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- Black students are far less likely to have access to high school personal finance classes.
- It’s important for Black teens to learn about the challenges they’ll face — and how to face them.
- Scholarships, books and podcasts, and financial planners can all help bridge the gap.
High school personal finance courses can be hugely beneficial for young people who are preparing to take out student loans, secure their own housing, interview for new jobs, and build their credit. But high schools with a majority of Black students are less likely to have a guaranteed personal finance course.
That’s according to a report from Next Gen Personal Finance. Only 23 states require students to take a semester-long personal finance course, and of those, only eight programs are fully implemented. Schools with more than 75% Black or Hispanic students are only half as likely to offer personal finance courses.
Black teens need to understand how discrimination has affected the finances of Black families for generations. Now that many schools have rolled back their Black history curriculum, this kind of teaching falls increasingly to Black parents.
Black parents often talk to their kids about discrimination in general, but not as much about financial discrimination, says Tiffany Aliche, author and personal finance educator. “Every Black child has heard, ‘You’re going to have to work twice as hard just to get half as much,'” she says, but often the conversation stops there.
The subject of Black economics is big, but there are four basic concepts that are especially relevant for teenagers.
1. The student debt gap
Black borrowers are disproportionately burdened by student loan debt. Four years after graduating from college, Black borrowers have nearly double the student loan debt of their white counterparts: $52,726 on average compared to $28,006, according to Brookings. And 40% of Black borrowers experienced difficulty making federal loan payments within one year after graduation, according to The Institute for College Access & Success.
Higher education has long been touted as a ticket to the middle class, but the racial wealth gap persists: In 2019, the median white household held 7.8 times the wealth of the typical Black household, according to Brookings.
Student debt can be daunting, but there are scholarships out there for Black students. The NPR podcast Code Switch explains how Pell Grants have helped low-income students access higher education for 50 years. President Biden has continued to issue student loan forgiveness, and some borrowers have qualified for assistance. There’s also a growing movement in favor of full student debt cancellation as a meaningful step toward closing the racial wealth gap.
2. Housing discrimination
Securing a rental apartment can be surprisingly difficult. In many markets, property managers are less likely to respond to prospective Black and Latino tenants when they inquire about open rental listings, according to the National Bureau of Economic Research. And renters of color typically submit more applications, pay more in application fees, and pay higher security deposits than their white counterparts, according to a report from Zillow. The Fair Housing Act of 1968 outlaws these practices, but they are notoriously difficult to prevent.
Renters should know that housing discrimination gets more complicated with homeownership, which is traditionally one of the most effective ways to create generational wealth. Homeownership has been elusive for Black families because of redlining, a historical practice in which lenders denied mortgages and other financial services to Black families.
Housing is typically a person’s largest monthly expense, and first-time renters especially need to learn how to manage their spending. Aliche’s new workbook, Made Whole, has worksheets, checklists, and suggestions to help young people create a realistic budget.
3. The racial pay gap
The average Black and Latino household earns about half as much as the average white household, and this inequality has worsened in recent decades, according to the Federal Reserve. Employment discrimination is prohibited by the Civil Rights Act of 1964, and hair-based discrimination is now prohibited in some states by the recent CROWN Act, but the pay gap has proved difficult to close.
The Brown Ambition podcast covers many career-related topics like job hunting, salary negotiations, and professional empowerment, and concepts that affect young adults outside of the workplace, like the importance of saving early to take advantage of compound interest.
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4. Credit discrimination
Redlining is a well-known form of credit discrimination, but the issue goes beyond mortgages. Many Black applicants are denied credit cards based on race. Some are steered toward less favorable terms for credit cards, car loans, or other lines of credit, or they are offered a higher interest rate even when they qualify for a lower one. These practices are prohibited by the Equal Credit Opportunity Act of 1974.
Accumulating excessive credit card debt is an easy pitfall for teenagers who have never had access to that much capital before, but establishing good credit will help a person throughout their life.
Choosing a credit card can be overwhelming without some assistance. “Teens can meet with financial advisors too,” says Aliche. The Association of African American Financial Advisors can help young people connect with one, and parents can model this at home. As a young girl, Aliche sat in on meetings with her father’s advisor, who came to their home and reviewed their finances at the dinner table.
It’s important for teenagers to understand basic concepts rather than get bogged down in nuance, says Aliche. And, they need to feel comfortable. Parents can create “a safe space to make financial choices, ask financial questions, and make financial mistakes,” she says.
“Help is available,” says Aliche. “You’re not supposed to do it alone.”