One of the few positives of the 2008 financial crisis has been the increased state legislative focus on personal financial literacy and education courses. In fact, 35 states now mandate a personal finance course. This includes Virginia, which since 2011 has mandated that high school students take a one-credit course on the subject to graduate high school. While such high school personal finance courses help students gain rudimentary knowledge of the economy, the University also has a responsibility to help expand such knowledge. Therefore, the University must implement a mandatory first-year personal finance and literacy course to provide students with the necessary skills for college and thereafter.
While personal finance is relevant at all points in one’s life, it becomes especially high stakes for students the moment that many of them join the University. This is in large part due to the complexity of obtaining and managing loans. AccessU.V.a., the University's need-based financial aid system, has made the University one of the most affordable public institutions in the country, but the average University student is still graduating with approximately $17,500 in federal loans. This excludes any form of private or Parent PLUS loans and any broader credit card debt, suggesting that the real number for student debt is much higher. Many students, then, must immediately balance transitioning to college with the new challenges of managing these complicated finances.
The University, being the root cause for students’ heightened personal finance needs, must act on its clear responsibility to equip students with the requisite skills. The University’s general financial aid still typically makes an undergraduate degree a strong value proposition. Nevertheless, students are not only burdened by debt, but also by navigating the many financial aid offerings by private credit institutions. While credit card companies have some limitations that restrict them from previous predatory credit practices aimed at entering college students, young people still remain a prime target due to their relatively limited exposure to credit management. A mandatory personal finance course at the University would help students navigate educational loans and draw awareness to potential debt traps posed by credit card companies, and how to get out of them.
In these ways, implementing a mandatory personal finance class would be a straightforward way of giving students a greater understanding of student loans and credit card debt, but there would be other benefits as well. For instance, a personal finance course could teach undergraduate students how to evaluate job offers based on health benefits, matching employer contributions to retirement plans and other miscellaneous benefits. The course could also explore long-term strategies to build wealth, helping students translate their University degree into intergenerational prosperity. Even if the University does nothing in this class except effectively explain the phenomena of compounding interest — the economic phenomenon underlying saving practices — then the class will be far more valuable to students’ long-term financial outcomes than the vast majority of classes offered at the school.
It is true that integrating a mandatory personal finance course into the overall curriculum is difficult given the scale of having every first-year student enrolled. However, the University already has a successful three-credit, COMM 2730, “Personal Finance,” that could be a guiding point for a one-credit version of the course. On top of this, the University could limit costs and resources, while still ensuring academic standards by recruiting TAs from McIntire to lead this course. These actions would not be unprecedented, as other Virginia public universities, such as Virginia Commonwealth University and Virginia State University, already offer “first-year success courses,” and other classes aimed at developing the core competencies. These courses, broad in reach, help in both easing the transition to college and in building key life-long skills.
Ultimately, University administration must begin to more fully understand the role that education plays in the development of the whole individual, including personal financial literacy. Given the rise in student loan debt over the past 30 years, now more than ever it is important that students have strong knowledge of how to manage personal finances to tackle costs across the board. While a new course would require a financial and time commitment, the long-term benefits to the University and its students drastically outweigh any potential alternative uses of the curriculum and resources.
Through this course, the University would invest in not only its own students, but would also strengthen our society, as students absorb this knowledge and then enact its components in a way that promotes broader societal welfare throughout the remainder of their lives. In short, in graduating financially educated students, the University equips a new generation with the skills necessary to navigate and thrive in an exceedingly complex economic world.
Jonathan Scanlon is a viewpoint writer who writes about academics for The Cavalier Daily. He can be reached at opinion@cavalierdaily.com.
The opinions expressed in this column are not necessarily those of The Cavalier Daily. Columns represent the views of the authors alone.
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