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New York City Schools Add Financial Literary to Curriculum

Posted on: Wednesday, 9 November 2005, 00:00 CST

By Phyllis Furman, Daily News, New York

Nov. 9--History, biology, geometry -- and credit cards.

New York City public schools are adding financial literacy to the standard high school curriculum and the move is paying big dividends.

Some 73 percent of high school seniors who took a personal finance course last year passed an exam that tested their knowledge of topics like savings, investing, insurance, and retirement. The results were released yesterday by WISE, a non-profit focused on financial education, which developed the money lessons.

The 50-question test was given to 6,226 seniors from 49 New York City and Long Island schools. Seven of the kids earned perfect scores and 29 missed just one question.

The 73 percent pass rate -- you need to score a 60 to pass -- was even with last year's results. Of those who passed, 74 percent were minorities and 41 percent were eligible for free lunch.

But don't call them little Alan Greenspans yet.

The kids were still in a daze over subjects like insurance and investing. Only 53 percent understood why installing a home security system can lower the premium on homeowners' insurance. Just 48 percent correctly identified the role of the Securities and Exchange Commission.

The toughest question on the test: Why would you buy bonds over stocks? Only 33 percent knew the answer to that one.

The goal of the three-year old program is to acquaint students with the rapidly changing financial world, while helping them avoid the pitfalls of debt that are dragging down young people soon after they head off for college.

The average New York City college grad will leave school with $37,428 in debts. Some will be forced to drop out to cope with their bills.

"There is a growing complexity of financial products and services," WISE president Phyllis Frankfort Perillo told the Daily News. "There is a need for young people to differentiate among these new products."

Schools have been urged to sign on and yesterday more than 400 New York City public school teachers did just that, gathering at Manhattan's High School of Economics & Finance yesterday to bone up with sessions like "Understand Your Free Credit Report" and "Surviving Financial Disaster."

Paul Erriah, a teacher at Hillcrest High School in Queens -- where many students come from immigrant homes and two earned perfect scores -- has seen first hand the impact of adding finance in the classroom.

After offering a money course this past summer, "my whole class opened savings accounts," Erriah said. Their total savings: $1,500.

Students saw the value of the money classes.

"I never understood the concept of a mortgage before," said Victoria Ilano, an 18-year-old senior at the High School of Economics & Finance and a would-be engineer. "They told us you need to have a certain credit score."

"I learned how easy it is to fall into debt," said her classmate Cheavanese Diedrick, a 16-year-old from Brooklyn, adding, "don't use your credit card every day."

QUESTIONS FROM THE 2005 BLUE STAR FINANCIAL LITERACY CERTIFICATION TEST:

1. The money that an individual deposits in a 401(k) retirement plan is tax-deferred. A tax-deferred plan means that the individual will

a. never have to pay taxes on the money.

b. pay taxes in the year the money is withdrawn from the account.

c. pay taxes on the money in the account only until age 70.

d. pay taxes only if the account increases in value.

2. An advantage of investing in a Roth Individual Retirement Account (IRA) is that it

a. allows penalty-free withdrawals for any reason at any age.

b. provides tax-free income after 591/2 years of age.

c. can be used as collateral for a loan at anytime.

d. provides income that is taxed upon withdrawal at retirement.

3. One good way to build an investment portfolio is to

a. use interest and investment dividends to cover everyday expenses.

b. increase money budgeted for fixed expenses.

c. establish an emergency fund.

d. make regular monthly deposits to an investment account.

4. The best way to reduce the cost of car insurance on a 10-year-old car is to

a. drop the car's collision coverage.

b. decrease the personal injury deductible.

c. have the car serviced on a regular basis.

d. change the premium payments from twice a year to monthly.

5. After owning a $50,000 whole life-insurance policy for 10 years, a person decides to cancel the policy. How much is this person entitled to receive?

a. The accumulated savings or cash value of the policy.

b. The face value of the policy.

c. 10 years of premiums paid on the policy less a fee for canceling.

d. 10 percent of the $50,000, or $5,000.

Answers:

1 b 2 b 3 d 4 a 5 a

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Source: Daily News

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