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Posts Tagged ‘financial education’

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 Β£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 Β£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 Finance 2012 changes – it’s time to tackle the ignorance

Student Finance 2012 changes – it's time to tackle the ignorance

Student Finance 2012 changes – it's time to tackle the ignorance

Update Note 13 June 2011: Now see the new Student Finance 2012 the facts guide (direct link

I had a good meeting yesterday with David Willetts (Minister for Universities and Skills) and Simon Hughes MP (Advocate for Access to Education). While I’m not the greatest fan of the 2012 changes, I do believe a chunk of the widespread fear is based on a lack of understanding, rather than the facts. Therefore, it’s crucial that we ensure people really do understand the good and the bad effects of the changes.

So, I’ve taken a decision to accept these changes are going to happen (though I will still lobby on the areas that aren’t fixed e.g. early repayment penalties) and leave the wrangling for others – while I get on with starting to explain how the new system works.

When we recently launched the All Party Parliamentary Group on Financial Education, amongst the other challenges I put to the 100+ MPs there, one was to ensure, "no students go to university under the new system, without understanding how the borrowing works" (watch the Financial ed. challenge to MPs video).

Yesterday’s meeting was to discuss options on exactly how to do that. Simon Hughes has been working on the wider picture of access for a while, and I’m pleased to say the Government are very receptive to the plans.

Major change needs major communication

The last time there was a sea-change in the way student finance worked was in 1998. Then two things happened – tuition fees were brought in and the loans changed from the old ‘mortgage style’ to the new ‘income contingent system’.

The media then concentrated on the contentious tuition fee issue as it was the better story – little was said about the change of loan repayments, which meant that rather than needing to repay the whole loan over 60 months once you hit a threshold, you simply repay 9% of everything you earn above Β£15,000 each year through the tax system – a much more gradual and less harsh system.

Yet now we’re back in the same boat. We have a host of changes and of course yet again, the focus is all on the rise of the cost of tuition fees and the other changes, some good and some bad, have primarily all been ignored (see my old Student loan argument is dangerous blog).

But, most people haven’t got a clue of either and there’s widespread myths and ignorance (e.g. see Will new student loans stop you getting a mortgage? blog) and while I’m at it let me clarify the answer to the most common question I get asked on this subject – it will ONLY affect those starting university in 2012 and beyond, if you are already a student by that time, you will continue on the current system (see the Student Finance guide for more).

We need to change the language

I’m in the middle of writing a new top 10 things everyone needs to know about the changes guide, so I’m not going to go overboard on explaining the new system here in a hastily written blog.

Yet, there is a big confusion between the size of the fees and loans and the actual cost of education. For example it is possible to get Β£9,000 tuition fees and yet have absolutely no cost because you never earn over the threshold to begin paying off your loan.

The whole system of student loans simply doesn’t fit into other lending or financial categories, it needs its own new language to deal with it to make sure it’s clearly understood.

What is needed is for students and their parents to understand the cost of the system and its impact – not just the level of fees – for that we need tools, effective communication and more. Only then can they truly decide whether it’s worth it.

At yesterday’s meeting I’m pleased to say there seemed to be a commitment to ensuring this will happen.

Related Past Blogs

>Universities must educate students over the new loans
>Student loans the seven deadly sins of early repayments
> Argument over student loans could kill the next generation of students

Is it time to teach uncertainty in schools?

Is it time to teach uncertainty in schools?

Is it time to teach uncertainty in schools?

Sometimes there just isn’t a right answer, or at least not without a crystal ball. This simple fact is one many people struggle to grasp. My focus is financial, but this impacts all elements of life including relationships, work and health. The Government is looking to try and boost our happiness, perhaps ensuring the understanding of uncertainty would contribute to that.

It seems to me that society focuses too much on right and wrong, solving problems and definitive’s. Teachers in schools, do you ever teach, ‘there’s no right answer’?

It’s a common problem in my game. I’m often stopped by people asking such questions (as happened yesterday, which prompted this blog).

"Will fixing my mortgage for five years be the cheapest deal?".
"Are house prices in my area going to rise?".
or "Should I sell my shares?" (even though I don’t cover investments).

When I explain that these questions rely on unpredictable factors that no one truly knows and all you can do is examine the risks – I’m often given a shirty look. They seem a little perturbed, as if I’m hiding from them a hidden truth I must know. I sometimes think they’d prefer to think I’m just not telling them, rather than that I just don’t know.

Would you borrow money for a new car if you couldn’t get a job without it?

So, perhaps it’s time we tackled this issue. Regular blog readers will know I’ve been campaigning to get financial education in schools for a long time.

As part of this, we have our free Teen Cash Class guide to help parents and kids get a grasp on financial realities. Within it there is a ‘good debt, bad debt’ test with a series of questions and I often talk about it when making speeches to adults – but there’s one element of the test that always stumps people.

After a few black and white examples of when you should or shouldn’t borrow – leading to a jovial attitude as everyone follows my request to shout out "good debt" or "bad debt" on cue – I throw the following in…

I work in a big city, but lost my job a few months ago. The only job I’ve been able to find is in the countryside – I’ve managed to find somewhere affordable to live – but my kids school is six miles in one direction and my work is seven miles in the other and there’s no public transport.

"I’ve never had a car, but I have checked and the cheapest one I can afford that’ll be reliable is Β£1,500. Yet I’ve no savings left and after being unemployed my credit score is poor, so I can only get it at 20% APR. That’ll push me right to the brink, but without it I can’t get the job."

At this point I reiterate, "If I get the car and I don’t pass my probation at work, it’s a nightmare. Yet if I don’t get the car, I can’t get the job."

When I ask if it’s good debt or bad debt, I’m usually met with a stony silence – gone are the easy cat calls of the answer. So, I ask everyone to put their hands up for either good debt or bad debt and the room is usually split down the middle.

Occasionally there are a few smart-alecs out there trying to find a way round this deliberately constructed, hypothetical question, leading me to reply, "the kids are too young to cycle and I’ve got a dodgy leg"

My answer is that it’s grey debt – without a crystal ball it’s impossible to answer. In fact, this is less of a question about risk and far more about learning to evaluate a situation. Do a risk-benefit analysis and think about the key decision making criteria.

What’s taught in schools?

For me this is a key lesson we all need to learn in life, so I think it’s important to ensure we’re all prepared to understand that there are circumstances when you can’t always get it right.

My own education was a long time ago, and I’m not sure if Dr. Allday’s class on Heisenberg’s Uncertainty Principle, where using us as guinea pigs to see if quantum mechanics was suitable as an option for A Level students, really counts. But I’d love to know from teachers where this type of grey answer thinking is taught in schools. I hope that with a more progressive curriculum and with PSHE these days there is more of it, but I just don’t know.

It’s important for everyone to understand that sometimes we get a bad outcome having made the right decision, and life can be tough on the back of it, yet we shouldn’t berate ourselves for it afterwards if there was no way of doing better.

I’ve met psychologists who tell me one common reason people are in therapy is because they’re looking for certainty where there can never be any – maybe we all need to learn is that sometimes it’s just not available.

I’d love your thoughts on this, as well as some other examples of similar uncertain financial decisions you’ve needed to make.