In this opinion piece, Wharton finance professor Michael R. Roberts argues that a basic understanding of finance will help students and their parents avoid making disastrous decisions, such as taking on excessive student loans.

The student loan crisis has been in the news for some time now. However, this is just one example of the many life-altering financial decisions young (and old) people make and the implications of those decisions that extend beyond the decision-makers. That many people make financial decisions with little understanding of their implications is why finance should be mandatory for every high school student.

Now, as a finance professor, I realize that statement sounds terribly self-serving, but it shouldn’t be controversial, and I speak from experience. I took out student loans to support my graduate education with no clue of the future financial burden. I got lucky. My loans were modest in size, and I got a job that allowed me to pay down my loans quickly. What I should have done before taking out the loans was spend an hour or two figuring out my future loan payments and whether I would be able to afford them with my job prospects after graduation.

Let’s perform this exercise to illustrate how easy and informative it can be using the Columbia graduate film program highlighted in the Wall Street Journal article as an example.Continue reading→