According to a new report, when it comes to borrowing money for higher education, a little financial knowledge goes a long way. A study of students found that those who had some financial courses tended to make smarter decisions when it came time to borrow money for college.
The study, from researchers at Montana State University, found that young people from states that had mandatory financial education courses chose low-cost borrowing options more often than young people from states that did not require those types of courses. Specifically, the young people from the mandatory states were more likely to apply for federal financial aid and more likely to take out federal loans rather than more expensive private ones. “What we’re seeing is people who got this education seem to be making different and better financial decisions,” lead researcher Carly Urban explained to Money.com. This research is key, especially when considering that 2018 college grads have an average of $29,800 in student loan debt.
The researchers theorize that the key to improving financial education in high schools is to teach the teachers. As Money reports, only 25 percent of high school teachers have taken two or more classes in economics. Once teachers are exposed to more financial courses, students can be too. Then those students can go on to make better decisions with their money.