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In making sense of dollars, personal finance students still have to learn through experience.
Monday, April 29, 2013
Thanks to the Great Recession, today’s high school seniors encountered a real-life lesson these last four years in what can happen when the economy tanks.
Their schools cut classes, teachers and activities. They earned extra credit for lugging in donated paper and supplies.
Their parents, at worst, lost their jobs and, at best, managed on stagnant wages. Their college accounts shriveled. The bank foreclosed on the next-door neighbors’ house.
Everywhere, talk turned to high unemployment rates, low consumer confidence and how much it costs to fill a gas tank.
Teenagers’ high school years have been defined by economic terms that have become part of the nation’s everyday lexicon: underwater mortgages, housing bubbles, derivatives, credit default swaps, fiscal cliffs, sequesters, deficits and debt ceilings.
Yet, according to results of the economics tests given as part of the National Assessment of Educational Progress, today’s high school seniors know nothing more about the economy and personal finance than pre-recession seniors did in 2006.
Even seniors in states that require they take a class in finances fared no better on the test.
Which is something for Virginia’s policymakers to think about. Today’s sophomores are the first class required to take just such a course in order to earn a diploma from a Virginia high school.
The thought in enacting such a requirement is that if armed with knowledge, the new adults would be less likely to run up credit-card debt, borrow more to attend college than their career paths would allow them to easily pay back, succumb to the pitch of payday or car title lenders, or find themselves trapped with mortgages valued higher than their homes.
So far, the high school lessons seem to hold as much value as those learned while motoring around the board game Life.
Perhaps experience is the teacher. No matter how well financial principles are taught in class, putting them into practice is a lifelong test.
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