Financial literacy presents a huge challenge for college students, especially when its been painfully absent from required curricula for their entire educational career. However, California is growing closer to making these classes a part of the required coursework for at least one semester. This information is vital to student success as they graduate high school or college and go out into the workforce being left in the dark for far too long. Financial health and knowledge could not be more important to navigate everything from credit cards to taxes.
State lawmakers are exploring several options to do this, including pushing Assembly Bill 2927 and a November ballot initiative. While the passage of AB 2927 would push the ballot initiative aside, pursuing that avenue holds promise, as a 2023 Binder Research poll states approximately 4 out of 5 California voters supporting the initiative.
The course itself would include topics such as budgeting skills, building good credit, predatory loan practices, college financing, taxes, financial scams and identity theft. These are real-world issues that students need and deserve to be prepared for. Extensive research has found substantial benefits to finance education, including decreased defaulting and improved credit scores for young adults. It has also made it more likely that students apply for financial aid in college rather than taking out private loans, hurting their financial well-being. A study touted by Californians for Financial Education (CFE), which has been a driving force behind this movement, found that there is a $127,000 lifetime benefit to California students taking a high school personal finance course.
This is not a course requirement that has no basis in reality. These high school students are going to have to file taxes, deal with debt and budget. The fact that this course is not already considered important enough to be mandatory is nonsensical. Entering adulthood is already a daunting task, and the prospect of being thrown into the deep end of finances needs to be addressed.
A 2022 report by the TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business paints a concerning picture. It places Gen Z, the youngest group examined in the report, in a poor position when it comes to financial literacy, with a mere 43% accuracy rate on finance-related questions. Sadly, older generations, such as Millennials and Baby Boomers, did not score impressively better. This is not a problem with a singular age group, it is a fundamental issue with how the state has chosen to educate students on their financial options and decisions. California is plainly behind with only 1% of students being required to take a single semester of personal finance as compared to a 50% average nationally.
California has been given a failing grade by the Center for Financial Literacy at Champlain College as, “Personal finance is not included in the graduation requirements, either as a stand-alone course or embedded in another course, and schools are not required to offer financial literacy courses.” The gaping absence of this information in the California education system is central to the issue. With that absence, the situation cannot be expected to improve on its own. No one expects these students to figure out the Pythagorean Theorem on their own, and that has very little practical use for many students in their chosen fields. In contrast, financial literacy has practical importance to every single person — no matter their college major or future career.
There are concerns that, with California test scores in essential subjects lagging, adding to the diploma requirements could be disruptive and further deteriorate core subject learning. Recent state testing shows that less than half of students meet English standards, and less than a third meet Math standards. A number of efforts have been made to add courses to the state curriculum, including those on misinformation and ethnic studies, all of which add time to students’ course load and stress their time management. While these courses offer valuable information and learning, there needs to be more emphasis on how the actual burden of learning will be placed on students, especially if financial literacy courses are not added on their own but in conjunction with other new curricula. However, it is beyond reason that the state has not considered financial literacy to be essential.
This course has incredible implications for the development of critical thinking and building skills that students plainly need no matter what career path they pursue. It is universally necessary. Even one semester is insufficient to meet students’ needs and the gaps in the curriculum.
The addition of financial literacy to state graduation requirements has been necessary for much longer than Californians have struggled to make headway. The financial illiteracy of adults today is a testament to that fact and the benefits of such improvements are simply not outweighed by the many challenges implementing them presents.
