Many Wake high school juniors aren’t financially literate. Can you answer 5 questions?
Less than 1 in 5 Wake County high school juniors are financially literate, according to a national study, but school leaders say the results aren’t as bad as they seem.
Each year, some Wake County juniors take a survey that has five questions about financial literacy concepts such as banking, savings and investing. Last school year, only 19.5% of them answered at least four of the questions correctly to meet the survey’s financial literacy benchmark.
At a school board committee meeting last week, administrators downplayed the results by noting how most adults didn’t meet the survey’s benchmarks either. Additionally, school officials say most Wake students don’t learn about financial literacy until they take a civics course in their senior year.
“We’ve been hovering around the teens and 20s (percentages) with our high school juniors for the last several years, which doesn’t sound great,” Brad McMillen, Wake’s assistant superintendent for data, research and accountability, told school board members. “But when you consider that the U.S. adult population is only at 34% on a lot of these things — credit cards, personal loans, that kind of thing — maybe it’s not so bad in comparison.
“Obviously there’s been a lot of discussion about this in our state legislature this year about the need for this and talk about a standalone course potentially,” McMillen said.
Requiring students to take financial literacy class
In June, state legislators passed a law requiring North Carolina high school students to complete a financial literacy course before they can graduate. The new course will talk about paying for college, home mortgages, credit scores, car loans, managing credit cards and “the true cost of credit.”
The new class will become a graduation requirement starting with students who enter high school in 2020. The State Board of Education this week will discuss changes that will be made to the social studies curriculum to fit in the new course.
Lt. Gov. Dan Forest, a Republican running for governor in 2020, was a major proponent of the new standalone course. He has pointed to issues such as how student loan debt is rising.
Wake County school officials also say they believe making sure students are financially prepared is important. That’s why it’s one of the areas the district looks at to help determine if it’s meeting its goal of raising the graduation rate to 95% by 2020 and graduating students “ready for productive citizenship.”
“Because preparing citizens to be financially ready and independent begins before adulthood, financial skills, knowledge, and experiences gained in childhood are fundamental to their later lives,” Wake says in a report.
Wake wants to improve citizenship skills
Data presented last week shows how the graduation rate is at an all-time high of 89.9% with all individual groups improving in the last few years. But the data was mixed on how well Wake is meeting the productive citizenship goal.
Wake is seeing more students who are registered to vote. But it’s down in areas such as interest in current events, community involvement and financial knowledge.
Wake tests annually for financial literacy by having 11th-grade students answer five questions taken from the FINRA Investor Education Foundation’s National Financial Capability Study. The questions test people on their knowledge of interest rates and how they affect things such as mortgages, inflation and bond prices.
At the 12 Wake high schools which surveyed students last school year, the percentage that correctly answered at least four of the five questions ranged from 11.8% at East Wake High in Wendell to 27% at Broughton High in Raleigh.
Wake’s results are lower than the 34% of U.S. adults and 32% of North Carolina adults who got at least four questions right in the 2018 national study.
But Brian Pittman, Wake’s senior director of high school programs, said the vast majority of high school students don’t take the “American History: Founding Principles,Civics, and Economics” course until they’re seniors.
The financial literacy questions are given to Wake juniors because the subject is included when they take the College and Work Readiness Assessment (CWRA+), which the district uses to assess the critical thinking skills of students.
If seniors took the test “we’d like to believe that number would be significantly higher,” said Drew Cook, Wake’s assistant superintendent for academics.
Test your financial literacy
Can you get at least four of out the five questions right?
1.) Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
A.) More than $102
B.) Exactly $102
C.) Less than $102
D.) Don’t know
2.) Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?
A.) More than today
B.) Exactly the same
C.) Less than today
D.) Don’t know
3.) If interest rates rise, what will typically happen to bond prices?
A.) They will rise
B.) They will fall
C.) They will stay the same
D.) There is no relationship between bond prices and the interest rate
E.) Don’t know
4.) A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less.
A.) True
B.) False
C.) Don’t know
5.) Buying a single company’s stock usually provides a safer return than a stock mutual fund.
A.) True
B.) False
C.) Don’t know
Answers: 1) A, 2) C, 3) B, 4) A, 5) B
Source: FINRA Investor Education Foundation
You can take the survey online at https://www.usfinancialcapability.org/quiz.php.
This story was originally published December 1, 2019 at 5:45 AM with the headline "Many Wake high school juniors aren’t financially literate. Can you answer 5 questions?."
