In September, 2018, Congress voted on a bill that would improve financial counseling for student borrowers — online or in-person sessions for any student with a federal loan or a grant. The full House passed the Empowering Students through Enhanced Financial Counseling Act, H.R. 1635. The law is aimed at improving financial literacy at a time when student debt is topping $1.4 trillion, and default rates keep growing.
House Speaker Paul Ryan said regarding the new law that “college should be an opportunity for all those who want it. But with a complex federal financial aid system that provides little guidance to students, it’s often out of reach or leads to high student debt. Instead of this status quo, we should support students as they make decisions about how to finance their education and begin to repay their loans.”
With this bill, he continued, “students and parents enrolled in federal loan programs will receive yearly counseling tailored to their needs.”
The need for financial literacy for American youth is greater than ever. Only 20 states currently mandate that high school students take economics. This trend is concerning, considering the fact that less than 30% of young adults achieve a score above 70% on financial literacy tests, and the average score was just 58%. 
Most high school level students don’t need to know about complex investments and high-level financial concepts, but they most certainly need to know the basics, like how to open a bank account, how much they need to save each month to reach their goals and, if they borrow this amount of money, how much money they will need to earn to pay it back.
Immediate skills that have direct application to their lives are what is needed. It’s not very useful to teach a 16-year old about the complexity of mortgages, because the likelihood of their taking out a home loan in the next few years is very slim. So that knowledge, not having any direct application to their daily lives, will probably be forgotten soon after they take their exam on the subject, but they will need to know about how to live on a budget and balance their checkbook. That’s something that will be useful on an almost immediate basis. And developing healthy financial habits early is the key.
Bad money habits can have damaging, long-term consequences for our financial security. Developing healthy financial habits can do wonders for helping us achieve our long-term goals like saving enough for retirement or paying for a college education.
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