In an increasingly mobile and complicated financial world, it’s more important than ever that Americans understand how to manage money. The Wall Street Journal interviewed two experts, asking them to debate whether college students should be required to take a course in personal finance. Annamaria Lusardi makes the case in favor:
It is time to extend that type of thinking to financial knowledge by making personal finance a required course at U.S. colleges and universities. For people—especially young people—to survive and thrive in today’s financial environment, knowledge of personal finance is a necessity.
We’re already seeing what happens when young adults juggle high-impact financial decisions without the benefit of financial knowledge. Take the well-known burden of student-loan debt. Student loans are the second-largest part of the consumer credit market, after mortgages. The lion’s share of that debt sits in the hands of millennials—and our research shows they worry about their ability to pay off those loans. As well they should. The default rate on student loans is sobering.
Lauren E. Willis makes the case against:
Financial offerings change too quickly for regulators to keep up, never mind educators. In addition, compared with the salesperson across the table, consumers will never be as knowledgeable about financial products and services—or about the psychological maneuvering with which they can be sold.
Common sense thus suggests that college courses won’t enable people to make the kinds of financial decisions society currently demands.
Read the whole thing and decide for yourself, but count us on the “for” side—insufficiently persuaded by Willis’ case. In fact, we’d go further: American K–12 schools should teach basic personal finance too. Understanding money is a vital skill for citizens. Consumer advocates often accuse banks and other institutions of taking advantage of unsophisticated citizens. They’re not wrong, but their solutions all focus on regulations to protect consumers. What if we also thought about teaching American consumers to be savvier savers, borrowers, and investors in the first place?