More than half of 17-year-olds are in debt or have previously taken out loans, a new report by MPs calling for greater education in personal finance has revealed.
The report by an all-party parliamentary group said students are dropping out of their courses because they cannot manage their finances. In a survey of more than 300 colleges, 84 per cent said some teenagers failed to complete their courses because of problems managing their money.
Duncan Hames, a Liberal Democrat member of the group, acknowledged that some students may be in debt because of a lack of financial support, but said hard times are causing students interviewed for the report to take an interest in personal finance.
"It was very clear that the financial circumstances of the families had caused them to learn a lot about the basics of money management themselves, because of the environment and the challenges that their families face," he said. "Students we spoke to in South London were having to get to grips with the harsh reality of budgeting."
Only 56 per cent of colleges currently offer personal finance education, however, with many saying that the slashing of entitlement funding - which pays for tutorial time, among other things - by nearly three-quarters makes it increasingly difficult for them to pay for it.
Even colleges with a well-established programme of financial education reached less than half of their students. City College Norwich, for example, said that 45 per cent of its 16,000 students receive some finance education. Principal Dick Palmer told MPs that the figure would have been 75 per cent if it were not for the reduction in tutorial time.
"The changes are having an effect on the availability of tutorial time for this kind of learning," Mr Hames said.
As it becomes increasingly difficult to carry out finance education in tutorials, colleges such as New College Swindon are signing students up for short, stand-alone qualifications in personal finance that attract their own funding. Principal Graham Taylor said he is "winning back" students this way.
But as funding for 16- to 18-year-olds changes from payment per qualification to a single allocation per student, this option will become less viable.
The report recommends integrating financial education into students' main programme of study instead. Mr Palmer said it could be extended beyond the obvious subjects - maths and business studies - to sports science, technology and engineering.
"A lot of the more vocational courses are preparing students for working life in fields where they will often be self-employed or freelance or effectively running their own micro-businesses," Mr Hames said. Just as some colleges are integrating entrepreneurial lessons into subjects such as hairdressing or design, they can also accommodate finance lessons, he added.
So far, however, teachers have had little support in introducing financial education to students. Only 21 per cent of survey respondents said they had received any training on integrating financial education into the curriculum.
"Financial education is an essential life skill," said Nic Dakin, a Labour member of the parliamentary group and the former principal of John Leggott College in Scunthorpe. "There is an argument to say that finance education should be compulsory throughout the curriculum and each stage of progression."
But with tutorial time falling and few teachers supported in integrating financial education, that day looks a long way off.
Photo credit: Alamy
Original headline: Money mishaps drive teens to drop out of college