Can't explain APY vs. APR? Don't get a Student Loan.

This week, President Biden announced up to $20,000 in forgiveness on student loan debt, which is expected to bring relief to?approximately 48 million people in this country.

Think about that. Fifteen percent of our population is living with crippling debt because they were sold the American Dream?via the promise of education. A disproportionate number of those are young first generation Black and Latino students who are?currently on track to have zero net worth by 2053 and 2073, respectively.

While the educational system will allow our children to rack up hundreds of thousands of dollars of debt in?pursuit of a degree, we never educate them about the costs of their college education will have on their financial well-being.??Ironically, it will become their greatest obstacle to achieving what a degree is supposed to provide in the first place – a path to?upward mobility and financial freedom.

Not only are we burdening our children and impeding them from progress, some college and universities are?profiting off of them and disincentivizing future generations from obtaining an education along the way. And so, there’s no?doubt that we MUST lift this burden, but our responsibility goes beyond that.?

Throughout my journey in building Goalsetter, I have met tens of dozens of executives, including those who work in the?finance industry, who have openly admitted to me that the one thing they know about money is that they know nothing at all –?and the data supports it.

Currently, 45% of Americans do not have $400 set aside in case of an emergency and 58% live paycheck to paycheck.

It is unreasonable to think that students, or most people for that matter, really understand the choice they are making by just?explaining to them the amount of the loan, the interest rates, and the terms. If they don’t also understand the concepts of ROI,?compound interest, opportunity cost, risk vs. return, credit score, and credit utilization ratio, how can we expect them or their?equally uninformed parents to make a decision about the real-life consequences of their loans?

The simple truth is that we cannot.?

In essence, the K-12 American educational system has failed to prepare our citizens for higher education - not because they?can’t write compelling argumentative essays or solve calculus equations - but because they don’t have the fundamental?knowledge to make basic financial decisions in their lives, starting with whether it is economically prudent for them to pursue?a degree at Harvard University or Kingsborough Community College.?

Our country has a moral obligation to ensure that we teach our children early on about saving, investing, ownership and debt.??But we also have a moral obligation to not profit off of their foibles, when we are the ones who failed to construct the?knowledge ladder that would help them to avoid falling into the crevasse of crippling debt - particularly debt that many of?them incur, as I did, at the tender age of 17, 18 or 19.?

We have to make sure that we are allowing college to be the great?American equalizer that it has long been touted to be, rather than another shackle around the legs of those who most need a?college education to pave their way to financial freedom.?

Before a college education, we must teach FINANCIAL education. We have to teach them the language of money, the value of?ownership, and the path to wealth building.?We have to instill in them the habits that will prevent us from having to do this all?over again in 20 years. And we have to do it now.

This $10,000 forgiveness is a start, but it will be all for nothing if we don’t change the trajectory of the next generation.?Ensuring every K-12 student receives the tools necessary to make sound financial choices is the next bill we need President?Biden to pass.