The Case for Financial Literacy

For the last five weeks, I’ve been meeting with numerous professors, administrators and students about the issue of financial literacy. There is overwhelming support for having IU add financial planning to the mandatory curriculum for every student. In fact, in a statistically-validated, third-party survey done by Indiana Public Interest Research Group, 85 percent of students responded that they believe more needs to be done in order to promote financial literacy. Despite this, the issue is being pigeonholed and completely ignored by the IU president and his administration.\nThere are several important reasons why teaching financial planning at the university level is crucial. For one, lack of financial planning has led to more personal strife then any issue in the country. Financial mismanagement is often cited as one of the top reasons for divorce in America. For many years after graduation, students carry loans and credit card debt that decrease their standard of living – all of which could have easily been avoided with proper financial planning. For example, by using a tax-free College 529 plan, parents could cover the cost of tuition and board at an in-state school with as little as $25 per month for every child. Credit cards could be reconsolidated. The problem is not that these solutions are difficult to understand. The problem is they are not being taught in universities.\nIn my previous column, “An Inconvenient Truth,” I brought up national security, the low U.S. savings rate and the possibility of class warfare as reasons for why our educational system must change. The problem is deeper than even these issues, and has spread throughout society. As a society, we have embraced a policy of social welfare over personal empowerment. The government has focused on taxing individuals more in order to account for the poor decision making of a segment of the population. This is different from the original intent of taxes, the idea of focusing tax dollars toward supporting those who couldn’t support themselves: the physically and mentally handicapped. This has led to higher taxes and a co-dependent culture in the lower class. The national debt continues to rise and the dollar is devaluated. This is not a sustainable model.\nIn fact, the issue of accountability has spread throughout our educational systems and universities. Tenured professors and administrators with guaranteed job security and large pension plans have become out of touch with the issues concerning the student body. The administration has taken the attitude of “why should we embrace this policy change,” rather then taking responsibility for their role in teaching the student body. Issues such as funding, curriculum and faculty (which are all taken into consideration in our proposal) have been overblown and used as excuses to preserve the status quo.\nI have personally admired the work of IU President Michael McRobbie in connecting with the student body. However, when the president spends an entire week focusing on firing a basketball coach and will not take 30 minutes to sit down with a student-led group, there is a big problem at our university. This issue will not go away until the student body has a voice at the table. If you support this issue, take two minutes to e-mail President McRobbie at iupres@indiana.edu and join the “Financial Literacy @ IU” group on Facebook. Let’s make this happen.