More students today are defaulting on student loans within two years than at any time in the past decade, according to new numbers released by the U.S. Department of Education.
Student debt is rising as college tuition continues to skyrocket.
With this in mind, a new legislative proposal is in the works that would help middle and high school students better learn about and manage their finances now and in the future.
Indiana Sen. Brent Waltz, R-Greenwood, and the Indiana State Teachers Association recently announced a proposal that would establish financial literacy curricula throughout the state.
“Our goal is to provide Hoosier students with the best education possible and give them the tools needed to be responsible members of society,” Waltz said in a press release. “Equipping future generations with financial knowledge will help them make informed decisions.”
Waltz, a member of the Senate Committee on Commerce and Economic Development, will author the bill to be introduced when the 2013 legislative session begins in January.
He will work with state banking leaders to determine which financial skills students seem to lack.
It will seek to implement financial literacy coursework in grades six through 12 with goals of understanding credit, debt, saving, investing and planning. The bill would also outline means of financing and developing such additional coursework.
IU announced a financial literacy initiative during the summer with the aim of giving students the knowledge they need to leave college without excessive debt.
Phil Schuman, director of financial literacy at IU, said the initiative was spurred by many factors, including the recession, increased tuition and increased social costs in college.
“It’s gotten to the point that we’re learning that students don’t have a very solid financial foundation,” Schuman said.
He said IU efforts should start this fall and will include a website, workshops and seminars on campus to help students learn how to manage their money.
“It’s not getting students to stop spending money, but making students more aware of how they spend their money,” Schuman said.
The IU program targets students who most likely have already taken on a financial burden.
Gerardo Gonzalez, dean of the School of Education, said he thinks the topic isn’t valued enough, particularly at the pre-college level.
“Just like planning for college really begins in middle school and certainly high school, I think that, in the same way, financial planning and understanding the financial dimension of college should begin before students go to college,” Gonzalez said.
Schuman said a yearly reinforcement of financial responsibility would help Hoosier students do better later in life.
“That’s a good lesson to learn early on in life, but it should be reinforced every year in life,” Schuman said.
Gonzalez supports the idea, but given the current curriculum restraints in the state, he said he hopes the legislative proposal would not mandate the addition of a new class.
“I think a financial literacy aspect can be dealt with in the subject areas that are already taught in the high school curriculum,” Gonzalez said.
With decreased state funding for public universities a continuing trend, costs will be passed to families, necessitating these financial literacy skills.
“As more and more of that responsibility falls on the students, the more they know about how to mange that process and the finances as to not get over their heads, it’s only going to help,” he said.
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