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This was written by Brian Page, a 2011 Milken National Educator Award winner. He is a Personal Finance and AP Macroeconomics teacher with Reading Community City Schools in Ohio. He has worked with the Ohio Department of Education to develop Personal Finance and Business Education standards and serves on various education advisory boards including Vanguard, BizWorld, and FinLitTV.

By Brian Page

The education world has turned into an alphabet soup of acronyms: RttT (Race to the Top), NCLB (No Child Left Behind), OAA (Ohio Achievement Tests), etc. In most cases, the program behind these acronyms requires a data-driven process that attempts to quantify student progress or teacher performance. Rather than discuss whether these processes make sense, I am going to quantify legislated academic coursework and societal results.

I won’t elaborate on statistics showing that the percentage of dropouts from 1980-2009 nearly dropped in half, or that according to the 2009
(Abdel Magid al-Fergany/AP) PISA scores, American students rank No. 1 in the world when you remove all students who live in poverty from the ranking. Rather, I am going to dive into the statistics that illustrate the consequences of what in most cases has not been legislated to teach. I’m talking about financial literacy — or the lack of it.

Consumer Financial Protection Bureau Director Richard Cordray recently addressed Jump$tart, an organization dedicated to financial literacy. He said in part:

“Aristotle said, ‘The neglect of education does harm to the political order.’ Although he made that observation more than 2,000 years ago, it still rings true today. As everyone in this room knows, the neglect of financial education can certainly help ruin the constitution of a nation founded on a regime of personal responsibility and organized around a free market, as is true with the United States of America. We see that in the personal struggles of individuals and families, and we saw it more broadly across entire communities during the run-up to the 2008 financial crisis. Consumers made many bad choices because very often they did not know any better. And unscrupulous businesses took advantage of those consumers.”

These remarks illustrate the dangerous disconnect between what our schools are not legislated to teach, and the tools and skill-sets that members of our society collectively need to maintain a mainly free-market economy. Currently, only four states require a stand-alone semester long course in personal finance to graduate.

Weekly, most of us receive credit card solicitations, bills, and various offers online. Most people have savings and checking accounts, and everyone makes spending choices. Each is a test that matters, and on the aggregate we seem to be failing.

One in four Americans has no savings at all. Only 11 percent of individuals with a 401(k) are putting enough money away to meet their retirement needs. Student loan debt has surged above one trillion dollars, surpassing credit card and auto loan debt. These frightening statistics illustrate the consequences of not equipping our students with basic personal finance tools and concepts — and Americans know it. Eighty-two percent of American parents agree that personal finance should be a graduation requirement, and 89% of teachers feel the same way.

Twenty-six countries have or are developing a formal national strategy for financial literacy. All of them see reaching kids in grades K-12 as critical to the prevention of another financial crisis.

The President’s Advisory Council on Financial Capability recently released a series of helpful personal finance lessons for parents named Money As You Grow. Yet this is a far cry from a legislative mandate to require personal finance, which is left in the hands of states.

Students are throwing their graduation hats in the air after demonstrating through testing that they have mastered science standards such as, “Explain how variations in the arrangement and motion of atoms and molecules form the basis of a variety of biological, chemical and physical phenomena.”

Yet they may not be able to manage a checking account, recognize the importance of saving and investing, or understand how to set up a budget. Year after year we are graduating students into a world full of financial choices without ever teaching them the most basic personal finance skills necessary to make wise and informed financial choices.

Subsequently, millions of Americans continue to face financial tests with life-changing consequences. These are the tests that matter — and through legislative choice, we are failing our students.

“All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation.” - John Adams (President of the United States; 1797-1801)

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