This is a good hands-on activity that students can complete to see how various inputs impact their credit score. We all have seen the pie chart that lists the main factors that determine your credit score.
How about letting students see how real-life actions and behaviors will impact their scores. Putting them in the role of “Credit Counselor” will make this topic more engaging to them. So here’s the situation:
You have been assigned to be the credit counselor to both Sam and Jenna (see cases below). You have access to this great tool: the FICO Score Simulator which allows you to analyze their situations and come up with their credit score.
This is a topic that I dreaded trying to teach. When you look at the changing regulatory environment, the alphabet soup involved (IBR, ICR, PYE, etc.), the myriad repayment options (6 at last count) and the math calculations, it can seem a tad overwhelming.
And then along comes this tool (The Student Loan Repayment Calculator), which manages to make this issue of student loan repayment much more approachable (Full disclosure: I do have some qualms with their assumption of 5% annual income growth). So, why teach this to high school students?…one way to discourage them from overdoing student debt is for them to understand: 1) Student loans actually need to be repaid (recent study found 28% of freshmen didn’t know they had a student loan) 2) Taking on lots of debt will impact their post-college lifestyle, which is where this calculator comes in.
I created a simple example using average debt load and salary information to see what the calculator told me: Continue reading →
I found this excellent simulation to teach students about how to manage an online banking account. Please note that the simulation comes via a UK company so currency is in pounds and the date is formatted as DD/MM/YY.
Here is the user interface with online banking capabilities listed on the right hand side.
Here is one way to utilize this simulation. Have the students complete the following activities: Continue reading →
This NYT article caught my attention recently as it described how challenging it is for consumers to analyze cell phone offers:
One wireless phone plan allows customers to upgrade to a new phone in less than two years. Another allows a pool of data to be shared across multiple devices. Yet another offers unlimited data, but only at slower Internet speeds. All these perks are there for the taking, yet the average wireless phone bill continues with its monthly sting. Confused yet?
Welcome to the confounding world of wireless phone billing plans. Even executives at the wireless phone companies say their industry has created a Tower of Babel of competing plans, with highly specific requirements and offerings and even, in many cases, unique language buried in the fine print.
With nearly 80% of teens having cell phones, it is an engaging and useful lesson to have them analyze their own plan (yes, including the fine print). Since many of them may be under their parent/guardian’s family plan, this will also help foster conversation between them about a financial matter. For those students, that don’t have phones, they might enjoy analyzing offers from several top providers to see which one might work best for them.
As the article suggests, given all the permutations in the plans, a spreadsheet is necessary in order to compare. Ask the students to develop a list of the features of their own plan by bringing in a monthly bill or printing out the plan description from their online account. What are the features that they should report back on? Continue reading →
The data reveals that students are generally clueless about the costs of higher education and how they’re paying for it. Nearly half of students underestimated their debt loads by at least $1,000, with 25% of students underestimating their debt by $5,000 or more.
We need to teach our students to be savvy consumers. How can we do that? I have a few posts titled “What’s the Catch” in which students analyze a financial product and come up with reasons they should be wary of it. My inspiration in the middle of the night was to string together a few of these posts and have students “solve” them in class today as an activity I called “Financial Detectives.”
Each student in class got a handout (WhatsTheCatch?) and laptop to conduct web research.
5 minute countdown clock to encourage students to work efficiently to solve each of the mysteries before time expired (since there were four scenarios most chose to assign one to each group member). I added three minutes and all teams were done by then.
Total time to complete the activity: 35-40 minutes moving at a crisp pace.
You see a Stanford International Bank advertisement on the Wall Street Journal site. This Bank is offering “risk-free” interest rates of 6% on a savings account while other banks are only offering 3%. You read the small print and see that the bank is located in Antigua. After some initial research, you discover that they have thousands of customers and billions of dollars in deposits. What’s the Catch?