Andrew Clark: Real world credit

As college kids, we know strikingly little about economics.

Now calm down. Before you start rattling off facts about supply and demand, let me just say those aren’t the economics I am talking about. In high school and college economics courses, we learn all about the nature of the U.S. economic structure, about the effect of taxes and subsidies on industries and production, inflation and deflation . the list goes on and on. We all know about that.

These things are not the economics that will matter five years down the road, because unless you plan to become the next Federal Reserve chairman, you probably won’t be spending the rest of your life referring back to supply and demand curves for your personal economic decisions.

No, I am talking about the economics of practicality and reality. What is a 401K? How do I get one, what can I use it for and what can go wrong with it? How is that different from an IRA? Or is it? What is the deal with those nine-page tax forms we have to fill out when we get a new job? Do I want to say I am a dependent or not? Why do they need all this information, and how does that information affect my tax levels? If I want to invest in the stock market, how does that work? Do I want to invest in treasury bonds or riskier portfolios? What will happen to me if I get into bad credit card debt? And how in the world will AIG and Merrill Lynch’s bankruptcies and the financial crisis affect me?

Remember when you were little and would watch your parents sitting at the dinner table with tax forms and checkbooks and calculators sprawled out everywhere? When you would say, “I don’t understand any of it,” they would reply, “Someday you will.” News flash: it’s someday already, and we still don’t get it.

I’m not saying we’re stupid. We just haven’t been exposed to many of these very real economic concerns. As a result, we will be ill-prepared when we go off into the real world. I’m sure we would do OK, but as college students, why would we want our knowledge of financial reality to be just mediocre?

It’s time that colleges and even high schools drastically revise the current economics curriculum. High schools need to spend a considerable amount of time discussing these things – tax forms, loan applications, tax law – so that students are prepared for real world. We don’t need vague theory; we need specific facts. If high schools are going to force us to learn anything, real economics should be included.

Colleges should offer a similar course to prepare their graduates to understand the practical nuances of the financial world. Call it “ECON 000 – Economic Planning,” or whatever you like. Many students already take economics to satisfy some general requirements, and no doubt many students would opt to learn the basics of managing their finances in a classroom setting rather than stumbling blindfolded into the real economic maze.

Some critics might say it is unnecessary. So what if you don’t know about IRAs? Hire someone to do it for you. True, some financial concerns are still far away enough that things like IRAs may be trivial to us right now. But there are also plenty of economic dangers very relevant to college students and recent graduates. Credit card debt is the perfect example. Many new professionals, fresh out of college, fall into credit card debt, which can throw you into a downward spiral if not handled correctly. Such problems could be easily prevented with a little realistic education.

You can’t convince me that Astronomy 001 is an essential part of my education while practical economics are something we can afford to ignore. You have to give it some credit.

The writer, a sophomore majoring in political communication, is a Hatchet columnist.

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