Priscilla Ross was surprised to learn students in her accounting class at Hillside High School in Durham didn’t know how to create a budget or manage a check book.
And when Ross, who oversees the school’s Banking and Finance Academy, asked, students couldn’t tell her that “APR” stands for annual percentage rate.
Her interactions with students reminded Ross of the secrecy around money that was common in many households when she was a child.
“Growing up, for me, those things were not taught, they were private matters,” Ross said. “But our students today need to understand how to manage their money and how not to go into debt.”
Ross’ work to improve financial literacy among Hillside students led to the opening of a bank on campus. Students receive training in managing and operating the bank.
Students at the predominately African-American school can open savings accounts to put money away for a rainy day or senior expenses.
A controversial approach to the problem
Few disagree that teaching students financial literacy is a good idea, but House Bill 924, which would require high school students to take and pass such a course in order to graduate, is a source of controversy.
Some critics of the bill (which was presented to Gov. Cooper yesterday after receiving final approval by the House on Thursday) have objected to the process involved, whereby the literacy provision was appended by the Senate onto an unrelated education bill and then returned to the House for a concurrence vote without any further discussion by a House committee.
Other critics object on substantive grounds, pointing out that financial literacy is already taught as part of the high school civics and economics course. A separate course, they worry, will crowd out vitally important classes.
“It’s already included in classes taught in WCPSS (Wake County Public School System) and (this would) eliminate a class of U.S. history,” said Suzanne Parker Miller of NC Families for Testing Reform. “We certainly know our kids need more history taught, not less.”
While Ross endorses the legislation, three of the five lawmakers who sponsored the original House version of the bill (which pertained solely to eligibility for extended contracts between educators and local school boards) – Representatives Carla Cunningham (D-Mecklenburg), Rosa Gill (D- Wake) and Raymond Smith (D-Wayne) – voted “no” when the measure came up for concurrence with Senate amendments on the House floor. The two original Republican sponsors in the House, Representatives Destin Hall (R-Caldwell) and Craig Horn (R – Union), voted “yes.”
Prior to Thursday’s House session, Rep. Smith, explained his altered position by saying that when he signed onto the bill, it only included the teacher contract provision. “I’m not going to support it in its current form now that they’ve added financial literacy,” Smith said. “It changes state curriculum and I think it needs more vetting. We also need more input from teachers.”
A Senate rewrite of the bill, attaching the more controversial financial literacy course, emerged June 5, although just three Democrats – Senators Ben Clark, Sam Searcy and Erica Smith – voted against the bill on the Senate floor.
“More is being required of students so they need to how to spend their money, how to manage it more,” Ross said. “When we were growing up, we just kind of modeled after our parents and just jumped into the fire.”
Ross acknowledged that students are schooled in some aspects of financial literacy in civics and economic courses.
“But I don’t think they’re getting full-blown financial literacy with specifics about budgeting, specifics about credit cards, specifics about investing,” Ross said.
State Rep. Cynthia Ball, (D-Wake), said lawmakers should consider alternatives suggested by educators who complain a stand-alone course in financial literacy would require cutting a history course.
“We [lawmakers] should not be dictating curriculum when teachers and other educational experts have brought forth viable alternatives,” Ball said.
But the stand-alone course is championed by Lt. Governor and 2020 gubernatorial candidate Dan Forest who has said the state could retool the state’s social studies curriculum to create room for a semester of financial literacy.
He said adoption of the bill would be transformative for students.
“I think transformative to the education of our young people and I think that’ll be transformative to our state and nation as well,” Forest said.
However, Kim Mackey, a social studies teacher at Green Hope High School who is part of a group of teachers that met with a Forest aide to present alternatives to a stand-alone course, said the group’s recommendations were ignored.
“Their response to our meeting was to push the gas pedal, pushing it through without factoring in any of the recommendations or concerns or considering the unintended consequences of the bill,” Mackey said.
The teachers made the following recommendations:
– Require the existing full credit Personal Finance CTE (Career and Technical Education) elective for graduation. If a stand-alone course is so important to sponsors, and this content is so essential, isn’t it worth adding this existing course as a 23rd credit hour required to graduate? Students in a 4×4 schedule have 32 course slots available during their high school career so one more credit is possible if this course is so necessary.
– Shift historical units from the “Foundations” course and increase their emphasis in American History I to make room for increased study of personal finance in the “Foundations” course. This would have accomplished the sought-after goal without overhauling the entire social studies curriculum.
Mackey said it appears lawmakers are shifting the burden of solving the state’s poverty problem onto educators, without considering ways in which the legislature has failed to address, or contributed to, financial challenges, such as the rise of in-state tuition. [Editor’s Note: This paragraph was edited to accurately reflect Mackey’s position.]
She said a better strategy would involve restoring K-12 spending to pre-recession levels, expanding access to Pre-K, expanding vocational education course and supporting early college, restoring funding cuts to community colleges and universities and closing the health care gap.
Rising debt abets a growing societal need
All sides acknowledge that the modern economy is placing increasing demands for financial literacy on Americans. Students planning to attend college in particular, are now asked to take on major financial responsibilities as soon as they walk across the graduation stage.
According to recent reports on college student debt, 69 percent of the Class of 2018 took out student loans and graduated with an average debt of $29,800, including both private and federal debt.
And 14 percent of those students’ parents took out an average of $35,600 in federal Parent PLUS loans.
Forty-five million Americans owe more than $1.56 trillion in student loan debt, which is about $521 billion more than the total U.S. credit card debt.
Supporters say if HB 924 becomes law, it would help to prepare high school students with the knowledge and skills to make good financial decisions.
Students would receive instruction on economic principles and personal financial literacy instruction that would include:
- The true cost of credit,
- Choosing and managing a credit card,
- Borrowing money for an automobile or other large purchase,
- Home mortgages,
- Credit scoring and credit reports,
- Planning and paying for post-secondary education, and
- Other relevant financial literacy issues.
The content of the course must, at a minimum, included standards established by the second edition of the Voluntary National Content Standards in Economics and the 2013 National Standards for Financial Literacy.
The U.S. Department of the Treasury recently released a new report recommending mandatory financial literacy courses for college students.
The report, released on behalf of the Financial Literacy and Education Commission, comes amid growing concern about the amount of debt families and college students are taking on without understanding the long-term implications.
According to the report, nine out of 10 parents and students failed a quiz about student loan debt in 2018.
“Helping students and their families avoid the pitfalls associated with financing higher education, and empowering them to make optimal financial choices, should be a priority of all institutions of higher education,” the report reads.
Meanwhile, at Hillside, Ross said students who are not enrolled in the Banking and Finance Academy learn about financial literacy from students who are in the program.
“The students who work in the bank, at least once a quarter, they set up in the lobby or cafeteria and they teach their peers what they have learned,” Ross said.
She said it’s critical that all students receive instruction in financial literacy, but especially low-wealth children of color who might not receive it at home.
“As children of color, they need to understand what happens to their money when they get it, how to budget their money so they can change their situation,” Ross said.
Despite the widespread acceptance of the need for improved financial literacy, many critics remain suspicious of the motives of the bill proponents. Stuart Egan, a Forsyth County teacher and K-12 advocate who writes extensively about education policy on his blog Caffeinated Rage, said the bill should be rejected because, among other reasons, of the way it came together.
Egan wrote that legislators attached the personal finance course to teacher contract extensions because it increases the likelihood that it’s received favorably by both Democrats and Republicans.
“With the teacher shortage that NC is experiencing and the backlash to ‘reforms,’ having a bill allowing for extended contracts for teachers seems to be a win for many public school advocates,” Egan said. “And that’s exactly why the personal finance bill was put into the bill – unless Forest wants to convince us that teacher contracts and a personal finance class requirement for students are genetically linked.”
The contract provisions give school boards authority to decide whether teachers must be employed for three consecutive years before they’re granted extended contracts. Currently, a teacher employed for less than three years may only receive a one-year contract. Those employed three years or more can receive contracts of one, two or four years.
Egan also decried the demise of the U.S. History course, as well as what he sees as the bill’s failure to address numerous aspects of personal finance, including poverty and access to healthcare.
Cooper has until July 8 to sign the measure, veto it or allow it to become law without his signature.