Utah State University is in the midst of getting the university senate’s support to offer a financial literacy course as an option for its social sciences general education class. The course will teach students, among others, about budgeting, investments, borrowing, returns, historical trends and the financial system.
“I think the biggest thing a student from USU could come away [with] from this [financial literacy course] would be confidence,” Senator Pitt told The Utah Statesman. “Confidence in the fact that they know what they’re getting into when they’re buying their first credit card loan, when they’re taking out student debt, when they’re getting ready to buy a home.”
Pitt is campaigning for the course alongside Associate Professor Ryan Whitby.
Whitby has been advocating for the introduction of this course since 2016. When he taught one this year, without it counting towards their specific major requirements, the interest was obvious.
“I think it could benefit everybody, but specifically a lot of students at USU are facing these [financial] choices on a daily basis,” he said. “Having some knowledge, having some preparation, is just going to help.”
Utah is the latest university to tackle the issue of lack of financial literacy among college students. Most students enter college without any formal education in personal finance – only 19 states require high school students to study financial literacy in order to graduate. In 2011, this figure was only 13 and recent years have seen more lawmakers expand this mandate in schools.
Colleges and universities are thus in a critical position to address this crucial deficit in knowledge. In a financial system that’s more complicated than ever before, and a US$1.5 trillion crisis in student loan debt, it’s high time higher education providers play their part in addressing this, for their sake and their students’.
Nearly three-fourths (72 percent) of students reported feeling stressed about their finances, causing their academic performance to suffer, according to a 2014 National Student Financial Wellness surveys.
On top of this, studies have shown that where students receive financial education, they make better decisions about how to pay for college such as preferring high-cost to low-cost financing, decreasing the likelihood of carrying a credit card balance by 21 percent and reducing private loan balances by roughly US$1,300 for borrowers.
Without such knowledge, these students graduate without the financial know-how of how to manage their affairs. The Utah Statesman notes a survey from the Center for Economic and Entrepreneurial Literacy, which found that “54 percent of college student respondents had overdrawn their bank account and 81 percent underestimated the amount of time it would take to pay off a credit card balance by a large margin.”
For the first time, total student loan debt exceeds $1.5 trillion, surpassing auto loan & credit card debt, and mortgages.
If nothing is done, this could double to $3 trillion by 2025.
— ISABELNET (@ISABELNET_SA) April 11, 2019
Whitby said: “There are a lot of issues in terms of people saving for their financial futures.
“So for example, 84 percent of workers have less than US$10,000 saved for retirement and 34 percent have no savings at all. The sooner we can get to people as their making those [financial] decisions, the better they understand the material and it would be more helpful.”