Students exposed to personal finance courses in high school tend make better decisions in terms of paying for college, a Montana State University study shows.
In particular, it found that those who lived in states requiring financial literacy courses to graduate from high school tended to be better at using federal financial aid, including being more likely to apply for and receive grants.
“There are some decisions that are going to reflect a smarter money management strategy than others, and we wanted to see if financial education classes influenced that, “ Carly Urban, co-author of the study and an associate professor of economics, said in a recent report for Money.
According to the study, college freshmen who were exposed to personal finance education were “3.3 percentage points more likely to apply for aid” and showed “a shift from higher-cost borrowing to lower-cost borrowing.”
Crucially, they were 3.3 percentage points more likely to secure free college aid through a grant. And beyond just school debt, the students who received personal finance instruction were also 2 percentage points less likely to owe money on a credit card.
With student loan borrowers currently carrying an average debt of $32,731, and with the total U.S. student debt rising 5% to 13% a year over the past decade, figuring out how to pay for college cheaply and effectively is a crucial skill for college-bound teens.
As of 2017, just 1 in 6 U.S. high school students were required to take finance coursework to graduate, but that looks set to change, as more and more states move to mandate personal finance classes.
Of course, a financial education can start anytime: If you’re interested in learning more about good college aid strategies, check out ValuePenguin’s guide to student loans.