Students at the University of Maryland are fighting to get to the top of Michael McMillan’s class waitlists. No, he’s not lecturing on a flashy new topic like artificial intelligence or Taylor Swift, he’s teaching personal finance—and students are more interested in the subject than ever.
More than half of all Gen Zers are entering adulthood without any formal financial education, and it’s causing real generational financial trauma, according to a recent study. McMillan, who is an associate clinical professor at the University of Maryland’s Smith School of Business, says parents are in part to blame.
“Parents are either unwilling, not knowledgeable, or uncomfortable about talking about sex with their children,” McMillan says. “This happens in the same case when it comes to money and managing money.”
However, adults may not be teaching their kids about finances in part due to their own lack of financial know-how. Over 75% of parents report not being completely confident in their ability to teach their children about investing, according to a survey by the SIFMA Foundation. A similar percentage said they would enroll their child in a different school if it had financial education and investment courses.
The benefits of teaching personal finance
Students’ finances are a leading cause of stress for most college students. In fact, close to three out of every 5 college students have considered dropping out of college due to financial stress, according to a recent Ellucian report, and nearly 80% of students say financial stress has harmed their mental health
When paired with the fact that college debt has ballooned to over $2.1 trillion, not many will argue against a need for personal finance education.
“Money causes stress, and money takes your attention away from your studies,” McMillan says. “So by helping them with finances and providing mentoring and counseling, we’re in fact, improving at least some aspect of students’ mental health, which is so important nowadays.”
Dorothy Kelly, lecturer of personal finance at the University of Virginia adds that having financial wellness can positively affect one’s entire life, including emotions, relationships, work productivity, and sleep.
“My ultimate goal for everyone, for all my students, is to make financial choices to enjoy life that allows you to enjoy life,” Kelly tells Fortune.
But, both professors say that despite the benefits, personal finance should not be required at the college level. Instead, students should want to take the course.
“Everybody needs to learn this, but we learn when we’re motivated to learn,” Kelly says. “And I encourage anybody—it’s never too late to learn. The sooner people start learning about financial literacy, the better; the sooner their life is improved.”
Does personal finance education work?
McMillan has taught college students about insurance, wages, and credit cards for decades but says he is constantly surprised that young adults are not familiar with basic financial information. However, a lack of personal finance know-how is not exclusive to undergraduates; McMillan says that even some MBA students lack foundational financial knowledge.
Today, he has two courses: one for first-years, sophomores, and transfer students and another for seniors. This division is not tied to basic versus advanced finance: it’s about focusing on what topics are most pressing for young adults.
“If you’re trying to figure out how to make a budget, you don’t care about investing in bonds, all of these other important but in some ways esoteric topics based upon what your current needs are,” he says.
More than half of all states mandate high school students to take financial education courses to graduate, and the National Endowment for Financial Education says it can be largely beneficial. Its research has found that students in states with the requirement are 21% less likely to carry a credit card balance and take on average $1,300 less in private loans.
However, Kelly says that doesn’t always work. Despite Virginia being one of the states with the mandate, her students largely say they didn’t remember what they were taught—despite it just being four years ago.
And while there’s no guarantee a college course will revolutionize one’s budget either, Kelly says students have reported being much more equipped at things like signing up for insurance at their first job or using a budget to make their dream job work out financially.
Andrea Pellegrini, assistant director of the University of Illinois System’s University Bursar Student Money Management Center, notes that education can only go so far.
“We also have to be advocates for change in a system that is not equitable in a lot of ways across the board,” Pellegrini tells Fortune. “And so advocating for marginalized groups, be them in college or out of college, is really important.”
She encourages individuals—no matter their age—to be aware of their finances, be skeptical of opportunities that sound too good to be true, and above all, be willing to forgive themselves.
“Don’t beat yourself up if something happens, recognize that it’s a learning opportunity, and identify where you want to make changes,” she says.
