I’m still fuzzy on the differences between a Roth IRA and a 401(k). I can’t fathom how much money I would need for retirement. I can’t begin to understand what going into debt might mean for my future. And don’t even get me started on taxes or insurance rates.
I’m far from the only student who feels this way. This might be reassuring if it wasn’t so terrifying. According to a 2019 survey by EVERFI, 53% of student respondents felt that they were less prepared to manage their money compared to other college activities like staying organized or managing coursework. I’m no psychic, but considering that a recent survey by Bankrate has shown that 51% of Americans have less than three months’ worth of emergency savings, the lack of knowledge our society has about money management doesn’t bode well for our collective economic health.
Put simply, there’s a financial literacy crisis in this country and few avenues helping to combat it. Financial literacy education should start at a younger age when most students can appreciate conversations about money, but are not yet saddled with obligations like paying off mortgages, student loans, or major medical bills. Universities like Cornell are in a position where they can help tackle the crisis instead of enabling it.
Some colleges have actually taken steps to financial confidence in their students. The Utah State University, for instance, just recently added a personal finance course that would satisfy general education requirements. In fact, during the Fall 2018 semester, Cornell had a similar class titled HADM 3200: Personal Financial Management, but it is no longer offered. The class covered topics ranging from taxes and insurance to investing and retirement planning. Bringing back such a course that teaches life skills such as budgeting while discussing concepts like inflation or compound interest could go a long way in setting up beneficial financial habits for the long term. Allowing the course to count for graduation requirements and marketing it as essential for students of all majors would incentivize students to take the topic more seriously.
In 2020, the total amount of US student loan debt reached 1.71 trillion dollars, with the average borrower owing 39,361 dollars. Students take out loans to pursue an education in hope of a better future, so it’s counterintuitive that so many graduate college with little understanding of how their current financial decisions will impact their lives later. Sure, the idea of placing a down payment on a house might feel eons away, and retirement even further. But, our credit scores and current debt numbers will affect how soon our mortgages will get approved, and the amount of money we invest now may determine the age we retire.
Financial literacy courses shouldn’t be about selecting stocks or advanced Excel modeling, but rather about developing ways to cope with all of the money concerns that will definitely crop up much sooner than expected. There are, unfortunately, so many other ways, in addition to student loans, to get into crippling debt. The sooner we’re taught how to make informed financial decisions, the more equipped we will be to handle whatever unknowns life throws at us.
Ten, twenty, thirty years down the line, I’ll probably forget the exact definition of an eigenvalue or the time complexity of insertion sort. Unlike these fleeting pieces of information worn away over time and disuse, money management is something that sticks around for the long haul. If that’s not a sign for colleges to start educating students on best practices for a financially stable future in this evolving world, I don’t know what is. Perhaps Cornell can reinstate its personal finance course and show that the school cares that its students succeed long after we leave Cayuga’s waters.
Katherine Yao is a junior in the College of Arts and Sciences. She can be reached at [email protected]. Her column, Hello Katie, runs every other Monday this semester.