Teaching financial literacy in high school (opinion)

Earlier this summer, as the annual budget made daily headlines, a remarkable bill was passed by the Senate Education Committee in late June. Senate Bill 1243, of which I am the primary sponsor, would require the completion of a full-credit economics and personal finance course as a condition of graduating from high school in Pennsylvania.

The most recent estimates indicate that there are more than 350 million credit card accounts held by Americans and, on average, credit card owners own about four cards each. All of these expenses have accumulated to astonishing levels of debt. In general, Americans are approaching about $1 trillion in credit card debt and over $15 trillion in total debt. To make matters worse, today our society is littered with predatory lenders, bogus investment schemes and exploitative scam artists who target our most vulnerable citizens who lack the education to see the shortcomings of these long-suffering contracts.

Unfortunately, an alarming number of our high school students are entering adulthood and the workforce without proper knowledge of basic financial concepts such as credit scores, student loans, home mortgages, compound interest, saving for retirement or borrowing money for a major purchase. It is imperative that our young people learn that there are indeed consequences to this spending spree. Far too often, the financial decisions our younger generations make early in life lead to unintended consequences that put them at an economic disadvantage. Because of this reality, a cycle of poor financial management decisions burdens our citizens, the Commonwealth and ultimately the taxpayer.

Growing up, many of us get financial information from our parents, family members and neighbors, who teach us how to write a check or open a bank account. However, this informal education leaves glaring gaps in the financial education needed to succeed. Understanding the importance of maintaining a good borrowing history, paying your bills on time, and saving early for retirement are not easy concepts to grasp. Yet, a bad credit rating can significantly limit an individual’s opportunities later in life. These essential ideas must be taught at home and in our secondary schools.

Senate Bill 1243 helps fill this gap by creating a stand-alone class covering the importance of credit scores, annual percentage rate for student loans and home mortgages, budgeting, compound interest, savings for retirement, calculating and reporting taxes and other basic financial concepts. From everyday shopping to long-term financial planning, mastering money management is an essential skill that all Pennsylvanians need.

This is not a problem unique to Pennsylvania; other states are taking the initiative to deal with the problem. This year, Florida Governor Ron DeSantis signed into law the Dorothy L. Hukill Financial Literacy Act, which will begin with students entering ninth grade in the 2023-2024 school year or later. Evidence shows that classes like these have a real impact. A recent national survey showed that high school students in North Carolina rank first in financial literacy after the state created a personal financial economics course for freshmen starting in 2020. It is of our duty to act quickly so that our children are not handicapped in adulthood and start their own family.

Requiring a financial literacy course here in Pennsylvania will empower our young people and give them the skills to achieve their personal life goals. This legislation is an investment in the Commonwealth’s financial future. By teaching high school students the financial basics, they will be able to make better decisions to position themselves for a life of success and financial independence. Senate Bill 1243 is a practical, bipartisan, common sense measure that will make a real, tangible difference in the lives of many Pennsylvanians.

Senate Bill 1243 is on the Senate calendar for the fall and will then go to the House of Representatives for consideration. I sincerely hope that the Governor will be able to put his signature on this important bill before the end of the year.

Gebhard, a Republican from Lebanon County, represents the 48th Senate District, which will include part of Berks County when the redistricting takes effect in 2023.

State Senator Chris Gebhard

Geraldine L. Melton