With not much emphasis being placed on financial literacy education, it causes little bewilderment to discover that college-going students have little to no knowledge of the financial workings of the economy. According to a survey by the National Endowment for Financial Education, 70 percent of high school graduates (which included future college-going students) are “illiterate consumers.”
The statistics of financial literacy amongst only college students are even more damning: of 924 students from different colleges surveyed, the subjects were only able to answer 53 percent of questions on finance correctly. Not very encouraging.
This lack of financial knowledge—which limits the ability to make informed decisions regarding monetary issues—will invariably and inevitably affect their ability to adequately and properly save and control debt.
There are even broader, farther reaching consequences of this financial illiteracy amongst college students; as of 2005, more than 16 million students were undergoing tertiary education (with the figures steadily rising). With college students accounting for such a sizeable portion of the economy, its only logical to deduce that students’ financial literacy, along with the subsequent consequences, will have a major impact on the economy in years to come.
Aside from being a rather financially incompetent generation of college students, it’s also been found that the current college-going crop’s knowledge of civic and current affairs isn’t much better. According to the New York Times, 50 percent of Ivy league college-going students are unable to name their home state senator. Over a third are unable to identify the British Prime Minister.
“Knowledge of current affairs isn’t that important,” some might say. Some might go on to say, “Besides, if something major happened, like say the government is forced to undertake massive budget cuts which would add up to just under $1.2 trillion, adversely affecting medicare, defense programs, interest rates and education, among other things, we would definitely know about it, right?”
To put this into context, a survey of 90 students was carried out here at the University of Massachusetts Boston, the objective of which was to find out how many students had a basic understanding of the ongoing sequestration, a current political hot topic. Of the 90 surveyed, 72 percent had no clue what the sequester was. Of the the proportion who had heard about the sequester, a healthy 80 percent knew at least the basic details of what it was.
During the mild depression/serious recession of 2009, catalyzed by the housing sector crashing, the general lack of financial literacy certainly played a massive role. The intense and excessive speculation on the housing prices created a huge housing bubble. Unbeknownst to a large proportion of the speculators, as the end result revealed, every bubble of that nature eventually pops. A little cognizance of this basic financial principle by the general public might have helped prevent the epic economic meltdown we experienced.
In order to educate our youth on the importance of civic, political, and financial literacy, it is not out of place to request that universities around the country institute a mandatory course which would predominantly focus on this. As of now, only business-related majors enjoy the benefits of this—and as studies have revealed, display a more coherent grasp on the issues of finance and politics.
A semester or two spent learning about the workings of the financial and political sector by not just business-related majors, but all students, would certainly do no harm.