Closing the Financial Literacy Gap to Combat Student Debt

Experts say knowing the dangers of over-borrowing and how to repay loans can help tackle student debt.

Experts say teaching students about what their repayment options are before they take out loans can help reduce debt.

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Shannon Schuyler is the corporate responsibility leader at PricewaterhouseCoopers (PwC), an accounting firm that promotes financial literacy among K-12 students and teachers. Last year, PwC pledged to invest $160 million toward educating students, parents and teachers about financial issues that range from managing an allowance to understanding what it takes to start and run a business.

"You have a certain number of states that have mandated financial literacy, and we hope that those continue to grow," Schuyler says. "But even in those states where it's been mandated that students have [financial education] before they graduate from high school, those teachers don't know how to teach it."

Schuyler says PwC has developed grade-level curriculum for financial education that teachers can access and use in the classroom, and also has staff work with teachers individually and in the classroom at schools throughout the nation.

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"A lot of it is trying to get a better understanding more broadly about why financial literacy is something that is important and how having students that understand this topic will actually help them lead better lives in the future," Schuyler says. "Giving them the tools is important, but I think the most important thing is having them understand why it is important to embed financial education [in school curriculum] in the first place."

Schuyler says it is important for students to understand the financial market before they even select a college because having overwhelming amounts of debt can have an effect on where they live later in life, what items they are able to purchase and even how soon they can get married or start a family.

A recent survey from the nonprofit group American Student Assistance found nearly three-quarters of students said they've put off saving for retirement because of student debt. Another 43 percent said they've delayed starting a family and 27 percent said they found it difficult to buy daily necessities because of loan payments. Additionally, close to 70 percent said they were confused about the different loan repayment options.

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Schuyler says educating students sooner about the cost of college, how much they need to borrow, how to repay loans and what their future earnings may look like could help solve this problem.

"If you look at that before you make the decision, your ability to start seeing the payoff of your education will come much faster than if you just enter into it blindly where you don't know the ramifications of taking out loans and how those get paid off," Schuyler says.

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