Personal Financial Literacy and Student Loans

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Student debt and college tuition levels have increased significantly in the past decades. The trends, which are coupled with significant recession in society, have contributed to the emergence of serious questions on whether the borrowers are heading to the state of defaulting while the taxpayers are expected to foot bills and unprecedented numbers of the loans increase (Business2Learn 4). Typical borrowers are subjected to facing debt burdens and the cases of the financial hardships, which are depicted in the media, are not as common as it is expected to be experienced for the narrative that is common for the people to believe. However, there are troubling issues, which are linked to the loans of the students that are not accorded similar attention. These include the high default rates that are not affordable taken on loans and the dysfunctional market, where colleges compete as the cost for the tuition increases rather than going down (Cappelli 1). Compelling and persuasive, the loans game move past the politicized and emotionally charged talk, which is ever surrounding the debt of the students. Thus, policy proposals are essential to be implemented in the education sector to ensure that all students in high school get an opportunity to learn about student financial literacy and how they can overcome the problems at hand significantly (Merino 3).

            In the past, personal finance existed as a straightforward thing in society. Wages were adequate such that an individual could save while compound interest power supports the other (Cappelli 2). Further, individuals had the opportunity of entering the housing market that is cheap while others became conscious on issues of debt in society and the stock market was not a challenge. However, in the current society, things have changed significantly. The ultra-low rates of interest have contributed towards the increase in the prices of assets and debt. Thus, things that range from houses all the way to the stocks have become expensive. The student debt has accumulated to $ 1.45 trillion and the grads are squeezed for years as they focus on making the payments to be complete (Business2Learn 2). The situation is escalating as these high school graduates lack skills and knowledge on matters of financial management. Consequently, they are finding it complex for them to make decisions, which are reliable on their choices in life that are tied to money matters. Moreover, people lack a good understanding of what is expected of them in society when engaging in making of the different decisions when they face several alternatives on how to spend their money wisely.

            In the United States, it is only 16.4 percent of the students who find it mandatory for them to engage in the course of personal finance while in high school. Further, there are only 5 states, which require their high schools to offer personal finance courses, which include Virginia, Utah, Tennessee, Missouri, and Alabama (Merino 2). The implication is that student finance literacy in the United States is quite low. Hence, these learners are released to the challenging real world, which makes it complex for them to survive because of the intensive competition for the limited resources in society. Therefore, the students find themselves in a confused state in society because they see different things from what they expected. Such is because they lack the awareness of how to make choices and decisions on matters of financial literacy as it is experienced and anticipated in society at all times.

            Young adults lack the adequate preparation, particularly on matters of decision making on saving, borrowing, and credit. Thus, several economists and educators, as well as parents are advocating for the teaching of personal finance in schools. In the current world, there are several financial decisions, which individuals are expected to make (Curry and Shillingford 4). When students enter the stage of adulthood, they are expected to engage in making of several financial decisions. Therefore, the provision of the classes on financial literacy is an integral tool towards ensuring that learners are fully equipped with skills and knowledge on financial decision-making.

            Personal financial education is essential for the students (Cappelli 3). The classes are designed to ensure that learners get assistance in relation to issues, which they expect to face in the world, which include taking and paying the student loans, reading and signing of the leases, credit cards use, saving, and investing (Curry and Shillingford 4). The financial literacy for the students will ensure that they are fully equipped and prepared to take the roles related to financial matters in the future.

            At the time when students graduate from the high schools, they are expected to engage in making of different choices, which are related to post-secondary education that they are required to pursue. Such includes how they will make payments for the education. Prior to them knowing this, they leave college where the loan debt increases and are not able to make the repayments because they get the jobs, which are underpaying. Such is the time when they begin learning about the critical aspects related to personal finances while working. Towards the time when they get at the age of 30, they find themselves making mistakes, which last a lifetime (Films for the Humanities & Sciences 4).

            Currently, over 60 percent of the student borrowers are under the debt of student loan, which they are still repaying (Films for the Humanities & Sciences 3). Majority of them starting charging the credit cards so that they can be in a position to meet the needs of their lifestyle. Consequently, majority of the student borrowers need to engage in the delay of their saving so that they can retire or build a home. Hence, the financial illiteracy is widely spread such that it affects generations and hurts the economy and society.

            The financial class for the students acts as the major source of their security and stability on matters related to life in the future. While in high school, learners engage in the process of making decisions of the place where they need to attend college, as well as how their education can be financed. Thus, several efforts are undertaken, which are geared towards generating the money that needs to be used in the classroom. In the year 2015, a study was conducted in the human resources journal, which indicated that classes in mathematics were effective in the process of training students to engage in financial markets, avoid foreclosures, manage their credit, and invest their income (Films for the Humanities & Sciences 1). In 2014, the report by the Federal Reserve indicated that the exposure of the students to the education on personal finance improved their credit scores as compared to those who did not have this exposure (Films for the Humanities & Sciences 2). The integration of the math classes with those of personal finance improves their effectiveness on the life of the students. Such helps in combating the poor financial literacy, which exists among several students in society.

            The financial class will teach the students very useful skills that they will use in their life, which include filling the tax return, writing checks and keeping their track, balancing the checkbook, and funds investment (Curry and Shillingford 4). Moreover, learners get an opportunity to know how to prepare and make their budgets for the present works, as well as the future. Through the lessons, a person acquires the basic business skills, which are vital in different aspects of life. Hence, an individual who has taken the class on personal finance is safer as compared to the person who has not undertaken this course since it is impossible to make the huge mistakes that are related to life.

            Personal finance classes are essential in the affluent suburbs and inner-city neighborhoods. Despite the fact that the parents are well off for a person, an individual needs to comprehend how money world is navigated efficiently (Films for the Humanities & Sciences 2). Every person needs to know how the money works irrespective of the financial status of an individual. Therefore, it is always wrong to send the irrational and irresponsible 18-year-olds to the stressful and confusing money world where they are required to manage the finance without having them undertake a course on financial education.

            The young are essential economic consumers, and the economy cannot be created when these individuals lack the ability to build their bank accounts. If people are concerned fully with the achievement of the economic goals that include full employment and price stability, there is a need to engage in the implementation of the curriculum for personal finance in all high schools. Such is because when there is failure in planning, the implication is that there is a planned failure. Money appears as an awkward thing to discuss, but it is always part of life of a person. Thus, because the person who is 15 years is not making money, it does not imply that the individual does not deserve learning about money (Annand 2). Therefore, providing an early financial mindset to learners is essential to ensure that these individuals get a good glimpse of matters that are related to finance. The move contributes towards shaping the lives of these young person’s to ensure that they do not get wasted in the future.

            The society considers parents as the role models and the best educators of the students. Thus, they are expected to create change in the school by advocating for financial literacy where the classes on finance are a must as opposed to being elective. Further, they need to ensure that they teach the students about financial literacy while at home. Such involves having parents discuss matters of finance with their children (Films for the Humanities & Sciences 1). These conversations and discussions ensure that students have the chance and opportunity to be successful as the best planners and learners in society. Parents will see the fruits of teaching their children on matters of financial literacy when they see these individuals not coming back their basements immediately after college to live with them and depend on them. The situation occurs because the students will have gained skills and knowledge on how to make essential choices on life matters through the financial classes, which include finance planning.

            Quality personal finance education for the students while in high school will contribute significantly towards the lowering of the student debt, which is experienced in society (Annand 2). The education will also make sure that learners have the opportunity to comprehend what is expected of them in real life on matters of finance, as well as making quality decisions. Further, learners will get an opportunity to appreciate the change of their status on growth and development from youth to early adulthood level. The students will also have the opportunity to achieve success in the conduct of their duties in life because they will have that element of financial literacy, which will help them in making critical decisions in life efficiently.


            In conclusion, student’s financial education improves their credit scores and prepares them for the real world experiences on matters related to finance. Such is an essential course that should be included in schools to ensure that students are ready to face the real world. The class will also help in improving the perception of the students on future matters on areas on areas of education and general life. Thus, the student debt will decline significantly and substantial economic development and growth will be seen in society without having the burden of student’s financial matters.

Works Cited

Annand, David. Introduction to Financial Accounting: Based On International Financial

Reporting Standards, V. 2.1. 2 ed. [s.l.]: Valley Educational Services Limited, 2016.

Business2Learn, LLC. Price of Admission: America's College Debt Crisis. New York, N.Y.:

Infobase, 2012.

Cappelli, Peter. Will College Pay Off? A Guide to the Most Important Financial Decision You

Will Ever Make. First edition. New York: PublicAffairs, 2015.

Curry, Jennifer, and M. Ann Shillingford. African American Students' Career and College

Readiness: The Journey Unraveled. Lanham, Maryland: Lexington Books, 2015.

Films for the Humanities & Sciences (Firm). Credit, Borrowing, and Debt. New York, N.Y.:

Infobase, 2011.

Films for the Humanities & Sciences (Firm). Declining By Degrees: Higher Education at Risk.

New York, N.Y.: Infobase, 2011.

Merino, Noël. Student Loans. Farmington Hills, Mich: Greenhaven Press, a part of Gale,

Cengage Learning, 2016.

August 18, 2023




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