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Do your kids go to an academy school? I’ve a job for you

Do your kids go to an academy school? I've a job for you

Do your kids go to an academy school? I've a job for you

Yesterday, it was announced that financial education is to become part of the compulsory national curriculum within citizenship and maths. This is fantastic news, but it only binds maintained schools, which are 50% of secondary schools. Academy schools are free to opt out.

While many academies do still follow the national curriculum, it is very important parents ensure headteachers are aware they want financial education to happen (either via the curriculum route or perhaps even more than that). This is especially crucial at a time of curriculum change, such as we’re having now, so they can get it going ASAP.

You can find more detail about what to ask for in the Financial education to be added to the the national curriculum MSE News story. You could even just link to that in an email, and ask if it’ll be happening at your child’s school.

This one is over to you. Let me know, via the details below, what help we can give for you doing this. (Teaching resources are available via Pfeg). Of course wonderfully, some academy schools are already teaching financial ed – bravo to those that are.

Not even a mention, Mr Gove? Plus breaking the quiet carriage rules due to Financial Education tip off

Not even a mention, Mr Gove? Plus breaking the quiet carriage rules due to Financial Education tip off

Not even a mention, Mr Gove? Plus breaking the quiet carriage rules due to financial education tip off

I still can’t quite believe it. Financial education is going to be part of the national curriculum (see the MSE News story). I found out sitting on a London to Manchester train at 9.58am yesterday – 90 minutes before it happened.

I must admit I broke the quiet carriage rules with an involuntary "yessss", to receive a suitably stern look from the Spanish lady sitting opposite me.

The Department for Education gave me a call to say there’d be an announcement in the House at 11.30am (partly as it was my e-petition last year that forced the debate). 

I kept calm and asked for a statement to see what it really was. I was expecting a damp squib mention. Yet what I saw was getting on for a huge chunk of what we asked for in the APPG report (which, I’m very proud that MSE funded – not what was said, but paying for the facilities). It was at this point I yessssed.

Financial education is to be a core part of citizenship, which crucially is a compulsory part of the national curriculum – therefore every maintained school must teach it. Exactly what we’ve wanted.

Not even a mention, Mr Gove?

By the time I arrived at Radio 5 Live before my regular Thursday Consumer Panel slot, the Education Secretary Michael Gove was making his announcement in the Commons – it was all about the much-vaunted change of mind over GCSE scrapping. 

Sadly he didn’t even mention financial education. While the fact it’s happening at all is wonderful and the most important thing; it’s slightly frustrating for those of us who’ve been campaigning for so long that the change came without even a Hansard footnote. (Strange really – it’s a no-brainer, a hugely popular change – I’m surprised he didn’t lead with it and take political capital from it.)

On the back of the announcement, sadly the media coverage has been less than I’d hoped (barring me pushing to get it out) – nothing on any main TV news bulletin, a shame for the 118,000 who signed the petition and made this happen.

So we made a quick call back to the Department to check it hadn’t changed its decision, then press-released it – to try to start the news flow.  

This will change maths too

It was while on air at Radio 5 that I found out we’d also made a dent in Maths too – which had been part of our two-pronged focus.

Now, for the first time, the term "financial mathematics" appears in key stages 3 and 4 of the maths curriculum. 

This means there is genuine recognition of the need for people to be able to calculate APRs and percentages and understand them (exactly what we pushed Education Minister Liz Truss for last week – thank you for listening).

I think that will not only be a boon for financial education, but also for maths itself – helping out with basic numerical problems. While theoretical maths puts many off the subject, talk to them about the cash in their pockets and they get it. So taught well, I hope this will make maths more appealing.

Of course this is still at proposal stage, and we’ll be submitting to that, but we’re pretty confident that now it’s in the proposal, it’ll be tough to get it out.

An important PS
. In my blog a few weeks ago on What’s happening to my £10m donation? I wrote that I wanted a chunk of the money to go towards helping financial education. This announcement has changed the game somewhat, so we need to act quicker. 

As such, I’m going to donate £100,000 of it to the charity Pfeg. I haven’t told the chief exec of the charity yet, as I know she’ll read this blog and the naughty boy in me quite likes the idea of her finding out, as she reads a PS.

Student loans will be interest free for many 2012 starters

Student loans will be interest free for many 2012 starters

Student loans will be interest free for many 2012 starters

On principle I hate the fact 2012 uni starters aren’t just going to pay for their education, but for financing it too. For the first time students will be charged ‘real’ interest rates.  This may seem a contradictory start to a blog promising interest free loans, but that’s because, yet again with student finance, principle and practice diverge.

On Monday university application figures are released. Almost certainly they’ll have dropped (though not all will be due to fee fear). One of parents’ key concerns is the interest cost. Yet in reality, a sizeable chunk of graduates in lower-earning professions will not only find their interest set near the rate of inflation, but won’t ever actually need to repay that interest.

Unless you know the system, to make this easier to understand, you’ll find it helps if you first read my detailed Student Loans 2012 myth busting guide. But even if you don’t, you should still get a rough idea from what’s below.

Student loan interest rates

For current graduates the maximum interest rate possible is the RPI measure of inflation, though the rate for most students is much lower than that (see the Should I repay my student loan? guide for details of who pays what).

That means there’s no ‘real’ cost to these loans. If you borrow an amount of cash that’d buy "a shopping trolley’s worth of goods", you repay whatever it costs to buy the same "shopping trolley’s worth of goods" in the future. In other words, borrowing the cash doesn’t alter your spending power.

The 2012 system works rather differently…

  • While studying: Interest = RPI inflation + 3% until the April after graduation when it changes to…
  • Graduates earning under £21,000: Interest = RPI inflation.
  • Graduates earning £21,000 – £41,000: Interest = Rises from RPI to RPI + 3%
  • Graduates earning £41,000+: Interest = RPI + 3%.

So the rate is certainly much higher – and as I said earlier – personally I object to ‘real’ rates on principle, yet…

The reality is some students won’t pay it

The amount 2012 starters will repay is dependent primarily on their graduate earnings – for 30 years you pay 9% of everything earned above a threshold which will be £21,000 at first, but will rise with average earnings after. That is far more important for many than the amount they originally borrow.

What that means is many graduates won’t repay what they owe in full before the debt wipes out after 30 years and, at a lower level of earnings, many won’t ever repay what they originally borrowed. I’ve plugged these numbers into where you can work out how much you’ll repay (you can see the mathematical assumptions used to calculate this there too).

Starting salary (then annually rises by RPI =3%)

3 years worth of fees and maintenance loans

Total repayment
(at today’s prices)

Real interest cost (ie, in today’s prices)

























As you can see in this table, the only people who pay interest are those on starting salaries above £30,000. Though take the actual numbers with a pinch of salt as the assumptions make a big difference – it’s more the general point that the interest rate only actually impacts on the repayments of some.

Also remember the table assumes people are working for the whole 30 years before the debt wipes – many (especially women) will take some time off during that period, which reduces repayments further.

Though of course for higher earners, it shows the interest can be huge too.

If you’re wondering why those at £50,000 pay less than at £40,000, it’s simply because as they earn more, they repay more quickly, so less interest accrues.

Now of course that doesn’t make it more favourable than the current system – where many more repay all that’s borrowed, because of course the price has shifted higher – but it does mean the fear of the interest at least does need to be mitigated for many students.

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The financial education debate – in full

The financial education debate – in full

The financial education debate – in full

Below is a cut and paste of the Hansard transcript of last week’s debate (source: Parliament). For those wanting a quick summary see my financial education debate – who said what blog, as the transcript below came from five hours of debate.

You can also watch a video of the session.

Read the full transcript

Financial education in the House of Commons – who said what

Financial education in the House of Commons – who said what

Financial education in the House of Commons – who said what

Proof 100,000 people can make a difference. Yesterday I spent five hours in the gallery of the House of Commons on the back of the e-petition many of you signed about putting financial education on the national curriculum. Time and time again the MPs referred to the signatures and the copious letters MoneySavers had written and it seemed to have impressed.

The key outcome was that the Education Minister Nick Gibb sat through the debate, listened and made the important commitment that the APPG Financial Education Report would be considered as part of the National Curriculum review. While this doesn’t guarantee anything it’s a big step forward in treating it seriously. 

I must admit to being impressed at the quality of the debate by the small but passionate group of MPs who were there for the debate (the problem with there only being a one line whip and a by-election). In many ways this is when parliament impresses, both sides of the house discussing together in a non-adversarial way and making many key points.

I hope to be able to get the text of the debate from Hansard and publish that here, but I thought I’d put the key points here and some of the most important and funniest quotes I managed to scribble down (no laptops allowed so it wasn’t easy).

One shocking stat that came up during the enquiry was that misunderstanding of basic concepts of APR are so rife, some students were even boasting about who had the highest APR loans – thinking that this made them better!

It’s worth noting there were a huge number of (well deserved) plaudits for Justin Tomlinson MP who chairs the all party parliamentary group and proposed the motion, and Andrew Percy MP who chaired the report writing committee.

Please forgive the scrappy nature of these notes

Justin Tomlinson MP – proposing the motion

Justin went through the history of All Party Parliamentary Group, the involvement of MSE and PFEG.

"I asked a question on this in Parliament and was approached by the Personal Finance Education Group who said, we’ve thirty more questions you can ask if you like.  I put those forward and was then approached by Martin Lewis who said, ‘you’ve asked some really pertinent questions can we speak about this.’  

"After that the three of us got together and worked out we need to do something more. And with the subtle persuasion of MoneySavingExpert’s six million email recipients we managed to get over 200 MPs on board and form the new All Party Parliamentary Group"

He then outlined the main report proposals, which due to my lack of note taking speed I’m reproducing here from the report’s summary…

• Personal finance education should be a compulsory part of every school’s curriculum.

• Resources produced by outside organisations and visits of providers to schools should be available
and accessible if considered helpful by teachers and quality marked by a trusted body.

• Primary teachers should build upon their teaching of basic money and mathematics skills from
an early age across the curriculum in preparation for secondary education.

• We welcome the Government’s current proposal to increase the minimum requirement of
mathematics GCSE to grade B for primary school teachers and encourage that it should be

• It would be advantageous to use the opportunity of training days to refresh the mathematics skills
of primary school teachers, although we respect the right of the schools to provide training in a
way they feel is appropriate.

• Personal finance education should be taught cross-curricular in mathematics and PSHE secondary education
with the financial numeracy aspect of personal finance education situated in mathematics and
subjective aspects taught in PSHE education. It should be packaged in an obvious and clear way
to young people.

• Personal finance elements of maths should be clearly highlighted to emphasise how they relate
to real life decisions. If viable, the Government should implement the Smith Report and Maths
Review’s recommendation for the twin GCSEs: ‘Application of Mathematics’ and ‘Methods in
Mathematics’ to improve financial numeracy and ensure it is examined.

• PSHE education should be clearly defined into four separate strands, one of which should be
personal finance. Through reworking the PSHE education syllabus, more focused training and
assessment can be developed.

• A school coordinator, or ‘Champion’, should be appointed in each school, preferably from the
Senior Leadership Team. This ‘Champion’ should be given responsibility for ensuring that outcomes
are achieved across maths and PSHE education, ensuring there is a clear link between the
elements of personal finance taught in mathematics and PSHE education and for sourcing

The stat that really stood out on this was that "91% of people in financial difficulty think had they been better educated, they would’ve had less issues."

Jenny Chapman MP – seconding the motion

"Even more people are coming to surgeries with financial problems than ever before."

"We must think about the teacher training needed to get this to work, many teachers say they lack the confidence in this subject."

"It should be examined because it gives a sharper focus.  As one head teacher said in giving evidence ‘Unless you examine it, it won’t happen.’"

Nick Gibb MP – Education Minister responding

"Thank you for the balanced and passionate APPG report and the powerful advocacy from Justin, Andrew and Martin Lewis. The government is involved in two reviews; the National Curriculum and PSHE. The APPG report gives good insights and recommendations and we will look at it as part of the National Curriculum Review.  It is an important report – grounded in knowledge and data. There is huge enthusiasm for this. We will give careful consideration to it and all its recommendations."

"Young people are growing up in a materialistic world where they are not truly prepared." 

He then was especially impressed with the example calculations in the report that were real mathematics – this is a big part of government policy, the aim to improve numeracy skills. 

There were many interventions by MPs explaining that they thought the introduction of financial numeracy in maths would actually benefit maths itself, as with it being more tangible a subject it should retain kids’ interest better.

The outstanding quote for me – Yvonne Fovargue MP

Perhaps the one quote that stood out for me most, was from the always worth listening to Yvonne Fovargue MP. She ran a Citizens Advice bureau for ten years and when it comes to debt and money issues, she really knows what she’s talking about.

"When I ran a financial education project at my bureau, one of the side effects was an rapid increase in the number of parents who came seeking debt help. It seemed that the children were coming home and discussing the subject and it helped the parents realise there’s a problem. So if we do this we need to ensure there are enough debt help resources to make this work."

In itself this proves that financial education works, not just for the future but has an immediate beneficial impact on families too. It’s a great way to get the information out there. This echoes my own experiences of teaching the teen cash class in schools – where the kids went home and could save their parents money and in one case even took over the family budget.

Andrew Percy MP – Chair of the APPG report

A hilarious blockbuster opening from Andrew: "I’d promised the minister that unless he took the report seriously I would douse myself with petrol and set myself alight. Thankfully he’s here so that’s not needed. This is especially important because considering the current prices I couldn’t afford the petrol."

Andrew then explained that he was useless with money, had been in debt during his prior career as a teacher (he’s part of the new intake of MPs) and was still paying it off, and had only just got on the housing ladder. 

"I’m extremely proud of having been in the top set in maths in my inner city comprehensive and managed to get a grade C in maths GCSE, but I am still incapable of working out interest and APR."

He then explained that he thought this was perhaps the most important thing he’d contributed to since coming to Parliament. In a witty exchange he explained how he and Justin Tomlinson MP were the perfect pair to be doing this, as Justin (who he also shares a flat with when at Parliament) is extremely financially numerate (many good natured cat calls of ‘tight’), whereas he simply doesn’t understand how personal finance works.

He then made an eloquent case for how it’s important that we don’t assume even clever people should be able to understand finance without education before setting out the mechanics of how the APPG’s recommendations will work. His most important point was that this should be "teacher led", but should work within the current curriculum within maths and PSHE.

Many MPs on both sides mentioned their support for a double GCSE maths, (similar to there being English Literature and English Language) one in applied maths where financial numeracy would fit in and one in more theoretical maths. He also discussed the partial banning of calculators in primary schools to help develop better mental arithmetic.

He believes that the plans would not only help financial education but that it should encourage better basic numeracy. Plus, it would also help views of PSHE as if that’s there to support maths, it gives it more credibility. Then some stats:

"At 17 half of the people surveyed had already been in debt. 70% of 18 to 24 year olds were in debt. 90% of parents never discussed with their teens how to spend. The lack of financial education is costing £250m a year in bank charges alone.

The best of the rest

At this point I need to apologise to the rest of the MPs. With no short hand and no laptop my RSI meant two hours worth of notes were enough for me. So here’s some of the other contributions to the best of my recollection.

The shadow education minister Kevin Brennan MP strongly supported the concept – though questioned how it would be possible to make it compulsory considering the Government devolving responsibility to individual schools through academy and free school schemes.

Congleton MP Fiona Bruce has long been a supporter of financial education and spoke about it a year ago. She explained how it was being done in 20 other countries even including Zambia and how important it was that the UK didn’t fall behind.

Big political beast John Redwood MP made an intervention at one point just to say something like: "I want to congratulate my colleagues on this debate. I have had emails from three constituents urging me to attend and I want to express my support for this important issue."  I think that’s proof that MoneySavers emails to MPs had the right effect.

Andrew Bingham MP made a detailed speech. He was passionate on the subject of life skills having even once authored a free e-book to try and guide students when they stated uni. The most popular bit of it was the budget planner (see MSE’s free budget planner here).

While he accepted financial education wasn’t a cure, he said it should enable people to assess if something is a good deal for them and what the total cost is. "Education needs to move forward to protect us in our ever more dense financial jungle."

Eric Ollerenshaw MP was another former teacher supporting the concept (and another one who admitted he wasn’t much cop with cash). "I can’t remember ever being taught anything about financial education at school. I can’t remember anyone teaching financial education in my 27 years as a teacher. It needs to be included within teacher training."

Mark Garnier MP – a thorough speech from a former investment banker and member of Treasury Select Committee and the APPG enquiry committee. His main focus was how Financial Education could solve the problem of irresponsible lending to irresponsible borrowers. As someone who works on financial regulation, his view is education is a better and cheaper solution helping people make more informed choices.

Then Damian Hinds MP who was perhaps the only speaker who had any objections – though again supporting the concept in general. His view was that it wouldn’t work being taught as PSHE as kids don’t take it seriously and while it shouldn’t be on the curriculum he strongly supports it as part of maths – but big picture skills rather than specifics.

He had two main worries, the first that if the subject goes too much into products, by the time the kids are old most of that info will be out of date. He gave examples of endowment mortgages and cheques as things that are now no longer relevant. The second, the fact that he worries that talking too much about debt makes it ubiquitous and may actually encourage people more than prevent.

Andrew Percy intervened to explain that while big picture skills are there, teaching about how current issues work is a great way to learn about the future.

Duncan Hames MP spoke about Further Education colleges and the provision there. He heads up the APPG’s Further Education unit and they are taking evidence for a separate report on the provision there. He discussed how having it in schools would help the provision in colleges. Yet the problem in colleges is that just having it isn’t enough – the broad breadth of the curriculum there makes it a real challenge to get the provision where it works.

Oliver Heald MP spoke about the need for pension education too, though thankfully only for secondary schools. He is a member of the work and pensions select committee and talked about the need to educate people to be able to make choices when auto-enrolment comes and how financial education could help play a crucial role in that.

Simon Hughes MP who is also the higher education tsar talked about the important not just of educating for the medium and long term with debt, gas and electricity type issues, but of the instant need for short term info on apprenticeships, student finance and the immediate options for those aged 16 and above.

I do hope I haven’t missed anyone out  (I’m pretty sure I have – so I’m really sorry) or misrepresented anyone. Hopefully when we publish the full Hansard transcript that’ll make up for it. I’d like to thank the MPs for listening and taking seriously the views of the 100,000 people who signed the petition. Fingers crossed this is the start of actually getting this in schools.

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