Great post. When I first started teaching financial literacy after years in the mortgage industry, I was surprised by how many people didn’t understand interest and how it accrues.
I remember the first time I saw an amortization schedule in a business math class, and I was fascinated with it. I can't say the same was true about my classmates.
It always makes me anxious to see young people taking these loans without being properly informed, Both students and parents need much better financial education before signing anything.
I know I'm likely calling for a decrease in demand for my position, but I do wish there was a way we could decrease the emphasis that young people place on going straight to a four-year university right out of high school.
I hate knowing there is a sizable number of students who take out a big loan and then drop out after one semester.
What my parents taught me about money was basically common sense sayings like "don't spend more than you can handle." There was never a sit-down with "here is how you make a budget" or "let's talk about how loans work." They were also late Silent Generation, carried little to no CC debt, and never had student loans, so their knowledge of a lot of it may have been minimal. In place of state history, practical finance should be a subject that all kids need to go through and pass with a decent grade. A 17% interest rate on a loan for a child should be 100% illegal. I have colleagues who don't fully understand amortization - how would a child without any required financial literacy know about it?
In hindsight, I was very fortunate to have been taught this lesson with my first car in high school. We bought it used, but my dad made me sit down and listen to the loan officer talk about amortization. I still remember the shock of seeing how my first payment was broken down between interest and principal.
Great post. When I first started teaching financial literacy after years in the mortgage industry, I was surprised by how many people didn’t understand interest and how it accrues.
I remember the first time I saw an amortization schedule in a business math class, and I was fascinated with it. I can't say the same was true about my classmates.
The level of financial and economic literacy scares me sometimes.
Sometimes, screwing up is the best way to learn. Unfortunately, this is a really costly lesson.
I only learned about this in high school because my dad made me take out a loan for a used car so that I could see the amortization tables.
It always makes me anxious to see young people taking these loans without being properly informed, Both students and parents need much better financial education before signing anything.
I know I'm likely calling for a decrease in demand for my position, but I do wish there was a way we could decrease the emphasis that young people place on going straight to a four-year university right out of high school.
I hate knowing there is a sizable number of students who take out a big loan and then drop out after one semester.
What my parents taught me about money was basically common sense sayings like "don't spend more than you can handle." There was never a sit-down with "here is how you make a budget" or "let's talk about how loans work." They were also late Silent Generation, carried little to no CC debt, and never had student loans, so their knowledge of a lot of it may have been minimal. In place of state history, practical finance should be a subject that all kids need to go through and pass with a decent grade. A 17% interest rate on a loan for a child should be 100% illegal. I have colleagues who don't fully understand amortization - how would a child without any required financial literacy know about it?
In hindsight, I was very fortunate to have been taught this lesson with my first car in high school. We bought it used, but my dad made me sit down and listen to the loan officer talk about amortization. I still remember the shock of seeing how my first payment was broken down between interest and principal.
Great walk through. I am always surprised to hear when people dont know they can refinance their loans.
Perhaps there's a belief that it only applies to home loans.
Fantastic post!