You’ve Got Debt!

Recently, the G20 Summit was held in Cannes, France to discuss world financial markets and a system of monetary reforms for some troubled European economies. This year, the discussions focused heavily on Greece, whose citizens are rebelling against austerity measures recommended by the International Monetary Fund (IMF) in order to prevent the Greek economy – and quite possibly the world economy – from collapse. While the financial discussions may be a snorefest for many students, it’s vital for them at all grade levels to understand the concept of financial debt and its consequences.

It’s difficult for students (and sadly, too many adults) to recognize how intertwined the world economies are. The collapse of a single country’s economy can send a ripple effect felt around the world. If the euro were to collapse, for example, stock markets around the world would likely plummet (affecting millions of investors), unemployment would soar, and capital would stop flowing between world banks, which directly affects consumers in their efforts to obtain loans, mortgages, college financial aid, and other types of financing. If the euro collapses because of the crippling sovereign debt incurred by Greece, Spain, Portugal, Italy, Ireland, and some other counties, the fallout will impact all of us, regardless of where you live.

Financial literacy is a subject that has long been ignored in American classrooms. Students in high school should definitely be learning about sovereign debt and the world’s financial crisis in social studies or other classes. Students at all grade levels need to learn what consumer debt is, and the consequences of borrowing money to fund purchases. According to the credit bureau Exquifax, consumer debt in America reached $11.2 trillion in September 2011 – which averages out to over $7,000 in debt for every man, woman, and child in the U.S. Lessons about debt for younger students can initially begin by discussing the concept of borrowing items such as toys, and then progressing to consumables such as paper or markers – items that once used up, cannot be returned. Middle and upper elementary students understand the concept of borrowing money, and can discuss loan repayment options and how long repayments would last for larger loans. Middle school students and above can learn about credit cards, interest rates, and budgets, as well as how consumer debt affects not just individuals, but nations as well.

This week I’ve selected three resources on debt for all age ranges. Throughout the week, we’ll also be featuring new lesson plans and other resources daily on our Facebook and Twitter pages, so be sure to check those pages regularly.

Debt Education Lesson Plans
Subjects: Economics, Math
Grade: K-4
This unit for young learners introduces the concept of value – that everything has a value, and that there is a cost to everything, whether it is time, money, or effort. Students will also learn that some things are more important than others, and should be prioritized. In addition, students learn about pocket money and the types of things that people spend money on. This unit was prepared by IVA UK, a leading authority on debt and finance in the United Kingdom. IVA UK aims to help improve the understanding of debt and debt solutions in Britain by providing advice, education materials, and a live forum.

It’s All Greek to Me: Understanding the Debt Crisis in Europe
Subjects: Economics, Math, US History, English Language Arts
Grade: 6-12
Why is Greece experiencing a major financial crisis? How are its fiscal woes connected to the rest of the European Union, Europe and global financial markets? In this lesson, students complete a List/Group/Label activity to familiarize themselves with key terms, then research a single term further in order to teach their classmates about it. They then create a math or financial problem that demonstrates how the term “works.” They not only become conversant with the European crisis but also develop financial literacy by putting key economic terms in context. This lesson was produced by The New York Times Learning Network blog, which offers online current and special events news and lesson plans for grades 3-12.