Memo
To:[professor name hidden]From:[student name hidden]
Date: / November 23, 2015
Re: / Personal Finance General Education Requirement Proposal
My final proposal, as demonstrated by the letter and report attached hereto, is that the University of Maryland add a requirement that studentstake a course on personal finance as part of the General Education Program. I was interested in the topic of student financial literacy because when I opened up a savings account during the summer, I realized I knew little about managing my accounts. In addition, because of the low interest rate, I wanted to invest my money, but did not know how to go about that process. After talking to friends, I realized that I was not alone in my degree of financial illiteracy. I began writingmy proposal by researching nationwide reports on financial illiteracy of Americans, focusing upon college students and recent college graduates, and the consequences associated with that lack of knowledge. I then conducted a survey of University of Maryland upperclassmen to determine the degree of financial illiteracy among students. Because a business finance course has some content in common with a personal finance course, I compared survey results among students who had taken a business finance course to those who have never taken a business finance course.
The contents of my final report has changed significantly from the description in my initial memorandum. After writing the initial memorandum in September, I realized that the University of Maryland already offered a personal finance course in the Family Science Department, FMSC 341: Personal and Family Finance. This realization thata similar course to the one I was proposing already existed in the School of Public Health’s Family Science Department, resulted in a shift of my intended primary audience from the dean of the Smith School of Business to the department head of the Family Science Department. I interviewed the professor of the existing course, Dr. Manouchehr Mokhtari, instead of Dr. Karen Hallows, a professor in the Smith School of Business. Dr. Mokhtari significantly helped me in my final proposal by explaining how the concepts of a personal finance course are critical to students of all majors. He also described the course’s content and provided me with a syllabus for FMSC 341.
The greatest challenge I faced in writing my proposal was finding a sufficient number of upperclassmen to completethe survey for my report. At this time of the semester, many students post class surveys on Facebook, and, as a result of receiving so many requests to complete surveys, many students did not have enoughspare time to fill out my survey. However, with the help I received my having the link posted on the ENGL 393 ELMS course page, I was ultimately able to post it on different pages to receive a sufficient number of responses. After you suggested after reading my Midsemester Proposal that I propose a course waiver for students in the Business School, I decided to add to my research a comparison between students who had taken a business finance course (but not FMSC 341) to those who had not taken a business finance course or FMSC 341. Because most responses I initially received were from students who had never taken a business finance course, I sent the link as an ELMS message to students in BMGT 340: Business Finance.
Overall, I have gained an extensive appreciation for the long process required for creating a proposal. Because I have never before written a report as extensive as this final proposal, I learned how to transform my initial plan based on the results of my research. My favorite part of the project was theprimary research I conducted in interviewing Dr. Mokhtari and interpreting the survey results. Because I know that effective communication of my research will be essential for the career I hope to have as an actuary, especially in the consulting industry, I viewed the proposal process in Technical Writing as an idealopportunity to develop my written communication skills.
[name and address hidden]
November 23, 2015
Dr. Elaine Anderson
Chair of the Family Science Department
University of Maryland, College Park
School of Public Health, Office
College Park, MD 20742
Dear Dr. Elaine Anderson:
I am writing to bring to the attention of the Family Science Departmentthe alarming general financial illiteracy among University of Maryland students. A survey I conducted revealed that, similar to nationwide statistics, University of Maryland students lack knowledge on basic personal finance principles and feel unprepared to manage their finances upon graduation.
Theexcellent elective course currentlyoffered in your department, FMSC 341, Personal and Family Finance, educates students on many essential principles of personal finance. I met with Dr. Mokhtari, the professor of the course since 1991, and he explained the universal value of the course to students of diverse academic backgrounds.The course informs students about skills that are essential to obtaining the best standard of living with their salaries. Topicswithin the course include creating a budget, investing and savings options available, and managing debt.
Without these life-skills, students are more likely to make poor financial decisions, accumulate debt, and be unprepared for a financial emergency and retirement. Because of the negative consequences associated with not obtaining this basic financial knowledge, I urge that the University of Maryland add to its General Education Program, and make mandatory, a requirement that students take a course in personal finance. The mandatory course I am proposing would bequite similar to the FMSC 341 course your department currently offers on a small scale. I would be extremely grateful for your, as well as the rest of the Family Science Department’s, support for my proposal. I plan to present the proposal to the University Senate, the entity who will ultimately make the final decision about changes to the General Education Program.
I would welcome the opportunity to further discuss myproposal with you. If you have any questions or suggestions, please contact me by phone at (301)509-6578 or by email at . Thank you in advance for taking the time to read the report, and I look forward to hearing your opinions.I want to reiterate that I would sincerely appreciate any support from your department for my proposal.With your support, more University of Maryland students will acquire essential life skills that help prevent them from incurring unnecessary stress and problems related to managing their financial futures.
Sincerely,
[name hidden]
Table of Contents:
Executive Summary:
Main Report:
Introduction:
University of Maryland Student Specific Findings:
Comparison to Students who have Taken Business Finance:
Recommendations:
Conclusion:
Works Cited:
Addendum:
Transcript of Interview with Dr. Manouchehr Mokhtari:
Survey Results:
Executive Summary:
This report is designed to demonstrate the need for all University of Maryland students, regardlessof theirmajors,to take a personal finance course. The University of Maryland currently offers a three credit elective course, FMSC 341: Personal and Family Finance on an electivebasis. However, the course is taken only by a limited number of students at the University of Maryland, and a course similar to it needs to be offered, and made mandatory, to students on a wide scale. Methods of analysis included in the report are the presentation ofnational data of Americans’ financial behaviors and financial literacy, an interview with the current professor of the University of Maryland’s FMSC 341 course, and a survey of University of Maryland upperclassmen. The survey revealed that the University of Maryland student generally feel unprepared to invest in the stock market, interpret the benefit package from a job offer, and understand credit card payments and mortgage payment plans.
The report findings support that the average University of Maryland student will benefit from taking a personal finance course. The course will provide students with the foundation to manage their finances effectively. By taking a course on personal finance, students will acquire skills that will be broadly beneficial, includingthe ability to budgettheir finances, save for retirement and financial emergencies, makeinformed decisions about job opportunities and understand payment plans, such as loans and credit card debt.
Specific recommendations proposed in this reportinclude:
- The addition of a requirement to take a personal finance course to the University of Maryland’s General Education Program
- The use of the course FMSC 341 as a template for the wide spread offering of a personal finance to University of Maryland undergraduates
- Consideration of a possiblewaiver or modification of the General Education course forstudents, primarily students from the Business School, who have already acquired a sufficient level of financial literacy as demonstrated by the completion of a course or courses that cover a significant part of the current content of FMSC 341.
The report acknowledges that more research needs to be acquired if the University of Maryland Senate approves the proposal to add a personal finance course as a General Education requirement. Specifically, the University needs to conduct more research into the comparison of the content learned in a business finance compared to a personal finance course. In addition, University officials can decide on the final content the class, including a decision on how best of modify the currentFMSC 341 courseto better accommodate a more diverse student population.
Main Report:
Introduction:
There are few issues that University of Maryland educators should be more concerned about than its students’ lack of knowledge about managingtheir own personal finances. Indeed, the general American public’slack of knowledge and insecurity about their personal finances is staggering. According to the 2015 Consumer Literacy Survey, less than half of Americans are confident that they are saving enough for retirement, and 75 percent of Americans agree that they would benefit from having basic financial questions answered by professionals. Alarmingly, half of American households report that they could not come up with $2000 in an emergency, placing households in an unnecessarily vulnerable financial position (Sherraden & Grinstein-Weiss, 2015).
Closer to home, University of Maryland students are among the 39 percent of millennials who admit theyworry about their financial future at least once a week(Fidelity Investments, 2015). The 2015 U.S. Bank Student and Personal Finance Survey revealed that college students generally lack knowledge on personal finances and are often are not even aware that they are unprepared to manage their finances. The survey revealed that 65 percent of respondents gave themselves a C or below with respect to how “successfully [they] manage their personal finances”(U.S. Bancorp, 2015). The survey also found that students are least knowledgeable about credit card debt, retirement programs, and saving plans. For example, only 39 percent of respondents correctly understoodthat a past delinquent loan or credit card payment negatively impacts one’s credit rating(U.S. Bancorp, 2015). In addition, only 37 percent of respondents were aware that 401-K investments can lose value and 43 percent believed that Social Security will be sufficient to fully cover retirement costs(U.S. Bancorp, 2015). Because of Americans’, and more specifically, college students’,general financial illiteracy, and the negative consequences that illiteracy can potentially cause students in the future, it is essential that the University of Maryland aid its students by adding a requirement to its General Education program that students take a personal finance course.
Although the lack of knowledge of college students about their personal finances, and their recognized lack of confidence in their knowledge of the subject, are by themselves more than sufficient justificationfor a mandatory General Education requirement for a personal finance course, numerous trends in American society today make the need for such a requirement even more urgent. Of particular importance,the need for financial education among college students has become more critical because more students than ever before have started to repay student loans, in addition to ordinary expenses, soon after graduation. For example, the class of 2015, nationwide, graduated with an average student loan of $35,000, about twice the average loan of students graduating two decades ago, adjusted for inflation, and the percentage of students graduating with student loans in the United States in 2015 has increased to 71 percent from about 50 percent in 1995 (Sparshott, 2015).
Disturbingly, 11.5 percent of college graduates are more than 90 days late in making their payments (Nasiripour, 2015). As people educated in personal finance recognize, delinquency on loans has serious consequences: student loan delinquency harms graduates’ credit rating, leads to fines, and,if the loans arefederal loans, preventgraduates from receiving tax refunds and can interfere with their receipt of government transfer payments.Because such a large percentage of graduates struggle with making their student loan payments on time, the personal finance course will emphasize the use of a strategy that enables the student to develop a budget that ensures monthly payments are made in a timely manner,and educates that student as to what options are available to repay the loansand the serious consequences of loan delinquency.
Another trend that makesknowledge of personal finance even more critical is that the growing need to prepare financially for retirement.Due to the time value of money principle, it is most beneficialto start saving early in one’s career. As the average expected lifespan of Americans increases, Americans need to save more to prepare for theirexpanded retirement years. On a related note,the future availability of existinggovernment programs that many people depend on today for their retirementis becoming less and less certain. For example, Medicare is predicted to be unable to fully fund its costs in 2030 and Social Security is expected to only be able to pay 75 percent of the amount due recipients by 2033 (Reuters, 2014). Thus, as college students enter the workforce, they have an even greater need to save for retirement than previousgenerations.
The University of Maryland, College Park’s General Education program provides that a major goal of the program is for students to “establish the ability to thrive both intellectually and materially and to support themselves, their families, and their communities through a broad understanding of the world in which they live and work” (Maryland, 2015). Given this goal, and the indisputable fact that so many American students graduate college lacking the skills to manage their finances effectively, it is essential that the University of Maryland add to its General Education program a requirement that students take a personal finance class.Further demonstrating the need for such a mandatory course at the University of Maryland specifically are the findings from a survey I conducted of University of Maryland upperclassmenwhich indicate that the average University of Maryland student is no exception to the national trend of financial illiteracy. This class would be intended for upperclassmen as they prepare to enter the workforce after college.
University of Maryland Student Specific Findings:
Not surprisingly, consistent with the majority of students nationwide, the majority of University of Maryland students have a disturbing lack of understanding of finance.From November 2 to November 16, I conducted a survey of 69 University of Maryland upperclassmen to determine their general knowledge of personal finance and how prepared they feel to manage their finances after graduation. I also interviewed Dr. Manouchehr Mokhtari, the professor of FMSC 341: Personal and Family Finance, a course offered by the Family Science Department in the School of Public Health. My findings showed that many students are not knowledgeable about personal finance and admit to being unprepared to manage their finances after graduation, supporting the need for students of all majors to take a personal finance course.
Dr. Mokhtari, who earned his Ph.D. in Economics in 1986, unequivocally believes that a course on personal finance is universally beneficial. He emphasized that the material learned in a personal finance course is helpful “for everyone, from a child in elementary school to an elderly person” (M. Mokhtari, personal communication, Oct. 22, 2015). Notably, in recent years, the course has attracted interest from a variety of majors outside the School of Public Health. Of the students enrolled in FMSC 341 for the fall 2015 semester,only 22 percenthave majors within the School of Public Health. The largest percentage of students enrolled are from the School of Behavioral and Social Sciences (27 percent), followed by students of the School of Public Health, but closely followed by students from the College of Computer, Mathematical, and Natural Sciences (17 percent). The wide variety of majors demonstrates that there is interest among students of all majors to learn the concepts taught in personal finance, even as an elective.
However, despite the diversity of students taking the course, the total number of students at the University of Maryland taking the course is minimal. . For the spring 2016 semester, only one section of FMSC 341is offered at the College Park campus. As of November 25, 39 students are on the holdfile to take Dr. Mokhtari’s course. The course is offered in two additional sessions, but only to University of Maryland Shady Grove students.
Although the number of students taking the course is small, Dr. Mokhtari provided anecdotal evidence that the students who have taken the course appreciate the fact that the course provides them with knowledge that is extremely valuable to them. Specifically, Dr. Mokhtari reflected duringmy interview with him thatstudents have told him that the course has helped them better manage their finances and enhance their lifestyle. He also advised of one student who was unable to register for the fall 2015 semester due to the class popularity, but sat in the lectures and advised him that she did so “because she had learned how beneficial the lessons taught were from other students” (M. Mokhtari, personal communication, Oct. 22, 2015).
The Personal Finance survey of University of Maryland students revealed that many students are financially illiterate, and admit to their lack of familiarity withpersonal finance. Students were asked how well prepared that felt to “understand the options for a mortgage or car payment” when they entered the workforce. On a scale of 1-5, with 1 labeled as not at all prepared and 5 very well prepared, the mean was only 2.57. Without the ability to understand concepts of personal finance needed to understand the real interest rate and payment options, students may choose a more expensive option than other options, or choose an option they do not have the ability to afford. In the seventh and eighth week of the FMSC 341 course,students learn about the different types of loans available and how to finance large investments, such as purchasing a home or a car.