Singh 1!

Sajan Singh

Mrs. Dooley

Center for Law and Global Policy Development

30 January 2019

Capstone Paper

Currently, 49% of Americans live paycheck to paycheck and over 80% of Americans are

in debt. In an increasingly tumultuous economic climate, it is important that the average

American citizen be educated in how to handle their finances. Despite strong educational

systems and an internationally powerful Gross Domestic Product, the United States suffers from

a lack of financial knowledge. Many students are educated in how to find the hypotenuse of a

triangle or what the sine value of an angle is. Many learn about aggregate demand or how to

communicate in other languages. However, the state of South Carolina has overlooked the

necessity of personal finance as part of a core curriculum. With Social Security set to fail in

2034, it is more important than ever that South Carolinians learn how to balance a checkbook

and keep a budget. This is especially important for high schoolers who are not planning on going

to college. With a seemingly "set in stone" minimum wage in South Carolina, and limited access

to occupational enhancement, those who ended their education with a high school diploma need

to have an adequate understanding of fiscal responsibility. Currently, South Carolina ranks 45th

in terms of credit score. With exponentially increasing college tuition costs and loans, students

need to be prepared in areas such as financial literacy in order to take on the world. Not only

would the class teach students integral information regarding "growing up", but it would prepare

them to contribute to the national marketplace. A financial literacy course, albeit simple in
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nature, can drastically change the economic stance of South Carolina when it comes to the

national marketplace, and can prepare students for fiscal issues that the United States is

currently facing.

The United States has gone through many times of economic upheaval. Recently, the

country has undergone the .com bubble of the early 2000s as well as the Great Recession in

2008. With the last recession costing the average person $70,000 and hitting a peak

unemployment of 20%, the American middle class needs to learn about the merits of

diversification and the advantageous nature of the time value of money (Gibson). Unsurprisingly,

the next major United States recession is projected to occur by 2021 (Fortune). With this in mind,

it is of the utmost importance that the American people know how to safeguard their money.

There are many unknowns when it comes to the American economy. There is a seeming

unpredictability about it that can leave even the highly trained, world renowned economists

wondering what happened. However, just because the economy can oftentimes be difficult to

read does not mean that there are not lessons to be learned to build a resiliency to economic

degradation among the people of the United States.

There are many threats to the American economy that people are aware of, but are not

taking into serious consideration. For example, credit card debt has been steadily increasing

despite the Great Recession, student loan debt has become an insurmountable obstacle in front of

education for many, and social security is on track to fail in the next 20 years. Despite these

problems, the increasingly materialistic sentiment of the American people has caused savings to

fall to new lows.

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"The economy might be prospering now, but that won't last forever: 'The party has to stop

sometime, and when it does, employers will lay off workers,'the study says.In fact,

Bankrate estimates that half of the American population won't be able to maintain their

standard of living once they stop working. A report from GoBankingRates found similar

results: Over 40 percent of Americans have less than $10,000 saved for when they

retire...'The average American has less than $5,000 in a financial account, a quarter to a

fifth of what you should have," (Martin).

With savings nearing record lows, it is clear and apparent that Americans are exposed to many

threats. Moreover, it is projected that social security will no longer be a feasible or sustainable

model because of the demographic shift that faces the country, "As the generation of baby

boomers enters retirement, the payroll taxes that they've contributed to the system throughout

their careers will turn instead toward withdrawals in the form of retirement

benefits," (Caplinger). This depletion of social security funds will negatively impact the benefits

of future generations. With so many economic threats to the American way of life, a solution is

necessary now more than ever.

Interestingly, these financial struggles are not isolated to just the nation as a whole, but

seem to have quite an impact on the state of South Carolina. In 2016 South Carolina was ranked

the state with the seventh worst credit score in the United States. Moreover, many South

Carolinians have not yet grasped the importance of the effect of timeliness on credit, "A majority

of South Carolina borrowers, 52.7 percent, have debts that are past due or in

collections," (Kirkham). On the note of debt, South Carolina ranked first in average student loan

debt after finishing college at an intimidating $26,535 (Ardis). Furthermore, South Carolina has a
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higher default rate on these loans than the national average (NerdWallet). With so many threats

to the economic stability of the state of South Carolina, it is a necessity to implement a course

that educates the future leaders of the United States on how to appropriately and safely take care

of their financial assets and resources.

Before one can institute a financial literacy course, one must be willing to understand the

ethical concerns that could arise from the course itself. If a financial literacy course is

implemented into the standard South Carolina high school education, it would put an extra

course pressure on students in order to graduate. This would further restrict students in pursuing

courses they are interested in. Although high school is a time that prepares students for the

future, it is also a time where students find their passions. A financial literacy course may distract

from that fundamental institution of the high school education. However, with that said, financial

literacy could also enable students to have the resources in the future to follow their passions. A

basic understanding of personal finances is a necessity to living a stable life in the modern day

economy.

Something that needs to be considered is that the most efficient way to rectify the

potentially catastrophic effects of the impending economic collapse is to encourage long term

fiscal thought on a fundamental level. High School is meant to be a part of someone's life in

order to prepare them for the future. Whether that be college or career, it is essential that students

have the opportunity to learn about how to balance a checkbook or create good credit history. In

order to do this, South Carolina, as a state, should institute a required semester-long high school

course on financial literacy. However, many states incorporate financial literacy into the

economics course. Unfortunately, economics is only required in 22 states in the United States
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(Thompson). Moreover, only 16.4% of American high school students are required to take a

personal finance class in order to graduate (Desjardins). Although the class incorporates key

information about personal finance, the breadth of the average high school economics can not

possibly cover the full extent of applicable financial literacy.

The state should mandate that the class be taken in a student's freshman year. With the

high dropout rate of the Corridor of Shame, requiring this class freshman year could have a

positive effect. That is, the course could bring prosperity and fiscal stability to these currently

struggling communities. Unfortunately, South Carolina ranks as the ninth highest in poverty rate

with "More than 860,000 South Carolinians liv[ing] below the poverty threshold," (Ellis). The

institution of a class on financial literacy would improve the economic condition of underserved

communities. Moreover, the course would give individuals in areas like the Corridor of Shame

the essential knowledge to improve their own situation, and find a way out. Whether it be lessons

on balancing a budget or checkbook, diversifying assets, the time value of money, or, most

importantly, saving money, a semester-long course in financial literacy being mandated could

change a lot of lives. Furthermore, the course could help prepare South Carolinians with the

uncertainty and economic volatility that presents itself with the tariffs, or with any economic and

fiscal strife in he future.

Currently, only five states in the United States require courses in personal finance:

Alabama, Missouri, Tennessee, Virginia, and Utah. Unsurprisingly, these five states were the

only ones to reactive an "A" grade on the 2017 Financial Literacy Report Card. These states are

illustrating a boom in value and a progressive nature in the requirement of a personal finance

class. In the modern American school system, "only 24% of the generation demonstrates 'basic'
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financial knowledge, while 70% are already stressed about saving for retirement," (Desjardins).

With many students uncertain about how their finances will shape up in the future, financial

literacy courses are being valued more and more by younger generations.

In order to monitor the success of the course, one could look at a multitude of variables.

Whether it be the saving/spending habits, the presence of a basic emergency fund, less

indebtedness, or even a higher average credit score in areas where the course is offered, the

success can be easily monitored. However, true success will be seen with the overarching health

of the South Carolina economy. In such a turbulent time both economically and politically,

having some semblance of stability could ensure the future leaders of South Carolina with the

potential to change the world.

A required course in personal finance or financial literacy for high school students could

have drastically positive affects on the national market place and the economic state of the

United States while preparing future generations for potential fiscal difficulties. In a world where

"69% of parents have some reluctance about discussing financial matters with their kids" and

money is the biggest cause of divorce, why is a course on financial literacy to prepare future

generations even being considered (Champlain College)? Simply put, financial literacy is

becoming a necessity in an increasingly competitive, volatile, and uncertain world. To not expose

students early on to the nature of financial literacy would be a disservice to their futures and

would rob them of essential knowledge. High school is meant to be a place to prepare students

for their future. College or career, lessons in personal finance would make the transition into

adulthood and independence more readily available for students. A personal finance class should
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be required in the American school system in order to prepare future generations to lead this

country.
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Works Cited

Ardis, Susan. “South Carolina Is No. 1! But in This Instance, It Is about Student Loan Debt.”

The Greenville News, The Greenville News, 4 June 2018, www.greenvilleonline.com/

story/news/2018/06/04/south-carolina-no-1-but-instance-student-loan-debt/669131002/.

Caplinger, Dan. “2018 Social Security Trustees Report: The 5 Things You Need to Know.” The

Motley Fool, The Motley Fool, 6 June 2018, www.fool.com/retirement/2018/06/06/2018-

social-security-trustees-report-the-5-things.aspx.

Carrns, Ann. “Most States Don't Require Specific Financial Literacy Classes.” The New York

Times, The New York Times, 19 Jan. 2018, www.nytimes.com/2018/01/19/your-money/

states-financial-literacy-classes.html.

Desjardins, Jeff. “Most US High School Students Never Have to Take a Personal Finance Class.”

Business Insider, Business Insider, 2 Oct. 2017, www.businessinsider.com/most-us-high-

school-students-never-have-to-take-a-finance-class-2017-10.

“Economists Expect the Next Recession to Hit by 2021.” Fortune, Fortune, 2 Oct. 2018,

fortune.com/2018/10/02/the-next-recession-economists/.

Ellis, Sarah. “South Carolina Poverty Rate Nearly Steady but Still Ranks 9th Highest.” Thestate,

The State, 20 Sept. 2014, www.thestate.com/news/local/article13886885.html.

Gibson, Kate. “How Much the 2008 Financial Crisis Cost You in Dollars.” CBS News, CBS

Interactive, 13 Aug. 2018, www.cbsnews.com/news/how-much-the-2008-financial-crisis-

cost-you-in-dollars/.
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Kirkham, Elyssa. “10 States With the Best and Worst Credit Scores.” GOBankingRates, Sections

Best Brokers 2018, 8 June 2016, www.gobankingrates.com/credit/credit-score/states-

best-and-worst-credit-scores/.

Martin, Emmie. “65% Of Americans Save Little or Nothing-and Half Could End up Struggling

in Retirement.” CNBC, CNBC, 15 Mar. 2018, www.cnbc.com/2018/03/15/bankrate-65-

percent-of-americans-save-little-or-nothing.html.

“The Case for High School Financial Literacy.” The Great Debate: Is College Worth the Cost? |

Champlain College, www.champlain.edu/centers-of-experience/center-for-financial-

literacy/report-national-high-school-financial-literacy/the-case-for-high-school-financial-

literacy.

Thompson, Daniel. “2018 Survey of the States Reveals Slow to No Growth in K-12 Personal

Finance and Economic Education by CEE.” Council for Economic Education, 6 Feb.

2018, www.councilforeconed.org/2018/02/08/2018-survey-states-reveals-slow-no-

growth-k-12-personal-finance-economic-education/.

Voices, Advisor. “South Carolina Students Default More Than US Average on Student Loans.”

NerdWallet, NerdWallet, 16 Dec. 2016, www.nerdwallet.com/blog/loans/south-carolina-

colleges-show-higher-student-loan-default-rate-u-s-average/.