Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Fewer Than 25% Of College Graduates Can Answer 4 Simple Money Questions Correctly
Consumer banking firm Sallie Mae released its new “Majoring in Money” study of hundreds of current and recently graduated college students up to age 29 — and one big red flag sticks out: Even college graduates don’t know much about basic financial concepts like interest.
"So where should college students go to learn the basics of everything from credit cards to loans?"
If they weren't exposed to it by sophomore year high school how about a first year course on household finance? It's no wonder they have perpetual debt. Sad.
If they can't do their finances, can they write grammatically correct headlines?
Marketwatch is the source of this thread's subject line (fewer than 25% of grads); other sites like ZeroHedge served up a different article with a headline reading "less than 25%" of grads.
How did they arrive at the 25%? I know if the percentages were say machine up time then you could say all 4 are probably only available 19.2% of the time - but how do we know that the 54% that got #2 right didn’t get the other 3 questions right?
BTW, if kids weren’t sure and they picked “not sure” did they get credit?
Hi @Rbrt I'm not a math whiz; but I need help with discovery of that 25% number, too. Can't email the author, as is the case now for most of these folks. She has a twitter account that I viewed, but nothing related to her write. The quiz should have a re-do as to whether any of the original quiz takers are able to understand the math behind the 25% number...........now, there is the test. Perhaps too tired tonight, for me.
If I hand out a pop quiz with four multiple choice questions, surely I know how many students aced it.
So long as at least 25% answered each question correctly, it is possible that 25%+ got all four correct. So long as the sum of the wrong answer percentages is at least 75%, it's possible that not more than 25% got all four correct. Both of those are true here.
You don't have enough information from the individual figures to do better than this. But the "teacher" does.
To make this clear, say that 25% get four answers right, and the rest are dolts who get 0% on their quizzes. Then the correct answer rates for all four questions will be 25%; still 25% of the students got all the answers correct. That's even worse than the actual individual question results.
Question 4 is completely different from 1, 2 3 -- it depends upon knowing the definition of the term "interest capitalization". I would not have been able to define the term, but I'd have answered the question correctly because of the way the answers were worded. Which proves nothing. In any case, I wonder how well Sallie Mae vetted it's survey before administering it. David
her eds also let through her stupid misspelling of pique in the lede
It’s also possible she had it right initially and her editors / spell-checker changed it. Either way it’s frustrating to see something like that make it to publication.
I liked the math quiz. Might have gotten 50% correct when I left college - but not so sure. In retrospect, it’s amazing how poorly prepared I was for the financial road ahead. One example - Shell Oil mailed me a completely unsolicited credit card my senior year of undergrad. No questions asked. Piled up a vast sum of debt over the next 3-6 months, prior to landing a job, before realization kicked in that I needed to repay the money.
Should we blame higher education? Should liberal arts majors forsake hours spent devouring Shakespeare or Milton in order to take courses in compound interest and sound financial practice? Not sure that’s what I was paying tuition for.
It’s true that only 24% of graduates taking the test got all 4 questions correct, but another 33% got 3 of the test questions right. That might be somewhat disappointing, but it’s not too bad either. The graduates out scored the other group categories taking the test.
A far more important statistic is that college graduates earn over 50% more per year than non graduates. Getting that degree has a measurable life changing impact so just do it. It is worth the effort and any sacrifices.
@_catch22 hi sir... Probably nothing do w politics but when I finished college I love Bill Clinton try to vote for him multiple times before previously.. I also voted for Kerry Bec ause use of gulf War . My point is probably >50%of mellenials are democrats or favored democrats
But if u are business owner or working pay heavy taxations you may change your views though...
It’s true that only 24% of graduates taking the test got all 4 questions correct, but another 33% got 3 of the test questions right. That might be somewhat disappointing, but it’s not too bad either. The graduates out scored the other group categories taking the test.
A far more important statistic is that college graduates earn over 50% more per year than non graduates. Getting that degree has a measurable life changing impact so just do it. It is worth the effort and any sacrifices.
I consider myself pretty financially literate, but I would have missed the fourth question — which was a ringer in my opinion. I’ve never heard of the term interest capitalization before, and I’m not sure how important it is to know. Then again, I have no outstanding debts, no mortgage, no student loans, an extremely high credit rating, and always pay off my credit card balances each month.
Frankly, I hadn't heard the term interest capitalization before either. I'm not taking out loans to go to college. But as a homeowner, I'm familiar with negative amortization - same thing, different name.
Students often don't have to start paying off their loans until they're out of college, or later. But during that time they're not making payments, interest is still accruing. One would hope that anyone taking out this type of loan would understand what that means. ("Today, 70 percent of college students graduate with a significant amount of loans.") https://www.valuepenguin.com/loans/what-is-negative-amortization
That's why this question is on the quiz. Not the good life; just the opposite.
"Noob is one of those few words where the word itself is actually part of it's own definition since anyone who even uses the word "Noob" in a serious manner is a Noob himself."
"Noob is one of those few words where the word itself is actually part of it's own definition since anyone who even uses the word "Noob" in a serious manner is a Noob himself."
No person that sources Urban Dictionary can be considered credible in any regard.
This may come as something of a surprise since you seem to believe that the sun, moon, and planets revolve around you, but whatever you may consider to be "credible" is totally unimportant and uninteresting to me, and also a fair number of others here.
Comments
If they weren't exposed to it by sophomore year high school how about a first year course on household finance? It's no wonder they have perpetual debt. Sad.
And welcome .....
Marketwatch is the source of this thread's subject line (fewer than 25% of grads); other sites like ZeroHedge served up a different article with a headline reading "less than 25%" of grads.
BTW, if kids weren’t sure and they picked “not sure” did they get credit?
I'm not a math whiz; but I need help with discovery of that 25% number, too.
Can't email the author, as is the case now for most of these folks. She has a twitter account that I viewed, but nothing related to her write.
The quiz should have a re-do as to whether any of the original quiz takers are able to understand the math behind the 25% number...........now, there is the test.
Perhaps too tired tonight, for me.
So long as at least 25% answered each question correctly, it is possible that 25%+ got all four correct. So long as the sum of the wrong answer percentages is at least 75%, it's possible that not more than 25% got all four correct. Both of those are true here.
You don't have enough information from the individual figures to do better than this. But the "teacher" does.
To make this clear, say that 25% get four answers right, and the rest are dolts who get 0% on their quizzes. Then the correct answer rates for all four questions will be 25%; still 25% of the students got all the answers correct. That's even worse than the actual individual question results.
Which proves nothing.
In any case, I wonder how well Sallie Mae vetted it's survey before administering it.
David
How does your Trump/GOP 2020 statement connect to this thread topic?
I liked the math quiz. Might have gotten 50% correct when I left college - but not so sure. In retrospect, it’s amazing how poorly prepared I was for the financial road ahead. One example - Shell Oil mailed me a completely unsolicited credit card my senior year of undergrad. No questions asked. Piled up a vast sum of debt over the next 3-6 months, prior to landing a job, before realization kicked in that I needed to repay the money.
Should we blame higher education? Should liberal arts majors forsake hours spent devouring Shakespeare or Milton in order to take courses in compound interest and sound financial practice? Not sure that’s what I was paying tuition for.
It’s true that only 24% of graduates taking the test got all 4 questions correct, but another 33% got 3 of the test questions right. That might be somewhat disappointing, but it’s not too bad either. The graduates out scored the other group categories taking the test.
A far more important statistic is that college graduates earn over 50% more per year than non graduates. Getting that degree has a measurable life changing impact so just do it. It is worth the effort and any sacrifices.
Best Regards
But if u are business owner or working pay heavy taxations you may change your views though...
Derf
Students often don't have to start paying off their loans until they're out of college, or later. But during that time they're not making payments, interest is still accruing. One would hope that anyone taking out this type of loan would understand what that means. ("Today, 70 percent of college students graduate with a significant amount of loans.")
https://www.valuepenguin.com/loans/what-is-negative-amortization
That's why this question is on the quiz. Not the good life; just the opposite.
"Noob is one of those few words where the word itself is actually part of it's own definition since anyone who even uses the word "Noob" in a serious manner is a Noob himself."