Posts tagged ‘Financial literacy’

April 24, 2013

Quick Links – Online learning similar to charter schools; financial literacy instruction doesn’t help much; high school grads avoiding college

by Grace

‘ Online learning faces many of the same obstacles that charter schools do.’

… It also has to overcome the same legitimate concerns about how to assess quality of a product offered by largely untested companies. Skeptics are right to note that many, perhaps most, of the online education providers out there won’t survive the decade—competition is intense, the technologies are new and changing rapidly, and not everyone can be a winner. Someone will be the Pets.com of the ed-tech boom. That prospect is alarming to the traditional school bureaucracy, which tends to make contracts with vendors that span years or decades. They’re not set up to contract with firms offering services for a monthly fee that can be canceled at any time. And parents are rightly concerned about the long-term value of a degree from Pets.edu.

In a perfect world, both online learning and charter schools would only be imposed on our children after rigorous testing and screening to be assured of their efficacy.  But in the real world, repeated unproven “innovations” are inflicted on students – No Child Left Behind being one of the latest examples.  So it is inevitable that some lucky students will continue to reap the benefits from the best of education’s innovations (think Amazon) and some unfortunate ones will suffer from the worst (think Pets.com).

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Financial literacy education doesn’t seem to work.

U.S. students who’d taken personal finance or money management courses weren’t more financially savvy than those who hadn’t, according to a study by the Jump$tart Coalition for Personal Financial Literacy.

Maybe innumeracy is part of the problem, and schools should focus more on better math education.

New York State requires some personal finance instruction as part of its Economics, the Enterprise System, and Finance, a half-semester high school course taken senior year.  It uses course content from the Jumpstart Coalition for Personal Financial Literacy.

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Smaller Share of High School Grads Going to College

The college enrollment rate — the share of recent U.S. high-school graduates enrolling in college or a university in the same year — dropped in 2012 to 66.2%, the lowest level since 2006, the Labor Department said in a report on Wednesday. For 2012 graduates, the rate dropped for both men and women, to 61.3% from 64.6% in 2011, and 71.3% from 72.3%, respectively.

The findings suggest some high-school graduates are becoming more confident about their job prospects after years of hiding out by going to college. When the economy sank into recession between 2007 and 2009, the college enrollment rate rose steadily to a record high of 70.1%. The implosion of America’s construction industry, for example, meant fewer jobs for young men looking for work right out of high school. Now it appears some of these young graduates are going on the job market again.

Of course, finding a job isn’t that much easier. America’s job-market recovery remains uneven: The unemployment rate is still unusually high at 7.6%, and the economy added only 88,000 jobs last month — the weakest job gains since June 2012.

Perhaps the rising cost of higher education is a factor.

May 30, 2012

Millenials’ declining financial literacy skills

by Grace

Studies show that a majority of young people in the United States have poor financial literacy, a trend that has been consistent over the past decade and shows few signs of improving. This at a time when young adults face a difficult job market and more personal debt, and yet must take greater responsibility for their financial future.

Today’s twentysomethings hold an average debt of about $45,000, which includes everything from cars to credit cards to student loans to mortgages, according to a PNC  financial independence survey released last month. Unemployment for those 18-29 is 12.4%, well above the national rate of 8.2%; and young people face an increasingly complex global economy that is credit-driven and puts more responsibility on individuals to plan for and manage their retirement accounts….

How bad is the problem? The Treasury Department and Department of Education have teamed the past three years to assess financial literacy in U.S. high schools, and the results haven’t been pretty: the average score of almost 76,900 students in 2010 was 70%. Last year’s testing of about 84,000 students and this year’s of about 80,000 students were both a point lower: 69%….

The problem has been a long time coming. A biennial survey by Jumpstart Coalition for Personal Financial Literacy, conducted from 1997 to 2008 (when many Millennials were in high school) showed high school seniors doing even worse. In 1997, the average score on a 31-question financial literacy exam given as part of the survey was 57.3%. In 2008, the average score was at its lowest ever, 48.3%.

Surveys show that parents, not teachers, have the greatest influence on a child’s financial literacy….

“Today’s parents are concerned, busy, overwhelmed, trying to keep kids off drugs and alcohol. They do not wake up in the middle of the night in a cold sweat thinking, ‘Oh my God, I didn’t teach them about money,’ ” she says.

Parents may not be teaching their children about personal financial planning, and in fact may be over-indulging them and shielding them from the realities of living within their means.  Schools have so far taken a limited role in teaching financial literacy.  Only 13 states require a personal finance class, and fewer than half mandate economics instruction.

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… Students who had taken such courses were more likely to go on to save money and pay off a credit card bill in full each month, and less likely to be compulsive buyers, max out credit cards and make late payments.

New York State requires a one-half semester economics class that focuses primarily on personal finance.  My son, who took the course in high school a few years ago, tells me he learned the basics of interest rates, mortgages, investments, and other similar topics.  I’m glad he took it, but other resources like the free online FoolProof program are also available to help educate young people about money, financial responsibility, and the realities of the free enterprise system.

You can test yourself with some sample questions from a financial capability test given to high school students each year.  When I saw question 4, I realized that poor math skills could be a factor in declining financial literacy.  Click the link below to take the quiz.

Financial Literacy Quiz

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