Kudos to WSJ for asking the question and getting opposing viewpoints on the answer to the question. I am having trouble containing myself so I thought I better get my thoughts down on paper before I explode. First, the newspaper is asking the wrong question. The right question is “Should High School Students Be Required to Take A Personal Finance Course?” College is too late. The biggest financial decision that young people make occurs BEFORE college. Those decisions are “where are they going to continue their education?” and “how are they going to pay for it.” I received way too many calls in my days at Student Lending Analytics from sobbing students and their parents about their predicament of high debt and “I am only a junior.” As we know student debt has a long tail to it and has ramifications far into the future. It is that much harder to course correct several years into one’s college career. 

In addition, why should we be waiting until college to teach young people the skills required to manage a checking account or how to avoid identity theft or the gotchas associated with a credit card.  Shouldn’t we help them make the link between college major and career earnings BEFORE they choose that major (or decide what their post-college options are)? Don’t we want to give them a head start on establishing credit (or teach how them to check their credit report at annualcreditreport.com or teach them how to budget so the $1,500 in their account in September will last for the whole semester? Who knows, maybe even the course in high school can create the conditions for students and their parents to have THE CONVERSATION about college before it is too late. Did I convince you this information would be more helpful sooner rather than later.

Now on to the argument made in the article AGAINST having students take a personal finance course in college. Let me deconstruct the arguments one by one. These objections to personal finance education don’t stand up to scrutiny as we at NGPF have taken an approach to curriculum development and training teachers which address each of them:

• “Part of the problem is simply what many of these courses teach—namely about specific products, without giving students the context to evaluate these products.”
  • Since we have only been in existence for less than three years, this might explain Ms. Willis’ statement as she has clearly not seen our curriculum. Our activities teach students how to evaluate and compare products using a student-centered approach. They do the research, they establish the criteria, they evaluate against those criteria and they make a decision. Select A Checking Account, Select A Credit Card and Online Tools and Apps are just three examples among the dozens of activities and projects we have developed that give students the context to evaluate products.

• “What’s more, even experts disagree about the right investment and retirement-savings strategies. Financial offerings change too quickly for regulators to keep up, never mind educators. In addition, compared with the salesperson across the table, consumers will never be as knowledgeable about financial products and services—or about the psychological maneuvering with which they can be sold.”
  • How about this for an approach about investing and retirement savings: Save as much as you can as early as you can! Create low cost, diversified portfolios using index funds. If you want even a simpler approach, use a target date fund near your retirement age. Let’s teach students how to evaluate new products so as these new products develop we teach them the right questions to ask:
    • What are the fees? All of the fees in writing please!
    • What’s your incentive to sell me this product? Are our incentives aligned?
    • How does this product compare with competitors (by doing their own research and not relying on a cross-selling salesperson)?
    • Do I really understand how this product works? If too complex for you to understand, walk away.
• “The financial industry profits when consumers make poor financial choices—buying overpriced credit insurance, paying late fees and interest, investing in high-fee funds, etc. Yet industry players from credit-card issuers to debt collectors all support personal-finance classes, raising the suspicion that they are ineffective.”
  • NGPF receives no funding from any financial industry firms. We are laser-focused on one goal: Improve the financial capability of America’s youth. Please don’t lump all personal finance providers together and raise “suspicions” about their effectiveness.

• “But consumers need to know when “my broker,” “my car guy” and “my bank” work for themselves rather than their customers. A little more skepticism might improve financial health more than financial knowledge.”
  • This issue of alignment of incentives should be a foundation of any good personal finance course. Ms. Willis seems to be making a simplistic assumption here that somehow this isn’t being covered in a financial course. Well, we cover it in many ways:
    • Case Study: What’s the Catch? 
    • Role Play: Open A Savings Account
    • Our Fine Print product to teach students to read the fine print of common financial agreements

Her closing statement is perhaps the weakest part of her argument: “Better regulation of products, sales and advisers, plus a few simple teachable rules, will do more to improve our financial lives than requiring ineffective college courses.” With the new Administration clearly signaling less regulation of financial products, sales and advisers (see recent actions re: CFPB and fiduciary rule if you don’t believe me), the urgency to deliver high quality financial education is greater than ever. Our job as educators has just gotten more important! 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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