Getting ahead: The fight for financial literacy

ELLICOTT CITY, Md. (TND) — During this period of high inflation, rising interest rates and crushing student loan debt, for so many adults, getting ahead in life or just keeping up can seem impossible. Declining financial literacy among American adults isn't helping.

Last year, a lack of financial literacy cost Americans an average of more than $1,800, according to a survey conducted by the National Financial Educators Council. For some, it's poor spending and credit card habits. For others, it's not understanding interest rates or budgeting for retirement. According to the FINRA Foundation, measured financial literacy scores have been steadily declining for more than a decade.

That's not the case at Mt. Hebron High School, a public school an hour and a half outside the nation's capital. It has one of the best economics programs in the country, led by teacher Vann Prime. And he's got seven national championship trophies to prove it.

In late May, Prime's students Nathaniel Ritter, Mehin Pandya, Joseph Phelps and Satvik Marripalapu placed first in their division at the National Economic Challenge in New York City hosted by the Council for Economic Education. They went on to beat China's team in the international round.

About a month earlier, on a Thursday afternoon in late April, Ritter, Pandya, Phelps and Marripalapu stayed after school with some classmates to run drills with Mr. Prime before taking a test to qualify for the aforementioned competition.

"What do we call the portion of a car value that we do not finance when buying a car?" Prime asked. "When crowding out happens, what happens to the market interest rate and private investment?"

A few feet away from them, behind Prime's desk, hung a poster of the esteemed economist Thomas Sowell with his quote, "The first lesson of economics is scarcity; there is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics."

“My kids actually in my classroom aren’t allowed to use two four-letter words: free and fair," Prime said.

For Prime, it's not about the accolades. He's concerned about preparing young adults to navigate, and hopefully thrive, in an increasingly volatile economic climate.

“I’m trying to emphasize the real world and try to make those connections. This is the first time in my career I’ve ever been able to teach about inflation and have kids understand it," Prime said.

Graduating senior Natalie Venginickal has already connected her Mt. Hebron economics education to her entrance into the "real world." When choosing between colleges — the top student naturally had options — she weighed tuition costs against the expected benefit of the engineering degree she plans to earn. She's starting at the University of Maryland in the fall.

“Econ teaches costs and the tradeoffs that you face between options," Venginickal said. “It’s made me look at choices as, there’s never a right answer. There might just be a better answer.”

She hopes to one day own a home, live debt free and have the financial freedom to travel.

Schoolmate and fellow economics whiz Diego Salamanca, who will be a senior at Mt. Hebron in the fall, immigrated to the United States from Spain when he was 8 years old. Salamanca hopes to be part of the middle class or greater and own a business when he grows up but he recognizes the path to getting there is narrower than it was for his parents and grandparents.

“Being able to use this information to have a good life you know, in this country, or anywhere else," Salamanca said. "We’re facing more and more financial problems as a generation, Millennials and Gen Z alike. So we have the fact that no one understands the problem, and a growing problem, so this is just gonna become more and more serious."

Despite the growing headwinds for young adults, economic education and financial literacy are not prioritized in many of the nation's schools. According to the latest survey from the Council for Economic Education, only half the states require students to take a course in economics to graduate and 23 require a course in personal finance.

The council's chief program officer Christopher Caltabiano spends his days urging state and local policymakers to make economic education a priority.

“There’s not a lot of disagreement about the need for it. There’s a lot of disagreement about how to actually make it happen in a very, very tight curriculum," Caltabiano said. “A lot of times a state might say, ‘You know, we’re not sure our educators are ready to do this quite yet and so we’re not gonna put it in place.’ And that’s where organization like mine and others come in to help support those educators in being ready for it.”

If a course requirement isn't possible, Caltabiano said he tries to convince policymakers to at least integrate six foundational principles into existing curriculum: how to earn income, save, spend, invest, navigate credit and protect oneself.

“Students who’ve had financial literacy tend to have lower credit card debt. They tend to default less on their debt. They tend to, if they make a decision to go to college, they tend to make more informed decisions around taking out student loans. They tend to go more towards public loans than private loans and public loans tend to have a lower interest rate and therefore they’re paying less for them," Caltabiano said.

When Prime started teaching at Mt. Hebron 18 years ago, the school didn't offer a single economics course.

"And so the next year, I just thought, this is essential. We’ve got to teach these kids economics," Prime said. “They need to understand economic and economic reasoning for their future. And it can apply to anything that they do.”

While his school is now known for its program, the state of Maryland doesn't require that high schools offer economics, or even integrate it into another course.

Caltabiano said often it's the choices made at a local level that can have the greatest impact.

“The wealthiest schools and the wealthiest school districts just offer this at a much higher rate than other schools do and so this is an equity issue for us. Without a requirement, you’re leaving a lot of young people behind," Caltabiano said.

The council describes the current state of economic education as being at a standstill. Since 2020, not a single state has added an economics graduation requirement and only two have added requirements for personal finance.

Absent a school requirement, there are steps families can take to improve the odds of their children living healthy financial lives — and save parents money in the long run, too. A recent Bankrate survey found nearly seven in 10 parents are sacrificing something financially to help their adult children. About 40% reported sacrificing their own retirement savings and half were giving up money they planned to spend on paying off debt or reaching a financial milestone.

“I actually think it’s a great idea to add your kids to your credit cards as an authorized user, maybe by the time they’re 16 or so and that kind of serves two purposes. One is building credit because they can piggyback off your credit history so then by the time they’re 18 or 21 and more independent, they’ve had a jumpstart. But I also think that it’s important to help teach them how to use that card," Bankrate senior industry analyst Ted Rossman said.

Prime said he can hear it in a parent's voice when their child demonstrates a newfound interest and understanding of economics.

“I’ll get stories along the lines of, ‘Well Hamid, he used to come home, all he talked about was basketball. He wasn’t interested in the world and really didn’t have much of a direction to go in. Now he comes home every night and he says, do you know what’s going on with the inflation rate?’” Prime said.

As another class of graduating seniors leave the halls of Mt. Hebron, Prime hopes they carry with them lessons from his classroom.

"If you want them to make good financial and economic decisions, you’ve got to give them the tools and the tools aren’t that complex," he said.

In fact, the case for giving young people those "tools" may be a lesson in economics itself: Invest. And know the risk when you don't.