Can financial literacy in school curricula help address college debt?
Tuesday, July 30, 2019
Student debt in the U.S. is nearly a staggering $1.6 trillion.
A crippling national college debt situation is bad news for the economy. Now, states are looking to tackle college indebtedness.
They, along with colleges, are trying out new ways to help students manage debt. Chief among them are approaches like financial literacy counseling so that students know how to make informed decisions, understand promissory notes and read the fine print on loans and payments.
Several states think that financial literacy should be a part of the K-12 curricula. The Education Commission of the States reported that Oklahoma, Nevada, and Virginia are already addressing the issue.
For example, Nevada is addressing debt and focusing on educating students about all aspects of higher education. The Silver State wants its K-12 curricula to have everything from scholarship options, financial aid, career options, and how to file the Free Application for Federal Student Aid (FAFSA) form.
Lawmakers in Oklahoma and Virginia also want to include instruction on understanding FAFSA along with financial literacy. Virginia, in fact, wants to insert financial literacy classes in middle school, not just in high school.
The issue has become an intrinsic part of the political debate.
The presidential candidates for 2020 have presented an array of proposals to deal with the issue, a stark change from previous campaigns. This is a testament to how far the debt issue has gone.
Candidates are addressing everything from tuition-free public college and post-secondary affordability, free college proposals, and student-loan refinancing to debt forgiveness. While it remains to be seen how many promises are kept post-elections, the fact that we are talking about this is a step in the right direction.
Beto O’Rourke, a former Texas congressman and candidate for Senate, supported a 2015 Obama administration proposal to make two years of community college free. He also expressed that he would like to support legislation that lets students go to a public four-year university for free.
Sen. Bernie Sanders reiterated what said during his 2016 presidential run, that students should be able to attend public colleges tuition-free. In his 2020 campaign, he is vowing to cancel all of the nation’s outstanding student debt for 45 million borrowers.
Sen. Elizabeth Warren, D-Mass., presented the most dramatic proposal of all.
In addition to making public colleges tuition-free and dramatically expanding Pell Grants, she proposed debt forgiveness for a large swath of student-loan borrowers as well.
These are just a few examples, but we see most candidates invested in this issue. Consensus has been building that some form of debt cancellation might benefit the economy despite disagreements over finer points.
Critics say that the student-loan refinance plan may disproportionately benefit borrowers with the most debt. But overall, they agree that freeing up the money that goes into debt consolidation will likely help many people. Young people would spend more on retail, automobiles, and even real estate, which would be beneficial for the economy.
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