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Earn Your Future®

Digital Classroom
Level 1: The Case of
the Frazzled Friends

Module Resource
Guide
Table of contents
“The Case of the Frazzled Friends” Module Resource Guide .......................................................... 1
Background information about the topic ........................................................................................ 3
Teaching the module........................................................................................................................ 4
Assessing student learning .............................................................................................................. 9
Extending student learning ............................................................................................................. 5
National standards for financial literacy ....................................................................................... 13
Related resources for students ........................................................................................................ 5

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“The Case of the Frazzled Friends”
Module Resource Guide
Topic: Credit and Debt

Suggested grade level

Although this module may be used for all grade levels, the content was designed for grades three-to-five.

Hardware recommendation
Earn Your Future (EYF™) Digital Classroom modules are accessible on most devices, however, for
optimal user experience it is recommended modules are accessed via desktop or tablet. Please note, the
EYF Digital Classroom modules are not optimized for use on mobile devices (iOS and Android).

Technical specifications
While the EYF Digital Classroom modules were developed to function in all browsers, including Internet
Explorer, Safari, Chrome, and Firefox, browser load speeds will vary. For best performance, it is
recommended that the most current version of your browser of choice is used when accessing the
modules. Please note, connection speeds may be impacted by factors such as highly trafficked shared Wi-
Fi access, public Wi-Fi, and accessing modules behind a firewall.

Module summary
In “The Case of the Frazzled Friends,” students meet two friends, Jamal and Noah, and learn that Jamal
is not willing to let Noah borrow his new video game. Students’ challenge is to figure out why Jamal
won’t lend the game to Noah, learn how Noah can gain Jamal’s trust, and determine whether Jamal
should lend to Noah in the future. Luckily, Kreditt—a robot built to help people solve problems having to
do with money—is available to help students. Students begin by learning about the risks associated with
borrowing and lending and what it means to be trustworthy. They then consider the characteristics of
good and bad borrowers and learn about ways borrowers can build trust. Next, students learn how
borrowing and lending work in a professional setting and consider how interest and collateral can help
reduce risk and compensate lenders. At the end of the module, students learn that Noah has regained
Jamal’s trust and Jamal has agreed to lend him the video game.

Key learning objectives

• Students will define borrowing and lending.

• Students will identify qualities of a trustworthy borrower.
• Students will explain risks associated with lending and ways to reduce or avoid them.

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Procedure
This module is designed to be flexible to meet the needs of many different learning environments.

• One-to-one environment – Students using the module for independent, self-paced learning, can
simply move through the module at their own pace.
• Working in pairs or at centers – Students can take turns answering the questions throughout
the module and in this guide, or they can work together to answer the questions. As students may
have different reading levels, you will want to guide them to provide each group member with an
opportunity to read and comprehend the information before moving on.
• Class environment – If you are leading a group in a one-to-many environment, you can use a
projector and screen or whiteboard to make the module the focus of instruction and discussion. Use
the questions in this guide and a show of hands during each topic to gauge student comprehension.
• Customized instruction – You may also choose to use discrete elements from the module (e.g.,
video, activity, assessment) that fit your timeframe and curriculum. The navigation at the upper left
corner of the module can help you select specific parts once you have reviewed the module. Keep in
mind that many modules take students through a storyline about a character or event. If you start in
the middle of a module, you may want to provide students an overview such as the Module summary.

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Background information about
the topic
Investigation 1—Borrowing and lending
Most people regularly borrow things—money from a bank; books from a library;
clothes from a friend; and many other items. Lenders—those who loan items or
money to people—expect that any loan they make will be repaid or returned—on
time and in full or in good condition. All lenders, however, take a risk that the
loans they make will not be repaid or returned. There are three ways of
responding to risk: accepting it, avoiding it, or reducing it in some way. As a way
of reducing risk, lenders prefer making loans to people with a history of
responsible borrowing and trustworthiness. Borrowers who have failed to build trust with a lender may
find it difficult to obtain a loan.

Investigation 2—Responsible borrowing behavior

Borrowers have several obligations to lenders who extend them loans. The timely
repayment of loans, or return of borrowed items, is an essential aspect of both
responsibility and trustworthiness. For loans of clothing or other items, the
borrower must take proper care of the item and return it in good condition.
Failure to do so can damage a would-be borrower’s trustworthiness and make
lenders less willing to make a loan.

Investigation 3—How credit works

Borrowing (taking out a loan) and lending (loaning items or money to people
with the understanding that the item will be returned or the money will be paid
back) are common behaviors between friends and family members. In addition,
people often borrow money from banks and other financial institutions. The
offer of a loan to a person or business by a bank or similar institution is called
credit.

In most cases, a person who uses credit agrees to pay interest on the money they
borrow. That is, they agree to pay a percentage of the loaned amount for each
month or year that the loan is outstanding. This percentage is known as the interest rate on the loan.

Charging interest is one way that lenders protect themselves from risk. If a would-be borrower has a
questionable record of repaying loans, a lender can charge that person a higher interest rate. Lenders
also sometimes protect themselves from risk by requiring borrowers to provide collateral for a loan.
Collateral is an item of value that a borrower pledges to give the lender if the loan is not repaid. For
example, with most car loans, the borrower agrees to forfeit the car to the lender if he or she fails to repay
the loan.

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Teaching the module
Preparation
It is recommended that you complete the module yourself prior to sharing it with students. This will
allow you to build your background knowledge and experience what students will experience so that you
are better able to anticipate their reactions, questions, and misconceptions.

Key vocabulary
The chart below provides simple and advanced definitions1 for each of the key vocabulary words in this
module. The simple definition matches the glossary for grades three through five in the Digital
Classroom. The advanced definition provides the full definition of each vocabulary word for your
reference, and may also be used to differentiate instruction for advanced students.

Simple definition Advanced definition

A person who takes out a loan. An individual who has received

and used something belonging
to somebody else, with the
Borrower
intention of returning or
repaying it--often with interest
in the case of borrowed money.

Something of value promised to the Something of value pledged by

lender if a loan is not repaid. a borrower to be given to the
Collateral
lender should the borrower fail
to repay a loan.

A promise to pay later for something Borrowing money for an

you buy today. expense, with the contractual
Credit
understanding that it will be
repaid to the lender.

Money borrowers pay to lenders as the Money paid at a specified rate

price of a loan. for money that is borrowed,
Interest
deposited in a bank, or owed to
a lender.

1The following sources were consulted to create key vocabulary definitions: Council for Economic
Education, Merriam-Webster.com, and Dictionary.com.

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 A person or company that loans items
or money to people with the
understanding that the item will be
Lender
returned or the money will be paid
back.
One who grants someone the
use of something, on condition
that the object borrowed or its
equivalent will be returned
(often with interest, in the case
of money).

A sum of money or item borrowed from An amount of money that is

a lender. given to someone for a period of
Loan
time with a promise that it will
be paid back.

The possibility of harm or loss. The degree or probability of

Risk
harm or loss.

The amount of trust a person has Able to be relied on to do or

earned, based on past habits. Being a provide what is needed or right;
Trustworthiness
responsible borrower is one way to deserving of trust; worthy of
earn someone’s trust. confidence.

Pre-module guiding questions

The following questions can be used to activate students’ prior knowledge and extend their learning
throughout the module.

1. Have you ever lent something to a friend or relative that was not returned on time or in good
condition? How did you feel when that happened?
2. How would you feel if someone you did not fully trust asked you to lend him or her something that
was important to you?
3. Would you be more willing to lend something to someone you did not fully trust if that person paid
you some money or let you have something of value to keep until he or she returned the borrowed
item? Explain your response.

Discussion questions/writing prompts

Consider pausing at the end of each module topic to pose questions to students. Suggested questions and
prompts are provided on the next page.

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Investigation 1: Borrowing and lending basics
In this investigation, students learn that loans impose a risk on the lender and consider the choices a
lender faces: accept, avoid, or reduce the risk. They discover that lenders’ choices are influenced by
borrowers’ trustworthiness.

Investigation 1 questions/prompts

1. Kreditt explains that Jamal has three choices when faced with the risk of lending Noah the video
game. What were Jamal’s three choices? Which one would you have picked if you were in his
situation?
Possible answer: Jamal could choose to take the risk by lending the game. He could choose to
avoid the risk by not lending the game. Or Jamal could choose to reduce the risk, such as by having
Noah pay some sort of collateral—giving Jamal something that Noah values to keep until Noah
returns the borrowed game.

2. Kreditt’s goggles may one day help people accurately measure the trustworthiness of their friends.
Until those goggles are perfected, what can a person use to figure out whether a borrower is
trustworthy or not?
Possible answer: A person can consider the person’s history and whether he or she has a record of
trustworthiness and responsible borrowing. That may be a good indication of how the person will
act in the future.

3. Think about a time someone asked you to borrow money or a toy or other item you cared about.
Did you accept the risk? Did you avoid the risk? Did you take action to reduce it? Explain.
Possible answer: Student responses will vary. Students should be able to explain how their actions
accepted, avoided, or reduced the risk.

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Investigation 2: The importance of trustworthiness
In this investigation, students explore Noah and Jamal’s rooms to investigate whether they are
trustworthy borrowers and collect clues about why Jamal is reluctant to lend Noah his video game.

Investigation 2 questions/prompts

1. It seems that Jamal is judging Noah based on Noah’s past behaviors. Explain why the clues in
Noah’s room might concern Jamal.
Possible answer: Noah has some overdue library books, his sister’s calculator, and Jamal’s soccer
ball, indicating he does not take his responsibility to return things on time very seriously. The
broken sunglasses show he doesn’t always take good care of borrowed items.

2. How do the clues in Jamal’s room show his attitude about borrowing is different from Noah’s?
Possible answer: Jamal’s note from the coach and reminder in his calendar about the library books
show he takes returning things on time seriously. The soccer jersey reflects his effort to take good
care of other people’s belongings.

3. What if you took a look around your own room for clues about what kind of borrower you are? How
would you evaluate your own past behaviors? Explain whether you think you have been a
responsible and trustworthy person or if you think there may be some areas to improve upon.
Possible answer: Student responses will vary, but they should include examples of their
trustworthy behavior or of behaviors they might try to improve upon in the future.

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Investigation 3: How credit works
In this investigation, students learn how credit works and consider Noah’s options for building enough
trust so that Jamal will lend him the video game.

Investigation 3 questions/prompts

1. When Noah tells Kreditt he had Jamal’s soccer ball for three weeks, Kreditt jokes that Jamal should
have charged Noah interest. How does charging interest affect a lender’s risk?
Possible answer: Interest helps reduce a lender’s risk because it makes it more likely for a borrower
to repay a loan on time. It also helps provide the lender with some benefit for making the loan.

2. Recall Noah’s options for getting Jamal to lend him the game. Which do you think would be most
effective in getting Jamal to make the loan? Explain your answer.
Possible answer: Answers will vary. Students may suggest that collateral is the most effective way
to build Jamal’s trust because it would represent a significant risk on Noah’s part. He would lose
something of significant value if he didn’t behave responsibly.

3. Suppose you had a friend like Noah who wanted to borrow something you cared about. What might
you say to that person? Write a sentence or two about how you would respond.
Possible answer: Answers will vary. Students may say that they would express concern about
lending the item and also possible ways, such as charging interest or taking collateral, that would
help them feel more comfortable making the loan.

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Assessing student learning
Post-test questions, answers, and scoring
Students answer assessment questions that measure their understanding of, and ability to apply, the
module content. Each question is crafted to reveal complete understanding, partial understanding, or
very little to no understanding of the financial literacy skill being measured. Points, ranging from zero to
two, are earned based on answer selections.

In this module, the post-test consists of five questions for a total point value of nine. Students who
achieve a minimum score of seven points will earn a badge reflecting their understanding of the module
content. Students who earn six or fewer points will have the opportunity to retake the test to try to
increase their score and earn a badge.

In Question 1, students define borrowing and lending. These answers are correct because they
accurately represent the relationship between each term and description. If students answer
incorrectly, refer to Investigations 1, 3, and the Glossary.

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 In Question 2, students identify the level of risk associated with giving a loan. These answers are
correct because they accurately match the loaning decisions with the correct level of risk. To avoid
risk, do not loan. To accept risk, loan. To reduce risk, lend with rules. If students answer incorrectly,
refer to Investigation 1.

In Question 3, students explain risks associated with lending and ways to reduce or avoid them.
These answers are correct because they accurately identify the role of risk in lending and the ways
that risk can be reduced. If students answer incorrectly, refer to Investigation 1.

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 In Question 4, students identify how having a reputation for paying a loan as promised can result
in lower interest charges on loans. Option D is correct because it accurately describes the impact of
good credit on a loan’s interest rate. If students answer incorrectly, refer to Investigation 3.

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 In Question 5, students identify the qualities of a responsible borrower. The answers are correct
because they accurately pair specific actions with the level of responsible borrowing they represent.
If students answer incorrectly, refer to Investigations 2 and 3.

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Extending student learning
The following activities are designed to help students continue their exploration of key concepts. They
are intended to be used after students have completed the module.

Writing prompts/projects

1. Students have learned about the importance of building relationships of trust with people who
borrow from them and lend items to them. Direct students to create a contract they could use when
borrowing or lending money or other items with their friends and family. The contract should state
clearly the specific obligations of the borrower and the lender—including the length of the loan, the
expectations for the condition that the item will be returned in, and any collateral required or
interest payments collected. The contract should also specify how any dispute between the lender
and borrower would be resolved.

2. Direct students to think about the risk they face in their lives. For example, you might point out
that students take the risk of getting hurt when they play a sport. Another example of risk students
take is losing something they value, such as a bicycle, when they take it out in public. Have students
identify an example of risk and how they respond to it—by accepting the risk, reducing the risk, or
avoiding it. Students should present their findings in brief paragraph that identifies the risk and
their response to it.

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National standards for financial
literacy
This module is correlated to the National standards for financial literacy from the Council for Economic
Education. Standards are classified as primary or secondary. Primary standards are addressed directly
and thoroughly. Secondary standards are addressed indirectly or partially.

Primary

Using Credit – Grade 4: Interest is the price the borrower pays for using someone else’s money.

Using Credit – Grade 4: When people use credit, they receive something of value now and agree to
repay the lender over time, or at some date in the future, with interest.

Using Credit – Grade 4: Borrowers who repay loans as promised show that they are worthy of getting
credit in the future. A reputation for not repaying a loan as promised can result in higher interest
charges on future loans, if loans are available at all.

Protecting and Insuring – Grade 4: Risk is the chance of loss or harm.

Protecting and Insuring – Grade 4: Individuals can either choose to accept risk or take steps to protect
themselves by avoiding or reducing risk.

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Related resources for students
This resource can be used to reinforce or expand upon students’ understanding of key concepts in the
module.

Resource: About Cash and Credit

Source: TheMint.org
Description: Provides information about for young readers about the difference between cash and
credit cards
Link: http://www.themint.org/kids/cash-check-or-credit.html

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