Finance guru Dave Ramsey—who filed for bankruptcy at age 26—is the face of personal finance to over seven million students in high schools across the country. That’s due, in part, to the 26 states that now require financial-literacy coursework to graduate high school.
With schools already struggling to fill teacher vacancies, the responsibility to teach personal finance often falls to not-so-financially literate history teachers, or P.E. instructors, who end up showing a semester’s worth of videos from experts like Ramsey.
While a lack of faculty expertise is part of the uneven process, financial experts say a lack of financial literacy countrywide is to blame.
The country is doing a “disservice” to 18-year-olds by allowing them to sign up for $100,000 in college loans—without them or their parents having the financial proficiency to know the life-long impact, said Michael Roberts, professor of finance at the University of Pennsylvania’s Wharton School.
“It’s long been recognized that financial education is paramount to being an engaged and hopefully prosperous and happy citizen,” Roberts told Fortune. “If you think about the importance of finance for your life, for my life, for our lives, it’s really unavoidable.”
Most adults are making financial decisions with a poor level of financial literacy, according to the Global Financial Literacy Excellence Center and TIAA, with Gen Z having the poorest literacy. Those born between the late 1990s and early 2000s were only able to answer 37% of questions about topics like borrowing, investing, and saving. This is staggering considering that one in seven Gen Z credit-card users have already maxed out their cards, and in the U.S. alone, students hold over $2 trillion in student loan debt.
Overall, one in four Gen Zers are not confident in their financial knowledge and skills—and more than one-third say their parents did not set a good example for them financially, according to WalletHub.
However, not everyone agrees that classes dedicated to personal finance are the best use of students’ time.
One widely-circulated study suggests “there is little evidence that education intended to improve financial decision-making is successful.” It instead suggests greater mathematics training can later lead to greater market participation, investment income, and credit management. Another study said “interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples,” and that required coursework is negligible due to how quickly students may forget what they learned.
Both these studies, however, were written over a decade ago—back when only about five states mandated financial literacy. Now, 21 additional states have passed financial-literacy requirements.
Billy Hensley, president and CEO of the National Endowment for Financial Education, explained that part of the division has been driven by a historic lack of data and the dominance of a small number of studies. Today, he added, the evidence is overwhelming: Financial literacy education works—when done right.
He points to NEFE research, which in part shows students taking state-mandated financial education courses have a 21% less likelihood of carrying a credit-card balance, have on average $1,300 less in private loans, and have a 3.5% increased likelihood of taking out financial aid.
Teaching how to teach personal finance
With a growing number of states requiring personal-finance courses, school districts across the country have had to scramble to find qualified teachers. Yet, in many states, educators do not need to prove expertise in the field before being placed into a personal-finance classroom.
This summer, California became the most recent state to add a financial-literacy requirement to its curriculum. Teachers in social science, business, mathematics, and home economics are specifically authorized to teach the course, but the new law also gives authority to educators in other subjects to oversee personal finance.
Roberts said he is “very concerned” about who is teaching personal finance across the country. While it may be easy to teach some things, like what a checking account is, students need to learn financial proficiency to truly be literate. For example, young adults should be able to discern whether it’s better to buy versus rent a house, or to sign up for a fixed- versus floating-rate mortgage.
“You have to teach the teachers,” Roberts said. “It all has to start there, and the best way to do that is to make them take the course themselves because how many teachers out there have actually been trained and had formal training in personal finance? I doubt very many.”
Ramsey, who has over 2.4 million TikTok followers, agrees that financial literacy in schools is “crucial,” but says personal finance is 20% head knowledge and 80% behavior. His personal-finance curriculum has been taught in over 45% of U.S. high schools.
“Too many students enter adulthood with debt, leading to stress and anxiety, and it’s just not worth it,” Ramsey tells Fortune. “The younger you can learn about handling money, the quicker you can start to build wealth and make a difference in your family tree.”
With the absence of a national strategy, individuals often turn to social media and influencers for financial advice, Hensley shared.
However, a survey found 27% of social-media users have fallen for false or misleading financial information, with younger adults more likely to do so. Only one in 10 financial influencers on TikTok are transparent about their background.
“FinEd is not one-size-fits-all and you cannot believe everything that you see/hear online or in other medium, and there are not any surefire ways to build wealth or financial security quickly. Also, the more popular a particular influencer becomes they are likely to be paid by certain brands, which could influence what they’re telling people,” Hensley said.
A debate with middle ground
While Hensley does not believe education providers are to blame, he said the economic system is broken and has led to the systemic abuse of certain low-income Americans.
In a similar vein, Timothy Ogden, the managing director of the Financial Access Institute, wrote in an op-ed that Americans’ finances are in distress due to “cost of higher education, health insurance, child care and rent have all increased far faster than paychecks.”
However, Ogden and Hensley are on opposite sides of the financial-literacy education requirement debate. Ogden argues an increased knowledge of budgeting or interest rates won’t necessarily change behavior; Hensley, on the other hand, believes financial literacy can truly make a positive impact.
Instead of spending time picking sides, Hensley says energy should be spent making the financial system better for all.
“Everyone (has) had at least one point in their life where they wish they had known much more about personal finance than they did,” Hensley said.
