Can a New-Look Financial Literacy Program Fix New Jersey’s Budget?
By Dan Kadlec
March 1, 2017
A different kind of common sense is giving financial literacy a boost in New Jersey. Not the kind of common sense that holds financial education akin to a birthright—but the kind that recognizes personal finance instruction in schools as a key fix for the state’s long-term budget woes.
In other words, if we’re not going to do this for the kids’ sake then let’s do it for the sake of the state treasury.
That’s not a bad thing. If self-interest leads to more and better financial education, well then, OK. We’ll take it. And at least New Jersey lawmakers are making the connection between kids being smarter about money and their ultimately generating more gainful economic activity that pads state coffers.
This week, a bill with bi-partisan support cleared an important committee in the state legislature. Sponsors want to amend New Jersey’s current financial literacy curriculum.
Student-loan loads in New Jersey are among the steepest in the country. Two-thirds of New Jersey’s college Class of 2015 had student debt, eighth highest in the nation. On average, New Jersey students had $30,104 in loans from public and private four-year colleges, 11th highest in the nation.
Lawmakers want the state’s high schools to spend more time offering instruction and guidance on the student-loan process and tuition-assistance programs. They also want guidance counselors to show how high school students can save money on tuition by completing courses that count as college credits.
Among the lawmakers’ top concerns are young adults graduating from college with so much debt that they cannot buy a house or a car—things that generate tax revenue. They also worry that the cost of servicing student debt will drive graduates out of state, where they may have attended college and experienced a far lower cost of living.
Give New Jersey props. It is already among the 20 states that require high school students to pass an economics class in order to graduate, and among the 17 states that require a personal finance course, according to the Council for Economic Education.
And clearly student debt is a pressing issue. Nationally, the average Class of 2016 graduate had $37,172 in student loan debt, up 6% from the previous year. For many high school students, college loans will be their first major foray into the world of money.
Yet soon enough these young adults will also be choosing cell phone and cable packages, paying utilities, and navigating company benefits packages—most critically including 401(k) retirement savings plans. Expanding financial lessons to include more about college loans is a great idea—so long as it is true expansion, not at the expense of other critical money lessons.
The effort to make kids smarter about college loans in order to benefit the state’s economy should not impede the larger effort to make kids smarter about personal finance in order to benefit their own future.
More on financial education battles in the states: