Financial literacy is the ability to understand finance. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances. Wikipedia
The PBS production Frontline: College, Inc. (available on Netflix Watch Instantly) demonstrates the need for true financial literacy. The investigation examines the practices of for-profit college education, revealing glaring problems with the quality of education provided.
Recruiters at for-profit institutions seek to enroll adults in their schools. They do this by letting them know the potential salaries in their fields of study, and claim to prepare them for employment in said field. One woman from the report was fed lies about why the psychology program they were enrolling her in wasn’t accredited. In another example, three young women recount the “on-site” portions they went to as part of their nursing program. One woman’s pediatric rotation? The students visited a daycare.
This, much like sub-prime lending, is fraud.
There is a deep-rooted social justice issue in which one strata of our society feels entitled to the money of our large working-class. Our nation prides itself on The American Dream without laying out the clear groundwork to get there, and finish well. These institutions game the system by leveraging the debt of people who do not understand the loans they are signing for (funded by taxpayers), or who do not recognize that what they are being promised is undeliverable by the executives and recruiters who run these for-profit educational institutions.
Credit, when used responsibly, can help people. It can help people to get transport to jobs to help pay their bills for food and shelter. It can help people get the education to get the job to finance their dreams. Unfortunately, the way our dream-building infrastructure has been set up there’s no shortage of people willing to extend credit at predatory rates, no shortage of people who will take advantage of people who qualify for reasonable government support, and not enough regulators to serve and protect those whose motivations appear to be solely profit-driven.
Where does it stop? People are set-up over and over again to fail. No one person knows everything, but through our collective wisdom we can share with one another how to navigate life with modest success. When we teach one another, we help one another to stand.
It is imperative that we share the lessons learned and skills needed to operate in this world. We in the Credit Union Movement can do this is by empowering our members through consistent, ongoing efforts to increase financial literacy in the communities we belong to. I believe this to be critical.