College Planning – Mistakes you don’t want to make

In recent posts we introduced you to Jason and his friends and the student loan problems they all have. Jason and two of his friends, Terrell and Kate, are seniors in college, just months away from graduation. Olivia is a junior. We focused on Jason and told you something of his loans.

To summarize, Jason has taken five years to get to graduation and has borrowed the maximum amount of federal student loans, a total of $31,000. Because no more than $23,000 in subsidized loans is permitted, the remaining $8,000 in federal loans is unsubsidized. Jason also has two private loans totaling $15,000 which his uncle cosigned. Jason’s first payment on his federal loans is not due until six months after graduation but his first private student loan payment is due 60 days after graduation.

Another factor is that Jason has not received a job offer, although he has been interviewing with various corporations for jobs in human resources. The average starting salary in human resources is $53,000. The rule of thumb is not to borrow more than your anticipated first year salary. Therefore, Jason should be able to repay his loans without difficulty, even with the accrued interest added to his loan total. But he’s going to have to upgrade his job search now.

A look back often helps us to see forward more clearly. So, let’s take a look at what contributed to Jason being where he is now.

Jason and his sister were raised by their mother after his father became gravely ill and died a short time later. Jason was just nine years old and his sister two. Jason’s mother had to work full-time and eventually earn enough money to keep the family together. In fact, she had done well enough that Jason was not eligible for a Pell grant when he applied for financial aid to college. (Students whose total family income is $50,000 a year or less qualify.)

During high school, Jason had taken a mix of business and machine shop courses as well as college prep courses in English, math and science, but he was not interested in school and graduated with just a little better than a C average. Nevertheless, along with his group of friends, he assumed he would go to college. He attended a less selective college among his state’s several regional colleges where he changed his major after freshman year to psychology and then to business. He will graduate with a GPA similar to his high school average.

Jason is not unlike many students. And like many students, his decision to attend college was made without considering any alternatives. Upon entering college, his goal was unclear and he changed majors twice. This extended his time to graduation, costing him another year of college as well as the lost income he would have earned if he had graduated on time. Additionally, this required borrowing more money for school and more time during which interest continues to accrue.

Your homework is the following:

  • review our previous four blog posts about Jason and student loans:

Jan. 10; Jan. 18; Jan. 26; Feb. 2

  • reread this post carefully; and
  • make up a list of things Jason might have done to change the outcome.

In our next post about Jason, we’ll discuss some of the ideas you suggest and some you might have missed.

China’s Infiltration of America’s Universities

About one week ago, Jorge Salcido was sentenced in federal court in Boston to eight months in prison. This news made headlines even though the individual sentenced was not a celebrity. The mere fact that he was part of the Varsity Blues scandal was enough to warrant national coverage.

While this sentencing is newsworthy, a much bigger story goes largely unreported. The much bigger story is the threat to our national security. China has infiltrated our universities to steal intellectual property and conduct military espionage. Yet most people are unaware of the influence of China on many of America’s college campuses.

William Evanina, Director of the National Counterintelligence and Security Center, said, “We estimate $500 billion a year in economic loss just from the country of China. That’s theft of intellectual property and trade secrets.” China’s undercover work in our universities goes beyond this to include military espionage. China’s interests on American campuses, and elsewhere throughout the world, focus on science, technology, mathematics, medicine and economics.

America’s colleges and universities are widely recognized as among the best in the world. As such, they are where the best minds gather and where cross-pollination of the best ideas result in cutting edge discoveries in the fields most important to our future. This attracts undergraduate and graduate students from around the world. Many professors also come to U.S. colleges and universities to teach and do research. Virtually all of these students and professors are honest and come only to study, to do research, to teach and to learn. But there is a small but significant minority, some U.S. citizens and others from abroad, who have sinister and self-serving motives.

Three cases announced by the Justice Department in January 2020 illustrate this. The three unrelated cases involve two Chinese nationals and an American college professor who were arrested and charged with working on behalf of China.

According to the Justice Department, Yanqing Ye, 29, was working as a student and researcher at Boston University. The Justice Department alleges that on questioning Ye admitted she held the rank of Lieutenant in the Peoples Liberation Army (PLA) and that she was a member of the Chinese Communist Party, which she did not disclose on her student visa application.

The Justice Department statement also alleges that “a search of Ye’s electronic devices demonstrated that at the direction of a PLA Colonel, Ye had accessed U.S. military websites, researched U.S. military projects and compiled information for the PLA on two U.S. scientists with expertise in robotics and computer science.”

Ye was indicted on January 9, 2020 but is now in China.

In a second case the Justice Department alleged that Zaosong Zheng, 31, working on a student visa, conducted cancer-cell research at Beth Israel Deaconess Medical Center in Boston and that on Dec. 9, 2019 he stole 21 vials of biological research and attempted to smuggle them out of the United States aboard a flight to China. According to the Justice Department, Zheng admitted he had stolen the vials from a lab at Beth Israel and that he intended to bring the vials to China to use them to conduct research in his own laboratory and publish the results under his own name.

Zheng is charged with multiple crimes including visa fraud, acting as an unauthorized agent of a foreign government and smuggling goods from the United States.

On January 6, 2021, Zheng was sentenced in U.S. District Court to time served (approximately 87 days), three years of supervised release and ordered removed from the United States.

In a third case, the Justice Department stated that Dr. Charles Lieber was the chair of Harvard’s chemistry and chemical biology department and also served as the Principal Investigator of the Lieber Research Group at Harvard University. The Lieber Research Group, which specialized in nanoscience, has received more than $15,000,000 in grant funding from the National Institutes of Health (NIH) and Department of Defense (DOD). NIH and DOD grants require disclosure of significant foreign financial conflicts of interest, including financial support from foreign governments or foreign entities.

The Justice Department alleges that beginning in 2011, Dr. Lieber became a “Strategic Scientist” at Wuhan University of Technology (WUT) in China and that under the terms of his Thousand Talents contract WUT paid him $50,000 per month, living expenses and gave him more than $1.5 million to establish a research lab at WUT. The Justice Department further alleged that in return, Dr. Lieber was required to work for WUT “not less than nine months a year” by “declaring international cooperation projects, cultivating young teachers and Ph.D. students, organizing international conference[s], applying for patents and publishing articles in the name of” WUT.

The Justice Department made clear that Harvard University was unaware of any engagement by Dr. Lieber in what is alleged against him.

Dr. Lieber was indicted on January 9, 2020. He denies all allegations.

In a press conference following these indictments, U. S. Attorney Andrew Lelling said, “Our community benefits greatly from the diversity and talent of international visitors and our partnerships with foreign institutions. But Chinese economic espionage and theft is a real and daily occurrence that we must begin to confront.”

The news media that feature stories like Varsity Blues don’t cover the China story, but you can. To find out more about China’s undercover work at our colleges and universities, simply Google it. It’s that easy.

Varsity Blues Update

On April 22, 2019 I posted a piece about a prominent attorney who had confessed to having paid $75,000 to have his daughter’s ACT test “corrected” before submission to the ACT. He had “employed” the services of Rick Singer to have the test score rigged. As you will recall William Rick Singer is the man behind what became the Varsity Blues college admissions scandal.

Having written about the attorney, Gordon Caplan, I feel obligated to provide an update following the decision of New York’s Appellate Division to suspend Mr. Caplan from practicing law for two years. This closes the legal proceedings for the former co-chairman of Willkie Farr & Gallagher, a major international law firm in New York City.

In my prior post, “The Immorality of It All,” I quoted Mr. Caplan’s wiretapped statement to Rick Singer – “I’m not worried about the moral issue here. I’m worried about the – if she’s caught doing that, you know, she’s finished.” In response, I wrote, “As a lawyer, as a certified college admissions advisor, as a former high school English teacher and as a former proctor for the College Board’s SAT examination, my reaction to [what Mr. Caplan had said] was multifaceted disgust.”

Today, I feel much better about Mr. Caplan. And unlike some, I believe the Appellant Division decided correctly.

Following his guilty plea in May, 2019, U.S. District Judge Indira Talwani sentenced him to one month in federal prison, one year of supervised release (parole), 250 hours of community service and ordered him to pay a $50,000 fine. This, together with the loss of his position at his law firm, the personal and public embarrassment he suffered and the legal bills incurred, comprise a very significant consequence for his actions.

Just before his sentencing, Mr. Caplan told Judge Talwani, “I disregarded the values I’ve had throughout my life.” He continued, “I failed. I failed my daughter. I failed my wife. I failed my parents. I failed my colleagues. And I failed the profession that I love.” He added, “This was not a victimless crime. The real victims of this crime were the kids and parents who play by the rules.”

By all accounts, Gordon Caplan was a much better man than the man who employed Rick Singer. And by all accounts, he is chastened and become, again, the better man he was before the Varsity Blues scandal.

Note: Two days ago Netflix released Operation Varsity Blues: The College Admissions Scandal, a documentary about the bribery scandal from 2019.

Lee Bierer, a nationally syndicated columnist and independent college counselor, apparently had access to a preview of the film and wrote in her column,

It’s a powerful film that shows the ugly underbelly of what happened to the college admissions process. It features reporters, independent educational consultants and the sailing coach from Stanford who pleaded guilty. Since William “Rick” Singer, the kingpin coordinator of the bribery scandal, agreed to plead guilty and share information with law enforcement officials, the documentary has the original taped conversations between Singer and his unknowing clients.

In our next post, we will tell of a much more important college admissions scandal – one that threatens our national security.

Your College List – and Phi Beta Kappa

In our last post, we talked about a college rankings list you probably never heard of, the ranking of colleges with the most students selected for an award in the Fulbright U.S. Student Program. We thought colleges with Fulbright awardees indicated those schools had serious academic programs and advisers who helped the students earn their awards.

We also said another program, Phi Beta Kappa (PBK), was a sure indicator of the quality of the colleges’ strength in the liberal arts and sciences. Of the approximately 1,400 four-year colleges and universities U.S. News ranks, just 290 institutions have a Phi Beta Kappa chapter. (The more than 4,000 colleges and universities the U.S. Department of Education lists includes satellite campuses of larger universities, community colleges and for-profit colleges.)

Phi Beta Kappa’s first meeting took place on December 5, 1776 in Williamsburg, Virginia. Five years later, in nearby Yorktown, what became the climactic siege of the American Revolutionary War was imminent.  Afraid for the fledgling organization, one member persuaded fellow members to allow colleges in New England to charter chapters. That preserved Phi Beta Kappa, and chapters were established at Yale in 1780, at Harvard in 1781 and at Dartmouth in 1786.

Of course, most people hearing of Phi Beta Kappa believe it is such an exclusive academic achievement that it is well beyond their realizing and, therefore, of no importance to them. So, what does it matter whether a college you are considering has a Phi Beta Kappa chapter?

What matters is that these colleges and universities are different from all others, and here’s why.

  • Colleges that shelter, i.e. host, a Phi Beta Kappa chapter have applied for selection and submitted to a rigorous, three-year course of examination and re-examination by Phi Beta Kappa to prove the high quality of its liberal arts and sciences course of study and its support of its programs.
  • The steps in the application process consist of a review of the application by the Committee on Qualifications, a visit to the campus, an updated application, recommendations to the PBK Senate, and recommendations by the Senate to the Triennial Counsel. Rejection of the application is possible at each step. Then, at the end of three years, a vote by the Triennial Council approves or disapproves the applications that got that far.
  • So special is earning a Phi Beta Kappa chapter that the president of the University of Houston, Renu Khator, said, “Our earning a Phi Beta Kappa chapter…was the culmination of a tenacious and protracted effort led by a group of staunch faculty members.” He continued, “In many ways, I point to the Phi Beta Kappa chapter as the achievement I’m proudest of so far. . . . Simply put, you [a college] don’t qualify for Phi Beta Kappa unless you have clearly established a culture that supports your students at every turn.”

As a student compiling a college list, realize that many colleges that don’t have well-known “brand names” and that you, your parents and your friends might never have heard of are, in fact, very fine colleges that host Phi Beta Kappa chapters.

For example, what do you know about Muhlenberg College, Saint Joseph’s University, Swarthmore College and Ursinus College, all in Pennsylvania? What do you know of Alfred University, several of the City University of New York colleges, St. Lawrence University, and Union College, all in the state of New York? They all have PBK chapters.

If you’re interested in traveling farther from the New York-Philadelphia area, do you know the College of Wooster in Ohio; Grinnell College in Iowa; Rhodes College in Tennessee; and Wabash College in Indiana? They all have PBK chapters.

We are not suggesting you must consider these colleges. On the contrary, the presence of a Phi Beta Kappa chapter should not be the determining factor in whether you consider a particular college.

However, if someone whose opinion you trust recommends a college, but neither you nor your friends ever heard of it, check to see if it has a Phi Beta Kappa chapter. If not, continue to look further into the recommendation. If yes, you know that that college is one of the special 290, just one of many factors to consider as you make your college list.

Even if you don’t believe you could ever achieve a Phi Beta Kappa key (only 10 percent of graduates do), the presence of a PBK chapter is a sure sign of the college’s high academic quality and its commitment to its students’ success.

The College Rankings Are Here – The Ones You Never Heard Of

Everyone enjoys rankings regardless of the subject, and that includes ranking colleges. The Wall Street Journal does it. The Washington Monthly does it. The less well known Niche publishes a very different version of college rankings. And the Princeton Review publishes a book each year, The Best 386 Colleges.

But the college rankings that everyone knows about are the U.S. News & World Report rankings. They garner headlines and lots of commentary every year.

At the same time, a list of colleges ignored by the mass media is the list The Chronicle of Higher Education dubbed this past week the “Top Producers of Fulbright U.S. Scholars and Students, 2020-21.”

Admittedly, this is a list that would be of most interest only to students (and their parents and school counselors) who have the potential to be awarded a Fulbright U.S. student award. However, to those students and their parents and counselors, the possibility of competing for a Fulbright award might be a consideration in deciding where to apply for college.

The Fulbright Program is sponsored by the U.S. Department of State, Bureau of Educational and Cultural Affairs to support academic exchanges between the United States and over 150 countries around the world. The Fulbright U.S. Student Program offers awards for U.S. graduating college seniors, graduate students, young professionals and artists to study, conduct research, and/or teach English abroad.

Just over 500 U.S. colleges and universities actively participate in the Fulbright program, and the Chronicle of Higher Education published lists of the colleges and universities with graduating students who competed successfully for an award. The lists are grouped according to the type of institution the students graduated from. The four types of institutions are doctoral, master’s, baccalaureate and 4-year special-focus (institutions where a high concentration of degrees is in a single field or set of related fields).

The full list of all of the colleges and universities is available at the Chronicle of Higher Education. Below are the lists for baccalaureate and 4-year special-focus institutions. The number of applications and number awarded suggests the emphasis of the program and its advisers at each school.

Baccalaureate institutions (49 colleges – Those with 10 or more Awards are listed.)

4-year special-focus institutions (10 colleges – All had one or more Awards offered.)

As you can see, the Fulbright U.S. student award is quite exclusive. The number of applicants are few and the awards are still fewer. The point here is that the presence of such a program is indicative of what these colleges and universities make available to their best students.

Another excellent indication of the academic quality of a college is the presence of a Phi Beta Kappa chapter. Just 290 institutions have a Phi Beta Kappa chapter. To qualify for this, an institution goes through a three-year process of examination by three levels of Phi Beta Kappa examining committees. We will have more about this in our next blog post.

Two Essential Resources – FREE!

February is financial aid month and, appropriately, we have a wealth of free resources to tell you about. The first is a free guidebook for the SAT and ACT tests and the second is information about financial aid provided by the National Association of Student Financial Aid Administrators.

First, a free, newly updated SAT and ACT guidebook.

The Compass Education Group is offering for free its newly updated (2.1.21) Guide to College Admission Testing. The guide is 69 pages of information about the SAT and ACT aptitude tests and subject tests. The guide is available here.

Compass Education Group is a long-established, national company providing college admissions advising and test prep services. The well-known college admissions advisor, Lynn O’Shaughnessy (The College Solution) said she always looks forward to reading the latest update of the guide.

You will also find free access to webinars and other information at the Compass Education Group website.

Second, February is Financial Aid month, and to celebrate, the National Association of Student Financial Aid Administrators has assembled a collection of useful information.

For example, many people assume that they won’t qualify for financial aid because their grades are not good enough, they make too much money (or their parents do), or lots of other reasons. But, you won’t know for sure unless you try, and applying is free

You’ll also find links to the following helpful financial aid resources here:

Student Loans – A Primer – Part 2

In our last post we told how Jason and his friends knew very little about the student loans they had. Only Jason appeared to be concerned. That changed and now Terrell, Olivia and Kate are worried about their student loans. Except for Olivia, who is a junior, they are all seniors and just months away from graduation

Borrowing money to pay for college is complicated, and so it is easy to make serious mistakes if you don’t look at all the details. In this post we will give you just the most important facts and some advice to pay attention to in making decisions about borrowing money for your postsecondary education. In a later post we will talk about how much to borrow. This is information parents and students all need to know, so let’s get to it.

There are two types of federal loans available to postsecondary students, whether they are in college or in a trade school or other federally recognized postsecondary education. Part of the difficulty in understanding the available loans is the language used in talking about loans and borrowing. This is where greater financial literacy is a big help.

Students can borrow a Direct Subsidized Loan or a Direct Unsubsidized Loan. Why are they called “Direct” and what is the difference between “Subsidized” and “Unsubsidized”? Direct simply means the loan is borrowed directly from the U.S. Department of Education. Once you know that you don’t have to worry about “direct” anymore.

In the context of a student loan, subsidized means that you, the borrower, are being given a loan without having to pay interest until six months after you graduate or leave school before graduation. If you have an unsubsidized loan, it means that interest is charged from the moment you receive the loan all the way through until it is repaid in full.

This leads to another term, accrue. When speaking of loans and the interest we pay on loans, we say the interest accrues, or accumulates, over time until the loan is repaid. So, with a subsidized loan, the federal government is lending you the money without charging you interest until you graduate or leave school before graduation. No interest is accruing. But with an unsubsidized loan, interest begins accruing from the day you receive the loan. For this reason, it’s a good idea to pay this accruing interest as you go through college because it can add up to a significant amount of money.

The current interest rate is a fixed rate of 2.75%. Because it is a fixed interest rate, it won’t change for the life of the loan whether it’s a subsidized or unsubsidized loan. Note: This does not mean that every direct student loan you take out while in college will have a fixed rate of 2.75%. The Education Department can change the rate, up or down, each year, so that the next loan you take out could have a different fixed rate.

Interest rates for direct subsidized and unsubsidized loans for 2019-2020 was 4.53%. Students returning to school for the 2020-2021 school year were happy to learn that the interest rate on their new loan would be 2.75%, a very large decrease when talking about loan interest rates.

At this point, Jason, Terrell, Olivia and Kate felt a little overwhelmed with all this information, and they suspected there was a lot more coming. They were right. But for now, just know that their loans are all different even though they all have direct subsidized and direct unsubsidized loans.

Jason is a fifth year senior, so he has been accruing interest for nearly 5 years on his unsubsidized loans. The total amount a student is permitted to borrow under the direct student loan program is $31,000 and no more than $23,000 can be subsidized. Jason reached his $31,000 limit and has $8,000 in unsubsidized loans. The interest rates on Jason’s loans have changed every year from 2015 to 2020. The interest rate has been as low as 3.76% and as high as 5.05%. Jason also has two private loans totaling $15,000 which his uncle cosigned.

In future posts we will talk about the loans Terrell, Olivia and Kate have, but Jason’s loan status shows how borrowing over several years can be complicated and expensive. Jason didn’t understand this, and now he has to sort out his multiple loans and begin to think how he is going to repay them. He is especially worried about not putting his uncle in a difficult position if he is unable to repay his private loans. If you are a high school junior or senior planning to attend some kind of postsecondary education you will have to pay for, you would be wise to read this over again and begin to look into some of the financial literacy resources listed in earlier posts. Jason has our sympathy, but he’s not alone. Begin now to put yourself in a position where you won’t need our sympathy. If you don’t, four or five years from now sympathy is all we will be able to offer.

Student Loans – A Primer – Part 1

In our last blog we introduced Jason and his friends and told the story of how they had come to their senior year in college and realized they did not know how much money they had borrowed to attend college. They also didn’t know the interest rates or even when they would have to begin repaying the loans. They appeared to lack any understanding of personal finance. Put another way, they were largely financially illiterate. At the end of this blog, you’ll find links to some resources to help you increase your financial literacy. We will have more about financial literacy in future blogs, but now we would like to give you some basic knowledge about student loans.

Federal student loans are complicated, and the language you use to describe them only adds to the difficulty. Student loans consist of two types: direct subsidized loans and direct unsubsidized loans. The amounts the student can borrow under these loans are limited and the fees and interest to be paid are often not understood by the borrower. These loans are from the federal government. Then there are “private loans” which are obtained from banks, credit unions and other private lending companies. The interest rates for federal loans are lower than the interest rates for private loans, and there are also federal programs for loan forgiveness. Yet 7.9% of the outstanding student loan debt is from private loan borrowing.

If federal loans are less expensive and have other benefits, why would you take a private loan? It’s because you need more money than the federal government allows you to borrow. Private lenders offer different loan rates and different loan obligations, requiring the lender to have a better understanding of how loans work.  Private loans also almost always require a cosigner.

Cosigning a loan is serious business, and it’s important for both the borrower and the cosigner to understand the obligations cosigning a loan entails.

A cosigner, typically a parent, guardian or other family member, becomes legally responsible to pay the loan payments if the student loan borrower is unable do so. Typically, the cosigner is trying to help the borrower and does not think about the consequences of cosigning. Even if the borrower always makes the loan payments, the cosigner could be under that obligation for the entire term of the repayment, 10 years or more.

Also, a cosigner’s credit rating could be adversely affected when required to report the cosigned obligation on an application to lease an apartment or on a loan application to, for example, buy a car.

The financially literate borrower understands the obligation he or she is asking a cosigner to take on. Consider this before making the request, and you should inform the possible cosigner of what the obligation entails. In this case, being financially literate could save you an embarrassing circumstance with someone who cares about you should that person be denied a loan because of the cosigner obligation or because you become unable to make the loan payments.

For more information on cosigning a loan, go to

Improving your financial literacy is something you can do by yourself or, better yet, suggest that it be a family project. Everyone will benefit from it. There are many free resources on line. The resources listed below are ones we believe would be very helpful to consider using.

Next Gen Personal Finance  This is an excellent source of personal finance information and tutorials for students and parents. I suggest you start here.

University of Wisconsin financial Literacy Center  This link will take you to basic, helpful information on key financial literacy topics.

Financial Literacy and Education Commission of the United States Treasury Dept. Go to  for links to information for students and teachers.

National Endowment for Financial Education  NEFE offers two financial education websites, CashCourse ( ) and Smart About Money ( ). However, both of these websites will be discontinued effective July 31, 2021. CashCourse is also offered through the Northwestern University Financial Wellness office  and may still be available after July 31.

Also, go directly to CashCourse at  CashCourse® is a free, online financial education resource designed specifically for college and university students offered by the National Endowment for Financial Education. This interactive online money management tool provides answers and resources to help you make smart choices with your money.

Khan Academy  provides a wide array of courses. Scroll to the bottom of the page and click on Life Skills. This takes you to a page on Personal Finance and another page on College Admissions.Investopedia This link will connect you to 10 pages of personal finance information.

Student Loans — Don’t Be Like Jason and His Friends

Jason and a couple of friends were sitting around one evening in the fall of their senior year in college when one them said something about his student loan. That led to them all talking about their loans and they realized that none of them knew exactly how much they owed or what the interest rate was or when they would have to start repaying the loan.

They had all laughed off the student loan talk, but later that evening the talk haunted Jason, and he began to worry. Why didn’t he know how much he had borrowed? Why didn’t he know the interest rate or when he would have to begin repaying the loan?

There’s a reason Jason and his friends didn’t have answers that night. They were all lacking in financial literacy. Simply put, to be literate in something is to be knowledgeable and competent in the subject. Here, the subject is finance, that is, money, credit cards, loans, etc. Jason and his friends were simply not knowledgeable about money.

Financial literacy is probably the most important subject that isn’t taught to high school students. Students are taught to be literate, that is competent, in algebra and French and science, but most students won’t need to be competent in these subjects in order to make important decisions in their lives. This is not the case with financial literacy. Whether you are rich or poor or somewhere in between, you will have to make money decisions throughout your life. Starting in your senior year of high school, you will have to decide what you’re going to do after high school and how you’re going to pay for it.

Unfortunately, too many students are like Jason and his friends – clueless about money matters. And often parents are not informed enough themselves to provide the guidance they need.

A 2017 study by Inceptia, “Loan Summaries: Nudging Students Towards Smart Borrowing,” found that 94% of the students surveyed do not understand their loan repayment terms and 65% reported that the loan process was confusing.

Moreover, the American Institute of Certified Public Accountants found while nearly all college students they surveyed ranked personal financial management as a skill that was extremely important only 23% of those surveyed actively sought out information to improve their financial habits.

Parents, too, wanting to help their children, often assume debt they cannot afford. CNBC reports, “According to Experian borrowers age 35 to 49 increased their direct loan debt by $45.9 billion last year. Much of this new debt is reportedly from 800,000 parents who borrowed Parent PLUS loans to help send their kids to college.”

Since most students going to college or some other postsecondary education will have to borrow money to pay for it, they need to start looking for answers to questions such as these:

  • How much money should you borrow?
  • Should you save money before borrowing?
  • Should the cost of postsecondary education be part of deciding where to go for college or career training?
  • What are the extra and sometimes unexpected costs of everyday living?

The federal formula that determines the “cost of attending” does not include costs like clothing, transportation, entertainment, unexpected costs like a car repair, etc.

Students who have a reasonable amount of financial literacy, and their parents, will recognize these and other important considerations early in the planning for postsecondary education. They would also consider a host of other matters which we will discuss in our next post.

Financial Literacy – Don’t leave home without it!

Verbal literacy and math literacy are common enough terms when talking about education. But financial literacy is a term you’re likely much less familiar with. That is not your fault. After all, it is not taught in most schools across the country and, when it is, it is more often than not just one unit in a larger course.

The Council for Economic Education’s 2020 Survey of the States recently issued its biennial report and noted that while more teaching of personal finance was being done, only 21 states require high school students to take a course in personal finance.

Forty-five states require that personal finance be “Included in the K-12 Standards,” but only 37 states require the standards to be implemented by their school districts. Pennsylvania requires study of personal finance to be included in K-12 standards and requires the standards to be implemented in school districts but does not require school districts to offer a high school course in personal finance and does not require personal finance study to be integrated into another course. Nor does Pennsylvania require any standardized testing of personal finance knowledge.

If that sounds confusing, you are not alone. My inference is that the idea of educating students in personal finance is applauded but that putting the idea into action is too much trouble. In the end, students are the losers.

And why are students the losers? Simply because before they even graduate from high school, whether they plan on attending college or pursuing some alternative, students will be confronted by important and consequential personal finance decisions. And so will their parents. The fact is that too many have insufficient knowledge to make these types of choices.

Annually, TIAA Institute in conjunction with George Washington University conducts a study to assess financial literacy among U.S. adults. Its 2020 report found that many Americans lack the necessary personal finance knowledge to make sound financial decisions, with just 52% of the US adults surveyed answering the Personal Finance Index questions correctly.

For students who are just three or four years away from high school graduation, financial literacy will soon be a necessity which they are likely unprepared for. Whether going to college or entering the workforce, students will have to make financial choices about which colleges to apply to or which training schools, boot camps or apprenticeship programs to apply to. With this comes the question of how to pay for your choice. Of course, their parents have been thinking about (dreading?) this as well.

Ask any parent what the most confusing and difficult part of the college application process is and they will tell you it is financial aid. It begins with filling out the FAFSA, continues through trying to understand the financial aid package colleges are offering their child and, finally, deciding which is the best offer.

The 2020 Survey of the States notes that research shows that personal finance education encourages more prudent financial behaviors and points to research by Montana State University professors Carly Urban, Ph.D. and Christiana Stoddard, Ph.D. Their research compared incoming freshman at four-year institutions from states with personal finance graduation requirements to students in states without a mandate.

Dr. Stoddard said, “We found that in states with mandated finance graduation requirements for high school, more college students make better borrowing decisions, including applying for and receiving federal aid and grants, while simultaneously decreasing credit card balances.”

The evidence is clear. Each of us, students and parents, should take steps to become more knowledgeable about personal finance. There are very good resources available online for free. Good sources of information include:

MoneySmarts  is a website of the University of Indiana Office of Financial Literacy providing a wealth of information and practical personal finance is a website that focuses on entrepreneurship and teaching financial literacy as part of the process

Khan Academy  provides a wide array of courses, including offerings on personal finance focused on Gen Z and courses on paying for college

Financial Literacy and Education Commission of the United States Treasury Dept. Go to  for links to information for students and teachers.

These and other websites you can find will enable you to increase your personal financial literacy and may even motivate you to lobby for a course in financial literacy in your school district.