Teaching Personal Finance to Undergraduate Students:

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1 Teaching Personal Finance to Undergraduate Students: Online and U-Pace Formats Sahar Milani Department of Economics University of Wisconsin - Milwaukee smilani@uwm.edu November 14th, 2014 Sahar Milani Personal Finance 1 / 11

2 Introduction The Economics of Personal Finance (Econ 110) 1-credit, 7-week, online and in-person undergraduate course. Offered by the economics department at the University of Wisconsin - Milwaukee (since 2007). Designed to develop successful financial skills through activity based assignments that utilize students individual financial goals and circumstances. Objectives: Outline the goals of this course and its importance in promoting financial literacy. Describe the educational pedagogy behind the conversion of this course to a self-paced (U-Pace) format. Sahar Milani Personal Finance 2 / 11

3 The Importance of Financial Literacy Total student debt in the U.S. nearly tripled from $364 billion in 2004 to $966 billion in 2012 (Brown et al., 2014). Student debt surpassed credit cards to become the second largest form of household debt after mortgages in 2010 (Brown et al., 2014). Lack of financial education contributes to an effective delinquency rate of 21% of all student loans in 2012 (Vermilyea, 2013). Lusardi and Mitchell (2014) find that in the U.S., only 30 percent of survey respondents can correctly answer questions about compound interest, inflation, and risk. Sahar Milani Personal Finance 3 / 11

4 Class Specifics Weekly modules on each of the following topics: Tracking spending and setting financial goals Budgeting and money management Interest rate calculations Credit cards Student and personal loan management Insurance Basic investing Activity based assignments Class discussion boards Quiz in week 6 Conducted entirely through online platform D2L. Sahar Milani Personal Finance 4 / 11

5 Effectiveness Pre- and post-course survey that gauges students knowledge of financial literacy prior to taking the course and after taking the course. Before beginning the course, 28% of students in the Fall 2012 and Fall 2013 semesters indicated that they had student loans and had a general idea about what their payments would be when they graduated. After completing the course, this statistic increased to 50%. Percentage of students who indicated that they had no idea about the payments of their student loans dropped from 37% to 17% after completing the class. Number of students who obtained and understood their credit report increased from 38% to 78%. Sahar Milani Personal Finance 5 / 11

6 Enrollment Levels Figure 1: Total enrollment from 2010 to 2014 Total Enrollment Fall 2010 Spring 2011 Fall 2011 Spring 2012 Fall 2012 Semester Spring 2013 Fall 2013 Spring 2014 Fall 2014 Sahar Milani Personal Finance 6 / 11

7 Enrollment Levels Table 1: Enrollment levels by student type Semester Total Freshman Sophomore Junior Senior Special Master Fall Spring Fall Spring Fall Spring Fall Spring Fall Sahar Milani Personal Finance 7 / 11

8 Student Background Required for recipients of the Lawton Scholars Award Available to minority Wisconsin residents who already exhibit strong academic performance. Recommended by Access to Success Initiative Courses (AOC) advisors to students who are admitted to UWM through the Student Support Services Program (SSS) Students who come from low-income families, are first-generation college students, or have documented disabilities. Course content attracts a diverse student population. Sahar Milani Personal Finance 8 / 11

9 Self-Paced Structure Basic idea: Optimum learning takes place when a student works at his or her own pace, is actively involved in specific tasks, and experiences success in learning (Morrison et al., 2011). Units are organized into small discrete steps. Mastery of each step is verified before student can proceed to the next step. If the student fails to master the learning objectives in a given unit, the student can ask the instructor for feedback before reattempting the assessment. Sahar Milani Personal Finance 9 / 11

10 Self-Paced Structure U-Pace is an award winning technology-enabled instructional approach developed at UWM for introductory psychology courses (Reddy et al, 2012). Econ 110 can easily be converted into a U-Pace format because it is already structured into modules. Well suited for a self-paced format because students come from very different financial literacy backgrounds. Some modifications and challenges: Amplified Assistance to provide positive and tailored feedback to each student. Alternatives to discussion boards. Modification of assignments to reflect individual students. Sahar Milani Personal Finance 10 / 11

11 Conclusion The Economics of Personal Finance (Econ 110) is important for promoting financial literacy. The conversion of the course to a U-Pace format will allow: Greater flexibility for students in managing the workload of multiple classes. Can provide a specialized learning experience for students who differ with respect to socioeconomic status, race, ethnicity, academic preparation, or learning styles. Sahar Milani Personal Finance 11 / 11