Lakeland College

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Leading the Charge in Economic & Financial education

By Scott Niederjohn
Charlotte and Walter Kohler Professor of Economics

The financial crisis that our nation is currently experiencing is a painful illustration of the real-world ramifications that an economically and financially illiterate public can bring. While the causes of the crisis are complicated and will be debated by economists for years, the typical blame list of "greedy" investment bankers, foolish investors, imprudent bankers, incompetent rating agencies and predatory mortgage brokers must also include financially illiterate consumers. The lack of knowledge of how mortgages, interest rates, risk, debt and consumer credit work played a part in the crisis.

The reality is that economic and financial literacy is key to an individual's short- and long-term security. Today, more than 92 percent of employee pensions are defined contributions rather than defined benefits. Instead of the employer promising a specific yearly benefit upon retirement (defined benefit), employees now bear this responsibility as they control their contributions, investments and, ultimately, the level of monthly income that they may likely receive in retirement. This trend, coupled with the increased number of financial services available to consumers via the internet (for example, people can change their retirement fund allocations without ever talking to a financial consultant) and Social Security's uncertain future, forces individuals to be more responsible for their own financial security than ever before.

Lakeland College recognized this need for comprehensive financial literacy several years ago and has become an emerging state and national leader on economic and financial education. The college's Center for Economic Education is leading the way by training more than 1,500 K-12 teachers through non-credit workshops and for-credit courses since its founding in 2005.

Not making the grade

Americans don't perform well when assessed on their knowledge of basic personal finance and economics. According to a 2009 survey of the National Foundation for Credit Counseling, 41 percent of U.S. adults give themselves a C, D or F on their knowledge of personal finance.

In addition, several surveys have cited troubling personal behavior related to money and finance:

• According to an FDIC study, 55 percent of African American households are either "unbanked" or "under-banked", meaning these households have no checking or savings account while regularly utilizing non-mainstream financial institutions such as pay day loan stores.
• A Harris survey in 2009 reported that only 11 percent of workers under the age of 35 indicate they are participating in their company's 401(k) plan and had limited knowledge of basic economic concepts.
• Money and financial problems are the No. 1 cause of divorce in Wisconsin and a leading cause of suicide.

How is your knowledge when it comes to basic economics and personal finance? Take the quiz here.

College students, a group whose success is central to Lakeland's mission, are not immune to this problem. Surveys suggest that more students quit college because of financial problems than academic struggles. Further, according to a report by Sallie Mae, undergraduates are carrying record-high credit card balances. The average balance grew to $3,173 in 2009 with 50 percent of students using four or more credit cards. According to the same survey, last year's cohort of college seniors graduated with an average of $4,100 in credit card debt. This debt is in addition to student loans.

Given these well documented challenges, one might expect to find economic and financial literacy emphasized in K-12 education. While 21 states require students to take an economics course to graduate from high school, only 13 require students to take a personal finance course. In Wisconsin, neither of these content areas is required, and, as a result, very few Wisconsin students take such courses.

Lakeland making a difference

Lakeland's Center for Economic Education is equipping teachers around the country with curricular materials and other tools needed to teach basic financial literacy to their students.

Each fall, during Wisconsin's observance of Money Smart Week, the center holds a full-day conference on economic and financial literacy for more than 100 Wisconsin teachers in Lambeau Field's Atrium conference center. The center will soon release a new book, "Teaching Financial Crises: A Resource Guide for High School Teachers," and was instrumental in the design of a new personal finance video game being used by thousands of teachers and students from throughout the country ("The Gen I Revolution," can be accessed for free at www.genirevolution.org). For their work with Wisconsin teachers, the center was recognized by the Council on Economic Education as one of the best in the nation.

Building on these successes, Lakeland recently expanded its reach by opening a new Center for Economic Education in Milwaukee.

This center traces its roots to UW-Milwaukee where, for many years, it led the nation in teacher training programs. When budget cuts caused UWM to close the center, Lakeland immediately stepped up to fill the void. Lakeland's center focuses on economic education programs for urban teachers and youth, particularly those in the Milwaukee Public Schools system.

The center utilizes a model that trains K-12 teachers, thus raising the state's level of economic and financial literacy with each new class taught. The most noteworthy program of the Lakeland College-Milwaukee Center for Economic Education is the Youth Enterprise Academy.

This program presents a two-week economic and financial literacy boot camp for Milwaukee inner city eighth graders each summer. Students completing the program receive a $500 savings bond.

The most successful graduates are placed into an investment club where they manage $10,000 until they graduate from high school. At that time, the proceeds from their account are used to pay for college-related expenses. This program has motivated many urban students to continue their education beyond high school.

The Milwaukee Center is directed by noted economic educator Tim O'Driscoll, a Wisconsin legend for his work in economics who taught at Arrowhead High School for more than 30 years before moving to college-level teaching.

Lakeland's two centers are affiliated with the state-wide non-profit group EconomicsWisconsin, and overseen by an advisory board of community leaders in the fields of education, banking, insurance, finance and manufacturing.

Scott Niederjohn is director of Lakeland's Center for Economic Education. He holds undergraduate and master's degrees from Marquette University and a doctorate in economics from the University of Wisconsin-Milwaukee.

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