How Teaching Personal Finance Helps Students Go to College Debt-Free
6 Min Read | Dec 21, 2021
Teachers, we know you care about developing your students. You make sure they know how to write persuasive essays, crunch numbers to see what “X” equals, not break microscopes that cost hundreds of dollars, and learn from history so they aren’t doomed to repeat it—all so they can grow into fully educated adults who make a positive impact on the world.
And because you care so much, you won’t be satisfied to sit back and watch your students walk blindly into the $1.6 trillion—yep, we’re way past millions and billions—of student loan debt that’s plaguing our nation.1
The good news is, you can help rescue your students from plunging headfirst into the deep, dark pit known as the student loan crisis. Why you? Because as their teacher, you have one of the best opportunities to transform the way they manage money—by preparing them with a solid financial education before they even walk across that auditorium stage.
5 Ways Teaching Personal Finance Can Crush the Student Loan Crisis
That’s right! Teachers like you can spark change when it comes to the student loan crisis. Right now, your students are looking to you for the knowledge and skills they need to make it in the real world. Who knows—you might be their only hope to avoid the dream-swallowing debt of student loans.
Are you a teacher? Help your students win with money today!
But can teaching personal finance really combat a trillion-dollar debt crisis? Yes! Don’t believe us? Check out these top five ways financial literacy leads students to a life that isn’t weighed down by a mountain of debt.
1. Financial literacy encourages students to avoid debt.
Seriously, teaching students to go against the toxic money culture and choose not to rely on debt is one of the main ways personal finance courses take on the student loan crisis. This type of education explains how things like interest work, and that helps students understand exactly what they’d be getting into if they took out a student loan.
A lot of students don’t even realize it’s totally possible to earn a college degree without taking out loans. And if no one shows them how, they might never believe it—which means they’ll be more likely to borrow tens of thousands of dollars to pay for their education.
When you teach your students practical steps to pay for college without debt, you’re giving them hope. And that hope will inspire them to power through their education and land a job they love—one with a good salary they don’t have to share with Sallie Mae month after month and year after year.
2. Financial literacy empowers students to take control of their money.
Teaching students to take control of their money at this stage in their lives helps them learn responsibility. The basics of personal finance show them how to budget their money down to the last penny each month so no dollar gets overlooked or wasted.
Students will also learn the value of saving up an emergency fund to protect them from anything life throws at them. If they’re not prepared, they’ll be tempted to borrow money when an emergency hits—and that slippery slope will lead to a lifelong habit of using debt. But students who learn smart budgeting skills will realize they have the power to protect themselves from emergencies and save for big things like buying a car and even paying for college.
3. Financial literacy gets students thinking about career goals.
Learning about personal finance helps students see that money comes from work. And that will really get them thinking about how they’d like to earn a living one day. Students can be tempted to pick a college because it’s “popular” without seriously considering how much tuition costs or if going there will really be better for their future career than a cheaper option.
But financial literacy teaches students how important it is to pick a college—or choose an alternative route (like joining the military or starting a business)—that matches their budget, interests and abilities. It shows them that a less popular college can offer the same value as a well-known (or well-marketed) college.
4. Financial literacy helps students feel the weight of choosing an affordable college.
At this point in their lives, many students probably rely on their parents to handle most of their expenses. So the enormous cost of college might not even register in their minds—much less be something they look at when choosing a school.
By offering students a personal finance class, you’re giving them a chance to experience real-life examples of managing income and expenses. This can help teens start to see just how steep the cost of college really is—and how big of a deal student loans really are. Then when it comes time to make a call on where to apply, they will keep cost in mind.
Instead of rolling their eyes when they hear “out-of-state colleges are more expensive,” financially literate students understand what it means to pay an average of over $16,000 more just to go to school across the state line.2 Yikes!
5. Financial literacy gives students a plan to pay cash for college.
Students who learn this important stuff early can start thinking about how to pay for college in a way that won’t delay their future plans—like getting married, buying a house, investing for retirement, and having kids. If their first “bundle of joy” in their adult life is a monthly bill to pay back student loans, they’ll have to put a lot of their life goals on hold.
But when you teach students these personal finance skills in school, they’ll learn the benefits of applying for scholarships, grants and financial aid. They’ll also see the value of getting sweat on their brow by doing some good ol’ fashioned work before they even hit college—and while they’re in college.
Imagine how excited your students will be when you help them discover all the options there are to get free money for college—and how much they’ll grow in maturity when you motivate them to work overtime with a goal in mind.
Ready to Fight the Student Loan Crisis in Your School?
If you’re ready to take action and get your students fired up to fight back against the crushing student loan crisis, start teaching financial literacy at your school. To find curriculum that’s made a difference in millions of students’ lives, check out Ramsey Education’s Foundations in Personal Finance and give your students hope to graduate from college debt-free so they can pursue the life of their dreams.