Financial literacy low among high school students

A common retort from educators to students’ question of “When will I need to know this?” is often “For the next four years.” Or their response to “Why can’t I…?” is “Because you can’t in college.”

But for some, college isn’t the next four years. And even for those for whom it is the next step, life still follows.

While secondary education is designed to prepare youth to be informed citizens, students don’t seem to know much about being financially successful citizens.

If asked how to write for a standardized test, high school students would likely have a good grasp on the subject. If asked what credit is, how to obtain it and what a good FICO credit score is, the story might be different.

For clarification, a FICO credit score is used by creditors as a measure of how risky it is to credit an individual—say, when taking out a loan for a house payment—and ranges from 0 to around 850. Credit is essentially based on if you paid back money borrowed and how timely you did so. The higher your credit, the more likely creditors are to trust you.

But a 2013 study by EverFi Inc. of U.S. high schoolers showed that “on average, students surveyed believe that a good credit score is about 500 and over a third believe that a good credit score is 300 or less.”

For perspective, MyFico.com reported only 2 percent of the U.S. population has a score lower than 500, the equivalent of saying, “Well I sorta paid you back, but most of the time it was a little late and I probably still owe you some.”

The same 2013 study by EverFi Inc. also found that 41 percent of students surveyed think they are entitled to receive “all paid taxes back upon filing a federal income tax return, or that they do not have to pay federal income taxes at all.”

Unfortunately, if you under 65, single and making less than $10,150—as most young working adults are—you will be paying a portion of your salary to the national government, and while you may be eligible for tax refunds, that does not mean you are entitled to immediately, or ever, receive a full refund.

However, many students acknowledge their financial blindness. The same survey said 83 percent of students felt personal finance should be mandatory in high schools, in contrast to the 17 states that actually require these classes to be included in the curriculum.

Though schools are doing a great job of raising a generation of trivia experts and robotic test takers, they lag on preparing students for personal responsibility. While many Carmel High students choose to further their education after high school and will benefit from the “Because college” argument, the financial world that follows is still murky at best.

What schools need to do is to increase opportunities for students to learn content that will be applicable beyond the classroom scenario. Many schools, encouraging student economic fluency, have created financial literacy courses that cover basic money lessons and the essentials of how to file taxes, how to create a budget or how to manage a bank account.

While CHS does provide economics courses, the aim, according to the course descriptions, is to give students the “capability of analyzing and critiquing past, present and future economic policies.” Financial literacy, therefore, should be a separate, semester-long elective course for students interested in increasing real-world financial knowledge.

-Aaron Kreitman