Requiring high school students to take a personal finance course reduces their likelihood of taking out expensive payday loans down the road.
The short-term loans, typically due by your next payday, can come with interest rates as high as 400%, the Consumer Financial Protection Bureau has found. For comparison, that's more than 10 times the rate on more pricey credit cards. It takes borrowers roughly five months to pay off the loans and costs them an average of $520 in charges, according to Pew Trusts.
Yet younger people may have few other borrowing options, Harvey said."It's difficult to secure credit by mainstream means if you don't have the sufficient history."Young adults who are required to take a personal finance class in order to graduate are 4 percentage points less likely to take out payday loans than peers who weren't required to do so, Harvey found.
Harvey compared the behaviors of individuals living in a state with a personal finance education mandate to older counterparts living in the same state and the same-aged counterparts living in a state without a mandate.On the fence about a Roth IRA? Here's what surprises most peopleIn some classrooms — including those in Tennessee and Utah — the risks of payday loans are directly addressed.
acorns They should teach about finance in JR High IMO. Home EC too, these kids aren't learning how to function without their parents and that's not good.