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Virginia high school students required to learn about managing money

By Philip Walzer, The Virginian-Pilot on

Published in Senior Living Features

This month's high school graduates in Virginia are the first who had to pass a class in economics and personal finance to get their diplomas.

The state launched the course in the 2011-12 school year. The graduation requirement kicks in with the Class of 2015.

The class blends the theoretical with the practical. Topics include "the characteristics of a market economy" and "the elasticity of supply and demand," as well as "reconciling bank statements," the pros and cons of "purchasing versus leasing a vehicle" and completing a W-4 tax form.

Virginia is among a minority of states with such a requirement: Twelve others, including North Carolina, demand that high school students take classes in economics and personal finance, according to a study last year from the Council for Economic Education.

Teachers predict that the course, with its wealth of practical material, will yield daily benefits for students.

"The numbers are hanging around in the background of their life," said Jason Barefoot, who teaches the course at Princess Anne High School in Virginia Beach. "But now the light comes on. They see what their parents are dealing with."

Some students say it's already changed their financial behavior.

Amaya Howell, a sophomore at Princess Anne, said she's less likely to use her debit card for expensive purchases. Tommy Sugg, a senior, said it helped focus his search for college aid on scholarships and interest-free loans. At Granby High in Norfolk, senior Julie Manning has started saving money, following her teacher's "pay yourself first" advice.

Economics and business professors worry that the class piles on too much and that some topics might be covered superficially.

"I think there's too many of them by far," said Peter McHenry, an assistant professor of economics at the College of William & Mary, "and I can't imagine getting students to meet these standards in a one-year course."

John Murphy, a financial adviser with Edward Jones in Chesapeake, compared the curriculum to "a firehose" and questioned the value of such entries as 18th century economist Adam Smith. But he reacted enthusiastically to several others, including the link between skills and income potential, "the consequences of conspicuous consumption" and the impact of compounding interest.

The course has strong backing in the business community, which lobbied for the requirement and helped craft the curriculum and pay for teacher training.

"The more financially literate young people are, the better bank customers they will become," said Bruce Whitehurst, president and CEO of the Virginia Bankers Association. "They will be lower credit risks, they will have higher savings-account balances, and perhaps they will be a little more willing to go into entrepreneurial activities."

This past fall, 77,200 students in Virginia took economics and personal finance, according to state records. The class is needed for graduation, but Virginia doesn't have a Standards of Learning test in the subject.

Several take a test offered by Working in Support of Education, a financial-literacy group in New York. Based on the results, the organization lists its 100 best schools for personal finance instruction. This year, 38 were in Virginia, including two in South Hampton Roads -- Cox at the Beach and Grassfield in Chesapeake.

Barefoot is in the business education department at Princess Anne. The course also may be taught by teachers in departments such as math, history and marketing, said Judith Sams, program specialist for business and information technology with the state Department of Education.

"The ultimate goal," she said, "is to change the behavior of these students so we don't have to go through the last 10 years of the economy again."

A study released in January offered promising evidence: Georgia, Idaho and Texas -- three of the 12 other states with personal finance and economics requirements -- registered "notable improvements" in the credit scores of young adults, according to the Financial Industry Regulatory Authority's Investor Education Foundation.

In Virginia, "they learn early on the importance of establishing a budget and saving money," said Michael Crespo, who teaches the class at Granby High in Norfolk. "If they start now, they can be pretty well off later on."

Virginia recommends that the class be taken by juniors or seniors. Manning said it's best in the junior year: "You can really understand the concepts," and it's not too late to apply tips on financing a college education. That topic has been optional but will be mandatory starting next school year, Sams said.

Other topics include deciding between renting and owning a home, reviewing types of insurance and "contrasting retirement plans."

 

"When you get a job, you set up a 401(k)," said Peter Nguyen, a Princess Anne senior. "I didn't even know what that was."

Nguyen will have to wait a few years before opening his 401(k). The section on the use of credit cards will have more immediate applications, said David Thaw, who teaches at Grassfield: "Students will get credit-card offers as they go off to college. They'll remember to be careful, to read the terms and to consider whether this is a good decision for me."

Online exercises help enliven the class.

Junior Achievement of Greater Hampton Roads, which promotes financial literacy and job readiness, brings its Finance Park Virtual game to students in Norfolk and Suffolk. They have to keep to a budget while paying for such expenses as housing, transportation and cable and facing traumas like a car accident or illness, said Kevin Will, president of Junior Achievement.

Nguyen participated in the H&R Block Budget Challenge, a similar online exercise nationwide, and won a $20,000 scholarship.

Like some counterparts at Princess Anne, Nguyen preferred the personal finance part of the course to economics, which includes subjects such as trade barriers and the Federal Reserve.

"I don't know how helpful economics will be," he said. "Financial management is more practicable and applicable to our life."

Virginia Beach separates economics and personal finance into different semesters to increase scheduling flexibility, spokeswoman Kathy O'Hara said. The state's goal, Sams said, is to erase the "never the two should meet" mind-set about the subjects. For instance, students should know how economic forces influence their wages, she said.

Lynne Mallory-Winter, managing director of Edgewater Asset Management at the Beach, offered another example.

During the recent recession, "many people got into trouble by taking adjustable-rate mortgages," said Winter, a board member of the Virginia Council on Economic Education, which has been a leading supporter of the class. "You need to understand what an interest rate is and how it's set before you decide the particulars."

But the accumulation of economic concepts troubles McHenry, from W&M. Some, like supply and demand, "are very deep, important ideas that are subtle and involve a lot of graphical analysis.

"I'm fully supportive of a lot of these things being in the high school curriculum -- teaching students how to deal with banks, how financial institutions work. But I think fewer topics understood at a deeper level would clearly be preferable."

Bruce Rubin, an associate professor of finance at Old Dominion University, agreed: "My perspective has been, less is more in some cases. I think it is important for students to understand the issues, but to avoid turning the program into an encyclopedic memorization."

Thaw, the Grassfield teacher, said: "What we're really focusing on is introducing these (economics) topics to the students and relating them to personal finance. I do think we give the kids good exposure to all of the major topics in personal finance."

The course, he said, is probably the one he's "most excited about. It doesn't matter whether you're a scientist, engineer or electrician. Personal finance will touch everyone's life, and it will make a difference to these students as they get older and become adults."

Philip Walzer, 757-222-3864, phil.walzer@pilotonline.com

(c)2015 The Virginian-Pilot (Norfolk, Va.)

Visit The Virginian-Pilot (Norfolk, Va.) at pilotonline.com

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(c) The Virginian-Pilot

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