Published Online: January 25, 2010

Interest Up in Students Learning Personal Finance

Each day after school, 17-year-old Phyllis Quach goes to a warehouse filled with silk flowers, stuffed animals and other gift items her parents sell through their South Florida wholesale business.

The recession hit the family hard and they can no longer afford the building. Quach helps pack the goods for a move to a cheaper location. On weekends, her mother often goes door to door, hoping to find new retail customers.

"I never want to go through what they go through," Quach said, tears gathering in her eyes.

So Quach is taking a a personal finance course at her Miami high school — getting early lessons on managing credit, balancing a budget and buying a first home. Experts say the recession's length and severity means it could affect the students' lifelong financial behavior, as the Great Depression affected their grandparents' frugal generation.

The number of states requiring public high schools to offer a personal finance course rose from nine to 15 between 2007 and 2009, according to the Council for Economic Education. Thirteen states require a personal finance course for graduation, up from seven in 2007. Many schools elsewhere offer or require such courses. The U.S. Treasury Department also recently announced a national award program to encourage financial education in schools.

"The students are hungry for this information," said John Parfrey, director of the National Endowment for Financial Education's high school program. "They see what is going on in their own home."

For many years, schools relegated personal finance to a home economics course, if they taught it at all. Students picked up the spending patterns of their parents — good and bad.

"It was not seen as a necessary life skill, and it was sort of seen as the kind of thing that should probably be learned in the home," said Jim Hedemark, executive director of Rhode Island Jump Start Coalition, which promotes financial literacy among youth and other vulnerable groups.

Meanwhile, personal finance became more complicated, credit card debt increased dramatically and families began opting into risky adjustable-rate mortgages they didn't understand to buy homes they couldn't afford, all elements of the recent meltdown of the economy.

"A good place to start so this doesn't happen again is the high school level. That's where younger people start to become more financially independent," said Connecticut state Sen. Scott Frantz, who is pushing for a law to require public high school students to learn about the basics of home mortgage lending, excessive speculation and the dangers of accumulating debt.

In Amy Broekhuizen's personal finance class at East Kentwood High School in central Michigan, teenagers want to know how to start a 401(k) retirement account — something she was never asked three or four years ago. Broekhuizen teaches 180 students today, double what she taught five years ago.

"They're realizing how important it is to manage their funds, and I think it has a lot to do with their personal situation," Broekhuizen said. "Through parents losing their jobs, having to leave their homes because they can't afford them anymore, going on free or reduced lunch."

Federal officials are taking note. In announcing the new National Financial Capability Challenge this month, Treasury Secretary Tim Geithner said society needs to make sure "students graduate from high school with a better understanding of basic economics, basic finance and the benefits and risks associated with debt."

Lessons can start young. Miami-Dade County's social studies classes at every grade level have an economics component, said administrator John Doyle, who oversees the program. In kindergarten, that starts with discussing needs versus wants.

"You do things that are age-appropriate," Doyle said.

Squeezing a separate personal finance class into the curriculum can still be difficult as schools focus on state and federal testing standards while dealing with budget constraints. As a result, personal finance is often taught as part of another subject rather than a separate course.

In the economics class Quach takes at Miami Springs Senior High School, students learn about making a down payment on a first home, what type of mortgage to select and the best conditions for a lease. Teacher Robert Nolan sketches a sample neighborhood on a whiteboard, writing the value of the homes, how much they were sold for and which were in foreclosure.

"This is what has happened the last two years," Nolan told them. "What is your situation going to be when you go to sell your home?"

"You're going to have a hard time selling it," a student answered.

The students in the class said the lesson resonates.

Yoel Torres, 17, helped his mother make ends meet after she lost her job last year. He said she has struggled with credit card debt, and he wants to learn to manage the money he makes working at Little Caesars Pizza.

"I wish that every kid that goes through high school had the same opportunity to take this class," Torres said.

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