Millennials are born between 1981 and 1996. The large levels of student debt amassed by many millennials has several causes, including increasing tuition costs and a lack of loan regulation. millennials grew up inundated with a barrage of doctored images of success and sayings like, “It takes money to make money.” These were the messages that influenced their decisions to pay exorbitant tuition prices when choosing their academic and career pathways. The U.S. set a new record high for student debt in 2020, surpassing $1.7 trillion for the first time. In the 10 years following the Great Recession in 2009, student loan debt increased nearly 130 percent.
Older millennials were pooled with members of Gen X (now ages 35 to 49), accounting for $466.7 billion in student loan debt within the same quarter. According to U.S. News & World Report, college graduates from the class of 2019 borrowed $30,062 on average. This 26 percent increase over a decade signifies that financial literacy, while not the sole answer, is an instrument that must be applied in the fight to address this growing financial crisis, writes Julian Zelizer, a professor at the University of California, Los Angeles. Zelizer: Financial literacy is defined as “the ability to use knowledge and skills to manage financial resources effectively”.
In 23 states and Washington D.C., fewer than 5 percent of students were required to take a standalone semester of a personal finance course. Financial literacy is not a mandated course or initiative provided at most colleges. Colleges that enact these strategies will help to better prepare America’s future workers to make financial choices throughout their lives, the authors say. The report calls on institutions to provide “clear, timely, and customized information to inform student borrowing” in financial aid offers and debt letters. It suggests that colleges mandate financial literacy instruction with standalone courses or by integrating lessons into core curricula.
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Preventing Student Debt Problems Begins with Financial Literacy Education