowledge.
There has always been a concern among the most selective schools about emphasizing the practical instead of the theoretical. Personal finance is a reality that each day must be confronted and hopefully mastered. The tools to its mastery might come from high school, community college, or Harvard. Wherever learned, properly applied these concepts are likely to prove priceless. nancial literacy before they graduate and have to set budgets to pay back their share of this growing debt load.