By Josh Brown
Students who will reach adulthood during the Trump administration face numerous anticipated changes to the financial landscape. President Trump recently signed an executive order to repeal the fiduciary components of the Dodd-Frank Wall Street Reform and Consumer Protection Act and proposed the elimination of the Consumer Protection Financial Bureau. This legislation was designed to protect consumers from the reckless lending and speculation that led to the subprime mortgage crisis of 2008. Without these protections, there are numerous implications for future generations trying to navigate the complex system of financial services and products.
I've pondered these potential market consequences for the 70% of low-income students who attend my school. I worry that without these consumer protections, wealth inequality will proliferate and our neediest students will have a more difficult ascent up the economic ladder. According to the Washington Post, the top 1% of Americans control 35% of the wealth in the U.S., a number that has been consistently growing since the new millennium. If our poorest students are no longer protected against unscrupulous business practices, and they're simultaneously faced with unprecedented wealth inequality, their journey to the middle class seems improbable.
I believe that the key to empowering these students is through financial education. While most adults are unlikely to use multi-variable algebra in their daily lives, every person will need to manage their finances. Credit cards, auto loans, and budgeting are just a few of the topics that nearly every one of my students will encounter as an adult. If we can educate young people about the dangers of overdraft fees and high interest loans, then they will be better prepared to lead fiscally stable lives.
Moreover, for low-income students that matriculate to college, tremendous fiscal decisions lay ahead. The total outstanding student loan debt is currently 1.2 trillion dollars and climbing, with an average student loan balance of $30,000. This type of debt presents myriad financial challenges for young people. As long as our education system remains hyper-focused on "college for all" and we continue to encourage all students to enroll in higher education, we have a fiduciary-like duty to simultaneously educate them about the fundamentals of personal finance. It is imperative that students have a firm understanding of the power of amortization and the gravity of promissory notes before electing to finance a college education. This is all the more reason to equip our students with the real-world skills to help them tackle the real-world problems they will encounter after graduating high school.
Fortunately, financial literacy can be incorporated into any classroom curriculum. For example, I use a ticket system to reward good behavior with my class. At the end of every week, I hold a raffle and select a winner to earn a prize. My students have the option to save their ticket, but the vast majority of them choose to spend it each week during the weekly raffle. By middle school, they've been conditioned for instant satisfaction and the delayed gratification is too difficult. This is why I challenge them to save their tickets to increase their chances of winning the following week. The real-world equivalent of saving tickets would be a savings account or investing for retirement. Teaching my students to save their tickets is one small yet important step towards developing the self-discipline and emotional maturity they will need to delay gratification and live within their means.
Today's students are coming of age in a vastly different economic landscape than previous generations. More than ever, student loans, stagnating wages, and uncertain market conditions necessitate making prudent financial decisions. The unpredictable market volatility is difficult for financial professionals to predict, let alone young people trying to navigate the complex system of financial services. Money management is a skill that can be taught, practiced, and reinforced early and often, much like learning a sport or playing an instrument. If we want to truly improve the lives of our students, we must prepare them for the challenges they will face in the real world.
Josh Brown teaches 6th, 7th, and 8th grade special education at Holmes Middle School in the Los Angeles Unified School District. He is a Teach Plus California Teaching Policy Fellow.