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The Mass Media

The Mass Media

The Mass Media

More Emphasis Needs to be Placed On Eradicating Financial Illiteracy Among College Students

There+is+a+case+for+financial+literacy+studies+at+higher+institutions
There is a case for financial literacy studies at higher institutions

 

 

With not much emphasis being placed on financial literacy education, it is not surprising that college students have little to no knowledge of the financial workings of the economy. According to a survey taken by the National Endowment for Financial Education, 70 percent of high school graduates (which includes future college students) are “illiterate consumers.” 

The statistics of financial literacy among college students are even more damning. Out of 924 college students surveyed, the subjects were only able to answer 53 percent of finance-related questions correctly. Not very encouraging.

This lack of financial knowledge — which limits the level of ability to make informed decisions regarding monetary issues — will invariably and inevitably affect students’ ability to adequately save money and prevent debt.

There are even farther reaching consequences of this financial illiteracy among 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, it’s only logical to deduce that students’ financial literacy, along with the subsequent consequences, will soon have a major impact on the economy in years to come.

Aside from being a rather financially incompetent generation of college students, it has also been found that current college students’ knowledge of civic and current affairs isn’t much better.  According to The New York Times, 50 percent of Ivy League college students are unable to name their own 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 even argue, “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, we would definitely know about it, right?”

Wrong.

To put this into context, a survey of 90 students was given at UMass Boston – the objective being 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 proportion who had heard about the sequester, a healthy 80 percent knew at least the basic details of what it was.

During the 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 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 may have helped prevent the epic economic meltdown we experienced.  

In order to educate our youth about 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 these issues. As of now, only business-related majors enjoy the benefits of this – and as studies have revealed, these students 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.