The Urgency of Now: Financial Literacy for College Success
CAP’s Director of Financial Services, Ivette Chavez, vividly recalls the first time she became aware of her own student loan debt, as she sat crying on the steps of UC Berkeley’s Sproul Hall. It had just been made clear to her in no uncertain terms that the financial aid she had received was in the form of loans, and that those loans would need to be repaid. As one of nine children in a low-income, immigrant family, Ivette was a first-generation college student whose parents did not speak English. No one had ever explained to her what exactly a loan is—that it is not a gift, and that it would need to be paid back with interest. When she had been handed the financial aid papers to sign each year she gratefully just signed on the dotted line.
Experiences like this are not uncommon among first-generation college students. Before these students experience the cultural disconnect of learning and living among those from affluent backgrounds, they need to navigate the maze of loans, grants, and scholarships with very little financial fluency and guidance. One national study found that first-generation college students indicated “increased financial strain but lower financial knowledge” than their peers.
This month, we reached out to Tim Ranzetta, co-founder of Next Gen Personal Finance, to learn more about how financial literacy can impact students’ college success—especially given the economic and social impact of COVID-19.
Tell us briefly about your work.
I founded Next Gen Personal Finance in 2014 with an amazing educator, Jessica Endlich. We started with a simple mission: to guarantee that by 2030 all students will cross the high school graduation stage with the financial skills to thrive in the future. We partner with over 43,000 educators in all 50 states by providing them with engaging and easy-to-implement curriculum that students love. We also offer professional development programs and certification courses that increase their confidence, develop their capabilities, and deepen their content knowledge. Finally, our advocacy tools have enabled hundreds of teachers to make the case in their school community for more access to financial education.
Why is learning personal finance important for students from low-income families, especially in relation to college access and success?
As a volunteer teacher at Eastside College Prep in East Palo Alto for 9 of the last 10 summers, I have seen the power of personal finance education. In my end-of-course survey for the 9th graders, students have left comments indicating how happy they are to know things like:
- The difference between “sticker price” and “net price” for colleges, which they learn from researching colleges that they are interested in
- Financial aid that is available based on family income
- How much of a difference education makes when it comes to earning power
- The importance of learning how to budget given all the expected and unexpected costs from college
What are some key lessons you hope students take away from learning about personal finance?
- “If it sounds too good to be true…it probably is!” There are many “get rich quick” schemes proliferating on social media. Learn to be a critical thinker and not be swayed by friends or social media.
- The best investment a high school student can make is in their own education. Spending extra time on your schoolwork and extracurriculars now can yield scholarship dollars later—so, in a way, you can earn money for doing your schoolwork.
How has COVID-19 impacted the teachers you partner with and your approach to teaching personal finance?
Since COVID-19, what we have seen from educators has been nothing short of inspiring. When we pivoted our professional development to 100% online in March of 2020 using Zoom as well as a presentation platform called Nearpod, we found a teaching corps eager to learn. Every teacher became a first-year teacher again, learning to adapt to this new environment. Teachers participating in NGPF also learned various student engagement strategies in a virtual environment. These included using Zoom breakout rooms for discussions, collaboration boards to share ideas and quiz games as checks for understanding.
They also became the de-facto experts in remote instruction in their school communities, so their impact spread!
On the content side, the pandemic has brought tremendous changes to everyone’s personal finances, so we have developed new lessons and professional development sessions to keep everyone current including sessions on Personal Finance in an Age of Pandemic which analyzed how COVID-19 affected how people shop, pay for things, and manage credit.
What have you learned about student loan debt that might be especially important for under-resourced families to know?
One important and surprising fact is that the students who struggle the most with student debt—with the highest percent of students not making payments—are those with balances under $5,000 who don’t complete college. Students need to be sure that they are doing everything they can to prepare themselves academically for college because college completion is key to being able to manage your student debt.
Plan, plan, plan. Students need to map out a four-to-five-year plan on how they will pay for college. Taking a piecemeal, year-at-a-time approach can lead to surprisingly high loan balances.
Finally, students need to understand the tradeoffs that they will be making with the decisions they make in college. Our game, PAYBACK, gives students the opportunity to see the decisions that they will be making over their college years and how those decisions impact not only their student debt but also happiness, focus, and connections. Even better, we invite students to play the game with their parents and use this discussion worksheet to open up a conversation on this challenging topic.
What keeps you up at night?
Only 1 in 5 students nationwide is guaranteed to take a personal finance course in high school. Furthermore, our research has found that only 1 in 14 students in schools serving predominantly Black and Brown students have a similar guarantee. Progress is happening at the grassroots level, which we are encouraging through our Mission: 2025 and Gold Standard Challenge grant programs for schools that offer or require personal finance electives.
Rather than keep me up at night, this gets me up every morning motivated to make a difference. The urgency of now!