Why don’t schools teach personal finance? (Part 1)

Ramit Sethi

This is the first of many posts on this topic. Seriously, isn’t personal finance at least as important important as teaching post-modern analysis of Wuthering Heights?

PS–I don’t know what the last sentence means. English majors, please don’t write me.

Anyway, check out a letter my friend Ian Ybarra wrote to Student Financial Services at MIT.

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I graduated (with a student loan) from MIT in June, 2004. And like all students with those credentials, I sat in an “exit interview,” which surely consisted of my receiving a folder of papers and watching a really bad instructional video about paying off student loans.

Recently, I revisited that folder of student loan documentation. In addition to the papers stating the principal, interest, and repayment terms of my loan, there was your business card (how I knew to contact you) and a paper with the headings “The Danger of Credit Cards, 10 Facts Students Need to Know.” Below those headings were, as promised, 10 facts students need to know — 10 terribly scary facts students need to know about very basic matters of personal finance, like…

#1 “Debt problems can lead to depression, which affects study habits, academic performance and retention rates.”


#2 “Unfortunately, in a few extreme cases, the stress associated with credit card debt has been a factor in student suicides.”


#4 “Some studies suggest that those students with credit card balances in excess of $1000 drink more, smoke more, use more prescriptions for
depression and have lower grade point averages than those who don’t carry credit card debt.”


#6 “Colleges and universities are the one group that makes money out of the credit card industry without bearing any responsibility for educating the students about the possible pitfalls and the devastating effect bad credit can have on their financial future. In return for lucrative fees, many colleges allow the banks and credit card companies to hawk their cards right on campus.”

(Read all 10 at

Great information. Definitely good to know…4 years earlier, don’t you think?

Fortunately, I didn’t leave school with credit card debt, my GPA was solid, I didn’t kill myself, and I didn’t develop substance abuse problems. But what about the kids who weren’t so fortunate?

Why were they not given this information when they entered MIT rather than when they left? Why are MIT students not exposed to the basics of personal finance — like those covered by Ramit Sethi’s seminars — as part of their “entrance interviews,” rather than being notified of what could have happened to them over the past four years as part of their “exit interviews”?

For as intelligent as MIT students are, I meet far too many new MIT graduates who have crazy credit card debt or don’t even have credit cards in their own names or wonder what kind of music comes on MITFCU’s CDs…the list goes on.

This seems broken. I hope that the people in your office are working to fix it.

Ian Ybarra

If you have ideas for how to fix this at your school, please send an email or add a comment.

Also check out Ian Ybarra’s blog, one of the best I read about discovering what you really want to do.

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  1. Jordan Rule

    Perhaps finance isn’t taught in college because professors aren’t that interested in it themselves. Finance is something most people end up learning on their own, whether they want to or not. Post-modern analysis of Wuthering Heights, on the other hand, generally isn’t something one just stumbles across in their daily routine.

  2. Jennifer

    This is too much, R.

    I’m a grad student too. In psych, no less. Social Psych.

    I teach two sections of that lovely, wonderful, ever enjoyable one unit class “University 101.” If you’re not familiar, the goal of the class is to get unwilling freshmen to think critically about their education.

    During the second class I gave students an excercise. They had 5 minutes to list “everything an educated person should know.”

    This is what the list looked like:

    Great Works of Fiction

    Since freshmen are still in NCLB victim mode, this is exactly what I expected.

    So I tried to open their cage doors.

    “But don’t you feel that to be educated means that you should develop skills that will help with the most pressing problems of our generations such as dealing with weight issues, preventing STDs, learning to invest for retirement and our children’s education, coping with credit card debt, being able to deal financially and emotionally with elderly parents, financing a home, enviornmentally, socially and economically sustainable living, etc.”

    Here’s what they told me:

    “It’s not worth it to learn those things in school. Those things are common sense. We’ll learn them on our own. Learning those things here aren’t worth our tuition dollars.”

    Ramit, we’re creating our own hell.

  3. Rob La Gesse

    I agree that finance should be taught in school, and so should CPR. I can’t believe we can’t spare 20 hours of a child’s lifetime in the classroom to teach (and re-teach) something as important as CPR.

  4. Manu Bains

    Apparently even Supreme Court nominees could benefit from Ramit’s seminar. Here’s a psycho-financial analysis of Harriet Miers:

  5. hypatia

    Well, Rob, I was taught CPR at my high school. That was in Newton, MA in the 1990’s. I thought every school did that.

  6. Santosh Iyengar

    Our college has just begun to understand the importance of the awareness with regard to Personal Finance. We are planning to have session to mature students in this regard.


    P.S. Probably Jeniffer should understand from the exercise that she conducted. How important this topic is. B’cos no one has listed this in the five things probably.

  7. kayla

    I graduated from CSU where I actually took a class offered in personal finance. The thing for me, though, is I wish I could go back and take it! At the time, I wasn’t retaining information and was only looking for my “A.” Now I’m re-learning what I could have known from that class!

    Thanks for your blog, Ramit. It is better than a personal finance class because I can do this in my own time, and come back to it when I forget things, too!

  8. Meg

    Students will never be exposed to the in’s and out’s of credit cards because of terribly scary fact #6: colleges and universities make money from student credit cards. Why would colleges and universities teach students things that may change student behaviors, i.e. not get credit cards? Besides, in US culture, politics, religion and personal finance is taught by family. Even though someone can study religion, politics and finance in a school… for those who do not study these disciplines get their knowledge from family, i.e. how Mom and Dad did it.

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