Editorial, Opinion

EDITORIAL: Teaching financial literacy is key in mitigating student debt

There’s this idea that people seem to have about students of color enrolling in college: that they are doing so on significant scholarships, or are at least getting some pretty hefty financial aid. Some white students even feel a bit miffed about it, thinking these students have it easier than they do when it comes time to pay their tuition bills.

But an article in The Boston Globe on Sunday reported that this stereotype couldn’t be further from the truth, especially for black students. Recent data from the U.S. Department of Education indicates that when black students enroll in college, they are taking a much greater financial risk than their white peers. In the process of paying for college, they face huge disadvantages from start to finish. Black students tend to come from lower socioeconomic backgrounds, which often forces them to take out loans at higher rates — and they still earn less post-graduation. The Department of Education data showed that African-American students who started college in 2003-04 owed, on average, 113 percent of their student loans 12 years later, while white borrowers owed just 65 percent.

There are an almost infinite amount of reasons for this disparity, most of which center around the systematic racism that our society has been built on — and that’s not going to be a quick fix. But in the meantime, there is something we’re not doing that could make a significant difference: teaching financial literacy.

Financial literacy is the concept of knowing how to manage money. But as straightforward as it may be, it’s not something you tend to see in high school curriculums, or any curriculum really.

Money can be uncomfortable to talk about. And so we don’t talk about it. Students learn about the broader concepts of economics in school, but oftentimes, those lessons don’t cover concepts as simple as how to balance a checkbook or apply for a loan. In lower-income minority communities, this is disproportionately the case. And as long as students are still living at home, they might not notice how much of this information they never learned.

But then they graduate high school, and are faced with a hundred different choices about college and the future. There are many decisions that need to be made, and a lot of those decisions are financial ones, but it can all be pretty overwhelming.

For the most part, students can figure out how to do the most important things, like comparing prices of different schools, applying for scholarships and taking out loans. But the harder questions, like where those loans are going, how they will be paid off and whether a school is even going to be worth going to, are often forgotten about.

There are so many influencers of these decisions, from for-profit schools trying to victimize students into getting worthless degrees, to bigger societal pressures, like the push to go to the most prestigious, well-respected schools in the country. It can be easy for students to get so caught up in these things that the financial side of the equation becomes an afterthought.

So students end up going to schools that don’t always have their best financial interests at heart. Because the thing is, for as many pressures as students face, colleges also face pressures. They are pressured to boost their rankings, to increase their prestige and of course, to be financially successful. This doesn’t mean school’s don’t want the best for their students, but rather that the struggles students face in paying off their degrees once they graduate isn’t always as pressing of a concern for schools. This means that this problem that is so important to students often goes unaddressed.

And once these students are out in the “real world,” things can get even worse. Employers don’t have the same incentives to keep their workforces diverse as colleges do, which can have some serious repercussions for black college graduates. People of color consistently have to face institutional racism in the workforce, and it certainly doesn’t help when black students are already facing higher student loans than their peers.

Student debt has been proven to pay off in the long run — a bachelor’s degree can increase a black family’s net worth sixfold — but it’s still a really scary thing, and one that no one really helps you with. Financially literacy has somehow gotten left behind in our education system, and students of color, especially, are paying the price for it. A movement to teach our students these fundamentally important money management skills before sending them out into the scary world of student loans and debt could do a lot of people a lot of good.

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