College costs and a lack of money knowledge are a heavy burden on US youth
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A majority of American teenagers believe that one of the greatest challenges to financial success is the cost of higher education, according to a survey by Junior Achievement.
They’re also concerned about a general lack of understanding of how money, investing, and the economy work. 46% say this is a major barrier to financial security. Other challenges are gender and racial wage gaps (45%) and inequality of education (42%).
Overall, 51% said they didn’t believe that everyone had the same opportunities to achieve financial success.
“It’s just frustrating,” said Jack E. Kosakowski, President and CEO of Junior Achievement USA. “We keep seeing the same challenges year after year, even though people are doing their best to turn things around.”
These efforts include financial literacy initiatives from organizations such as Junior Achievement and the advocacy of personal financial literacy in US schools.
Most of the teenagers surveyed, 95%, believe that education is an important part of equality, and 38% said they had some kind of financial literacy class in school.
“Financial literacy is a 21st century survivability. Every student should learn it,” said 14-year-old Kavya Venkatesan, who will attend Junior Achievement Town Hall and CNBC + Acorns Invest in You, “said Thursday.
Kavya Venkatesan, 14 years old, has already taken an online personal finance course and is learning about investing.
Source: Kavya Venkatesan
Venkatesan attends Old Bridge High School in New Jersey, a state where coursework is required for graduation. She took an online course with Future Business Leaders of America last summer. She has also learned to invest and buy stocks from her parents.
“I was able to develop my critical thinking skills and learn to make strategic decisions,” said Venkatesan. “These are all important skills in financial literacy and can help me later in my life.”
Only 21 states mandate personal finance courses, only a handful of which – Alabama, Missouri, Tennessee, Utah, and Virginia – require a standalone course to graduate from school in 2021.
North Carolina has passed laws for the requirement beginning with the graduating class of 2024, and Mississippi’s class of 2022 is required to complete a one-year college and career readiness course that includes a semester of personal finance, according to the newly released version of Next Gen Personal Finance report on the state of financial literacy in 2021.
In addition, 25 states and the District of Columbia passed laws this year to improve access to financial education. According to Tim Ranzetta, co-founder and CEO of Next Gen, actions range from developing curriculum standards and creating task forces to requesting a course before graduation.
There is also a trend in schools influencing their neighbors. Recent research found that having just one standalone Personal Finance course requirement within a 10 mile radius was associated with a 7 percentage point increase that a neighboring school had the same policy for the next year.
“Administrators, teachers and parents in a larger community speak to one another, and programs that work in a local school can easily create demand for a similar class in their own school,” said Carly Urban, one of the authors of the study and a Associate Professor of Economics at Montana State University.
“That means subsidizing a school in a desert for financial literacy could extend the course to other local schools.”
Florida teenager Jorge Sanchez attends school in one of the state’s counties that requires classwork but the state itself does not.
16-year-old high school student Jorge Sanchez is already thinking about how to pay for college.
Courtesy Jorge Sanchez
The 16-year-old, a sophomore at Jefferson High School in Tampa, will be taking the class in his senior year. Nevertheless, he has already completed programs through Junior Achievement to gain some of this knowledge.
“My family has always been very interested in talking about money and spending your money wisely,” said Sanchez, the son of Colombian and Mexican immigrants.
“When I went to the JA programs, I really got a better understanding of what it means to make money, what it means to spend it and how to budget.”
He also learned to plan smart to go to college. He hopes to receive scholarships and will carefully choose schools so that he does not run into deep debt.
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That’s something a lot of teenagers don’t necessarily think about, said Kosakowski of Junior Achievement USA.
“Too often students decide which school to attend based on where their parents went, where their friends go, a great sports team, as opposed to what area of study they want to work in, what it will cost and how a lot of you will see to it in your life that these educational costs are paid back, “he said.
Four-year private colleges averaged $ 50,770 in tuition, room and board fees in the 2020-21 school year, according to the College Board, which is tracking trends in college prices and grants. Four years in state public colleges averaged $ 22,180.
“As an education consumer, we really need to look at it more as a return on investment,” said Kosakowski.
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