United States / Financial Literacy

Making a Place for Financial Literacy in the Liberal Arts

On the first day of class in Financial Economics at Bowdoin College, Professor Matthew Botsch of the economics department prefaced his lecture with an announcement. Anyone taking the course for the purpose of preparing for a career in finance, investment banking, or consulting should leave, he warned. Botsch is not alone in discouraging such an approach to coursework. The idea that higher education should be about learning how to think rather than acquiring pre-professional skills runs deep among administrators and professors at liberal arts colleges. At Bowdoin, even classes taken abroad deemed pre-professional are not eligible for general credit.

Students are equally as committed to engaging with the liberal arts mentality. Michelle Albright, a computer science and biology double major in Bowdoin’s Class of 2018, remembers choosing a liberal arts education because she wanted freedom to explore. “I think it’s absolutely insane to choose a profession at 17, when you’re applying to schools. You have to learn to think before you can do that,” she said. Gaby Papper, also a junior, agreed. “I think it teaches you to be an articulate thinker and also how to be a team member. A lot of students I’ve seen come out of pre-professional programs with no ability to be critically engaged. This is our shot to learn how to learn. Tangible skills can come later,” she said.

The need for a strong commitment to the liberal arts is just as evident beyond Bowdoin’s campus. With reduced educational funding across the country and increased pressures on new generations to outperform the olds ones, some lose sight of the value of a liberal arts education.  But many continue to argue that the liberal arts are more important than ever. In 2015, Dr. Loretta Jackson-Hayes wrote in the Washington Post, “We do not need more STEM majors, we need more STEM majors with liberal arts training.” Lawrence Katz, a labor economist at Harvard University said, “A broad liberal arts education is a key pathway to success in the 21st-century economy.” Fareed Zakaria, an internationally recognized journalist, made this very same argument in his book In Defense of a Liberal Arts Education. Some of the brightest minds of our time are in agreement that students with liberal arts backgrounds are better prepared for the workforce. Their arguments sound extremely similar to those of students, who argue  that the liberal arts teaches skills that cannot be taught later on in the workforce. The ability to communicate effectively and think critically places these students at the top of the job market.

But sometimes a commitment to the liberal arts leads students to dismiss anything they think is too “real world.” Liberal arts students want to immerse themselves in the academic. Many of them strongly believe that learning how to think is more valuable than gaining practical skills. This commitment to the academic ideal has quashed any discussion of personal financial literacy on campuses. Many liberal arts students stop listening as soon as they hear the word “finance.” After all, they may not want to go into investment banking. But financial literacy is not about preparing for a career in finance; it is about learning about how money works in real world.

Astoundingly few students are prepared to be financially independent. Regardless of whether a student is an English or philosophy major, he or she will eventually use a credit card, take out a mortgage, and have a retirement plan. Liberal arts colleges should treat financial literacy as a basic skill akin to reading or writing, not just a pre-professional endeavor. In order to be successful in the so-called “real world,” financial literacy is essential.

Unfortunately, students are completely unprepared to make basic financial decisions post-graduation. Despite the fact that millennials are better educated than their predecessors, they are living in a more volatile and complicated financial world than any generation that came before. A study at George Washington University’s Global Financial Literacy Excellence Center found that more than eighty percent of millennials have one or more long term debts, which are financial commitments lasting more than one year. This could be leases or loans, including student loans. More than fifty percent of millennials are concerned about their ability to pay off their debts and nearly thirty percent are financially fragile. This means that in the case of a health or family emergency, most millennials would not be financially secure enough to deal with the emergency and keep up with their current financial commitments. Furthermore, only twenty-four percent of millennials demonstrate basic knowledge of personal finance concepts and only twelve percent have sought professional financial help within the last five years. Imagine if only twenty-four percent of millennials could read or write. Learning basic financial literacy skills is just as important for building success in the future.

Clearly, this problem extends to all members of the millennial generation, not just those who have attended liberal arts institutions. All colleges and universities need to provide opportunities to educate students about basic financial literacy topics. But this presents far more of a challenge at liberal arts colleges because of the deeply ingrained revulsion for anything approaching pre-professionalism. Students, administrators, and professors at these institutions need to recognize the differences between pre-professional skills and pre-life skills. Financial literacy is a pre-life skill that all students should understand before dealing with their personal finances out in the “real world.” After all, if the goal of the liberal arts is to introduce students to a wide range of topics so that they have a broad and balanced view of the world, financial literacy needs to be a part of that discussion.

Having conversations about personal financial literacy on campus is in the best interest of students and colleges. Because students are not gaining this basic knowledge in the classroom, it falls on them to become educated on their own. Organizations like the newly founded Bowdoin Financial Literacy Club are so important because administrators and professors are not providing the necessary information. More people will learn, and hopefully these discussions will reduce the stigma surrounding personal finance on liberal arts campuses. Students will discover that financial literacy groups are not investment clubs or resume builders for the eager consultant-to-be. Instead, these groups are places for meaningful education about an extremely important, under-discussed core skill.