See also “Personal finance education is essential for confidence and success in adulthood”
Only 17 US states require high school students to take a financial literacy course to graduate. Pennsylvania is one of 33 states that does not require this, nor does the state have standard tests for personal financial education.
However, Pennsylvania recently moved to allow students to count up to a personal finance credit towards graduation requirements in social studies, math, business, or family and consumer science. A bill is currently being considered by the state legislature to make the change.
The move comes after state officials learned that Pennsylvania has the second-highest average student loan debt per student in the United States, according to Forbes. On average, each student in Pennsylvania owes $36,854 in student loans.
The survey also shows that Utah has the lowest average student debt per person in the United States, at $18,838. Despite everything, student debt has been increasing steadily for decades in the United States
Undergraduates who earned their bachelor’s degrees in the 2016-17 school year borrowed an average of $28,500 to pay for their education, according to the College Board. The total amount borrowed increased by 3% among those who obtained their baccalaureate in the 2011-2012 school year, and this figure has continued to increase.
As the upward trend continues, there has been a lot of chatter, especially on social media, blaming the lack of personal finance education taking place in high schools and colleges across the country.
While personal finance education can lead to a better understanding of wiser financial practices, experts say education alone may not be enough to keep students out of debt.
“A lot of our money behaviors are driven by emotion — not just knowledge,” said BYU family finance professor Jeff Dew. “So while personal finance education can help a student understand the alternatives to debt and the problems that debt can cause, unless they also have a mindset or attitude thrifty, education alone may not help him avoid debt.”
Personal finance education and practicing skills and habits are key to avoiding debt.
Student debt isn’t the only financial worry young people face while attending college. Other types of debt may include auto loans, credit card debt, and consumer loans. Regardless of the type of debt incurred, it can pose a serious threat to a person’s financial security.
Research shows that debt not only puts a strain on an individual’s wallet, but is also known to affect mental, emotional and social well-being.
“Research is clear that debt is associated with higher levels of stress, anxiety and depression, working longer hours than one would like to work, and even greater relationship conflict,” Dew said. .
While debt can have a negative impact on personal well-being, student loans allow students access to higher schools that would not otherwise be possible.
The most common types of student loans offered by the government are subsidized and unsubsidized direct loans.
Subsidized loans are intended to help undergraduate students, and interest only begins to accrue when the student has fallen below half-time for at least six months. The government pays the interest while the student is in school.
Unsubsidized loans are available to support undergraduate and graduate students, but interest begins to accrue upon disbursement.
Students can apply for federal student loans, as well as federal grants, through the free Federal Student Aid application.