homebuyers, the inability to understand the mortgage option they selected in acquiring a home
contributed to the recent recession, as will be discussed in more detail below. Purchasers must be
able to choose from a wide variety of options. The cost of a college education and retirement, in
addition to many other milestones has only increased over time and will continue to increase,
making planning for these expenses more challenging and necessary than ever before. 84
D. Why Does This Matter for Young Americans?
“Part of your heritage in this society is the opportunity to become financially independent.” 85
Young Americans face a number of financial decisions early in life. 86 It is futile for them
to receive a financial education after they have begun to make such decisions. 87 Even worse, as
older Americans impart financial education, they often fail to take into consideration the
magnitude of the decisions young Americans will be making before they graduate from high
Id. (showing the advantages and disadvantages of the different types of mortgage options).
84 FINRA INVESTOR EDUC. FOUND., supra note 12, at 7-9.
85 Jim Rohn, Finance Quotes, BRAINY QUOTE, http://www.brainyquote.com/quotes/topics/topic_finance.html#OyyS6btsmreaGDcJ.99
(last visited Nov. 10, 2013).
86 FIN. LITERACY & EDUC. COMM’N, supra note 25, at 85.
87 ALISA F. CUNNINGHAM & GREGORY S. KIENZL, INST. FOR HIGHER EDUC. POLICY, DELINQUENCY: THE UNTOLD STORY OF
STUDENT LOAN BORROWING 4 (Mar. 2011), http://www.asa.org/pdfs/corporate/delinquency_the_untold_story.pdf.
Student financial aid—including grants and loans—plays a key role in supporting students’ access to and
success in college. Yet, despite periodic increases in grant funding, students and their families have increasingly
relied on borrowing to cover more of the costs of higher education. As the number of student borrowers has
increased and their cumulative indebtedness has grown, so too has concern about whether the resulting debt
levels are manageable and about the long-term impact of student loan debt on other life choices and
consumption patterns. Absent more complete data, policymakers have often focused on default rates, which are
an incomplete measure of the range of experiences of contemporary students, including those who may have
difficulties repaying their student loans. Default rates do not include the many borrowers who become
delinquent on their federal education loans, but manage to avoid default. These borrowers face some of the
same consequences as borrowers who default, but until now, the size and significance of this group has not been
recognized or been part of the policy discussion about default prevention and financial literacy in general.