On a recent morning, a group of sleepy juniors and seniors at Cary-Grove High School in northwest suburban Cary listened as teacher Laura Jacobson talked about repaying college debt in a family and consumer science class.
She was teaching them personal finance, which can be an abstract concept to a bunch of teens. But Jacobson wanted to get through to them, and that’s why she got personal. She has two adult children who she helped pay off college loans. She brought in their actual financial statements.
“I put up their account statements and it showed how much interest I paid and how long it took me to pay it,” she said. “They said, ‘You owe that much?’ and I go, ‘Yeah, I didn’t have the money in savings. I had to take a couple loans out.’”
The curriculum is part of a semester long course called finEDge, a program created by the University of Chicago and Magnetar Capital Foundation. The curriculum focuses on personal finance, with a heavy focus on student loans.
Student debt reached its highest this year at about $1.4 trillion in federal loans, according to the U.S. Department of Education Office of Federal Student Aid. Millions of borrowers who are well beyond college age are still paying them off. The writers of the curriculum hope an early lesson on personal finance will mean a decrease in that amount.
Rebecca Maxcy is with the University of Chicago and oversees the program. She said Jacobson sharing her personal story has an impact on students’ understanding. That’s why some of the assignments require students to ask an adult about their finances.
“We know from our experience here that having that home connection is great, but it can be a little nerve-racking, especially when people are taught not to talk about money,” Maxcy said.
Students in Illinois are required to take consumer education to graduate, but it’s up to individual schools to include personal finance. Maxcy said many students still aren’t getting this level of exposure.
“They don’t know what they’re getting into”
The cost of higher education varies widely around the country, but it’s not cheap anywhere. According to a report from the College Board, the preliminary average for in-state tuition and fees this school year has increased to about $10,400. It’s even higher at nonprofit private institutions, at about $36,800.
Maxcy said for many high school kids, this will be their first encounter with debt.
“They don’t know what they’re getting into,” she said. “They don’t understand the consequences and ramifications that 20 years from now, they could still be paying off debts.”
By the third quarter of this year, 14 million borrowers in the 35-to-49 year-old age group owed a collective $564 billion in federal student loans, according to the Office of Federal Student Aid. Some people 62 years and older are still paying off that debt, though it’s a much smaller number at about 2 million.
This is the second year the finEDge curriculum is offered to high schools. Maxcy said it’s too early to say how well it’s working in terms of bringing down debt, but she said one external evaluation by private consultant shows that students’ financial literacy has improved.
College sophomore Daniel Buie said he’s proof of that. He took a similar course when he was in high school.
“It was just extremely beneficial because I would've gone to college blind, not really knowing what I can do that’s considerate toward my mom because my mom is the one paying for it,” he said.
Buie said after taking the class, he made some financially-based decisions. He got into his number one choice for college, Northern Illinois University, but decided to stay in the city and attend the more affordable University of Illinois at Chicago. He opted to major in marketing, a career he thinks will be more lucrative than his original idea of psychology.
“Taking out loans isn’t fun because there’s interest and it accrues,” he said. “I just thought about my mom and how much she would have to work because NIU was not cheap.”
Back in Laura Jacobson’s class, she tells her students that even if they don’t take out college loans, the lessons apply to other future decisions, like buying a home or paying off major medical expenses. Jacobson said a few parents have thanked her for the course and said they wish they’d had something similar when they were teens.
“This is adulting 101,” she told her students.
She then asked a key question: “Should you have your mom call the bank?”
The students responded with a chorus of “Nos.”
“No, you can’t have your parents call on your behalf,” she told them. “Once you’re 18, you sign the line. The loan is yours.”