There’s a course missing in the high school curriculum – and it’s one that bears looking into, particularly in light of the changes graduates are facing today – not to mention the crisis the nation now faces due to the lack of such a course being included as mandatory in education.

Years ago, when you graduated from high school you either got a job or you went to college. You earned money, opened a checking account, and only bought what you could afford to buy. If you needed something, you saved for that something and bought it when you had enough money to buy it. You paid your bills on time and worked to establish a solid credit rating. With that solid rating, you might be able to get a department store card, which you had to pay off each month. If you saved enough to put a down payment on a home, you went to a bank and, with a good credit history, you were able to arrange for a mortgage on that home.

All that has changed.
Thirty years ago, there were no credit cards for graduates. There were no temptations to make it easy to buy more than you could afford by simply paying interest on your purchases. But today, credit cards are offered everywhere.

Go to a sports event and you’ll find it hard to get past people offering t-shirts or mugs or other freebies if you’ll simply sign up for a credit card. High school graduates are inundated with credit card mailings telling them that they qualify for a brand new card.

Getting a credit card is made so easy. But what do these young people know about credit, interest rates, things to avoid or things to look at? What have the high schools taught them about these things? What, for the past thirty years, have students been taught about the dangers of living on credit? Next to nothing.

I’ve asked around and haven’t found a student who was offered a class where they’d learn about credit cards, interest rates, loans or mortgages.

The results are horrific.

We’re now seeing an entire generation of homebuyers who are in danger of losing their homes because they’ve defaulted on their mortgages. Many of them signed balloon mortgages where they only had to pay the interest on the loan up until a certain date when a big increase would come due. Others bought mortgages with “arms” that could fluctuate up with the market. Still others looked at the low interest rates, took out home equity loans, cashed out on the loans, and now, with their interest rates rising, find they owe more on their homes than their homes are worth.

Were they taught about interest rates and mortgages? Was there a high school class to teach them about credit myths or where they learned the safest mortgage is one that is set at a permanent rate over a given number of years?

The news is filled with stories about foreclosures and the home mortgage meltdown. The Treasury department is looking into a solution. Political candidates are proposing moves to help out the defaulters. And much of this could have been avoided if our education system had kept up with the market place. The Department of Education—charged with overseeing schools, books and curricula—dropped the ball on t
this.

We have an entire generation that has grown up in a credit card culture where they’ve learned to pass the debt on one card over to a new card and keep the wolf away from the door by increasing their debt load and passing it on to a new card, at least for a while. But they never had a mandatory class to teach them about credit, how it works, what to watch out for, and how to live within one’s means. Little wonder that they bought homes they couldn’t afford by signing mortgage papers they didn’t understand, and resulting in a crisis of foreclosures.

The solution to the present crisis is up for debate; but a solution to keep this from

happening in the future is not. The time is overdue for our schools to begin teaching

students about the realities of borrowing and the inherent dangers to avoid.
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Mary Laney, a prize-winning former TV NBC anchor, is a regular columnist for The Chicago Daily Observer.