Study: 1 in 6 15-Year-Olds Lacking Financial Education

Most high school graduates who are heading off to college will be facing newfound freedom for the first time, and, along with that comes responsibility, especially where money is concerned.

Marilyn Campbell, writing for, reports that a recent financial literacy assessment of 15 year-old students by the Organization for Economic Co-operation and Development (OECD) showed that one in six have not been versed in basic financial literacy skills.

These students have about three years to learn what they need to know about money management before they leave the nest. There are courses for students like the one at the Northern Virginia Urban League which offers a series of classes teaming with the Fairfax County Human Services and Fairfax County Home-ownership & Relocation Services.

"College students can learn everything from understanding a [credit] score and avoiding credit traps to banking and money management," said Vickey King of the Northern Virginia Urban League.

"College is not the time to live the lifestyle of your dreams," said Rachel Powell of the Northern Virginia Council for Economic Education at George Mason University's Center for Economic Education in Fairfax. "College courses, room, board, books are all costly. You can expect to be poor in college, and if you use the many resources your college makes available to you in exchange for all the fees you are required to pay, you can expect to be fed, safe and reasonably comfortable."

The first step for college students is taking an inventory of personal money:

• Will you have help from your family?

• If so, will it be in the form of an allowance?

• Will you have income of your own?

• Make a budget that includes everything you will need to purchase. Put some money away each week for emergency expenditures.

• Use online tools that can help, like and

• Avoid credit cards.

An article by Robert Farrington of Forbes says that one of the biggest gaps in higher education is dealing with student loans. The gap, according to Farrington, is that students sometimes borrow much more than they will ever be able to repay later in life.

Many fall into the category of Too Poor for College, Too Rich for Financial Aid. Students have to understand that taking on debt early on in life can ruin credit scores, and could even prohibit the student from getting certain types of jobs upon graduating.

Farrington also suggests that colleges should offer more courses like Investing 101, or Personal Finance for Adults. He adds that it is time to challenge this problem with practical solutions.

Money Matters on Campus is a recent study on financial literacy among young adults which surveyed more than 65,000 first-year college students across the nation. The questions centered on banking, savings, credit, credit cards, and school loans, and the individual's financial knowledge. Those participants who had financial literacy education in high school demonstrated a higher level of financial knowledge and more financially-responsible behaviors.

At this time, only 17 states require high school financial literacy course before they graduate. Even small interventions can make a difference. Indiana University uses a letter to inform students what their monthly payments will likely be when they graduate. This has led to an 11% drop in federal loan borrowing at the school.

Florida is the first state to adopt standards about personal fiance in schools that are based on the National Standards for Financial Literacy says Margaret Tober, writing for Now the state is working on how to implement the standards.

"Unless we have both the time, in terms of the class time given, and the training of teachers to cover those national standards and to do it in a way that's going to make personal finance come alive and students see the relevance of it," he says, "the mere adoption of national standards doesn't solve the problem."

And, Deanna White of website AccountingWeb reports that, according to the Organization for Economic Cooperation and Development (OECD)/PISA international assessment of financial literacy American teens rate squarely in the middle of the 18 countries and economies in financial literacy.

The test was the 2012 Program for International Student Assessment (PISA) financial literacy exam. As in other key school subjects, students from a less-advantaged socio-economic background scored lower than advantaged students. 

"I think there is a tremendous need for those in the business community, especially CPAs, to promote and bolster financial literacy in the U.S. But, more importantly, I think it is important for these same individuals to actively pursue legislation at both the state and federal level which will prioritize the importance of financial literacy by requiring financial education be taught as a part of the K-12 curriculum," Lane McDaniel, of the Society of Louisiana CPAs (LCPA) Financial Literacy Committee, said.

07 30, 2014
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