Students failing at `financial literacy'

Most high schoolers flunk 31-question test on managing money

April 29, 2002|By SPECIAL TO THE SUN

More high school kids are flashing credit cards. But don't ask them about the dangers of running up big debt.

That's the gloomy conclusion of the latest test of high school seniors' financial literacy, which found two-thirds failed to get a passing grade when asked about managing their finances, organizing checkbooks and knowing the investment value of stocks.

Just 32 percent passed the nationwide test, which was administered during the winter to 4,000 students. The average score was 50.2 percent, a six-year low.

"They are only getting half the questions right in a nation where one-third of the high school seniors already use a credit card and half have access to an ATM machine," said Lewis Mandell, economics professor at State University of New York, Buffalo, who administered the test. "The need for financial literacy could not be more apparent."

Yaranilka LeBarr, economics teacher at Science Skills Center High School for Science, Technology and the Creative Arts in downtown Brooklyn, agreed and warned that her graduating seniors will face even stiffer problems next year. "Now, they are living with their parents. When they go to college, they won't know what they are doing," said LeBarr, who tries to teach "real-life" skills such as not having too many credit cards.

The 31-question test was sponsored by the Jump$tart Coalition, an alliance of private and professional groups and federal agencies ranging from the Federal Reserve Board and the Securities and Exchange Commission to the American Banking Association and Consumer Federation of America.

In the test, one-fourth did not understand the benefit of compound interest to a long-term savings plan, answering instead that nest eggs would be the very same for a person who saved $2,000 a year for 50 years as for a person who saved $4,000 a year for 25 years. In fact, the 50-year saver would have accumulated at least $3 million more.

This article is from Newsday, a Tribune Publishing newspaper.

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