Across the country, and right here in Memphis, students are returning to college after a long break. However, the Federal Reserve reports that more students have student loan debt and few debt management solutions.
The concern is that as student loan debt continues to grow, it could create a new financial crisis. Across the country students have taken out close to $1 trillion in debt. The hope is that more financial education will help to avoid a debt crisis.
More schools are starting the financial education at a much younger age. However, teachers report that they do not feel comfortable teaching economics. According to the reports, less than 20 percent of teachers feel qualified. The Council for Economic Education hopes to correct this problem. Utah is ahead of the curve when it comes to financial education. Under the past leadership of former Governor Jon Huntsman, the state advanced their high school curriculum to include classes like “Earning Income,” “Buying Goods and Services,” “Using Credit,” “Saving,” “Financial Investing” and “Protecting and Insuring.” Utah has been very successful with their education. As a result, Utah has a 1.9 percent default rate, which is a fourth in the national average.
Utah and 45 other states have adopted the Common Core State Standards Initiative. The Common Core establishes nationwide teaching standards for other subjects, but not economics. The Council for Economic Education is working with Common Core to establish a curriculum to teach economics and financial planning.
Hopefully, if students are given proper economic education, the cycle of defaulting on loans will end. Students will be better equipped for the challenges they face in financial planning in college.
Source: USA Today, “Column: Learn before the student loan“, Sabina Bharwani and Carrie Sheffield, Jan. 9, 2013