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Less Than 25% Of College Graduates Can Answer 4 SIMPLE Money Questions

Mac Slavo
April 18th, 2019
Comments (46)

Americans have become numb to financial intelligence. This is no more evident than a recent Sallie Mae survey, which indicated that college graduates can’t even answer simple questions about financial concepts, such as interest.

The statistics are not looking good for the United States, a nation deeply indebted, addicted to consumerism, and woefully ignorant about it all.  Not long ago, SHTFPlan reported that a mere 1 in 10 Americans is actually capable of getting an A on a basic financial security test.

A Mere 1 In 10 Americans Got An A On A Financial Security Test

And even college graduates, who are likely tens of thousands (if not more) dollars in debt because of school, learned little to nothing about handling their personal finances. The big red flag comes from consumer banking firm Sallie Mae. The firm released its new “Majoring in Money” study which asked hundreds of current and recently graduated college students up to age 29 about basic financial concepts. The results are worrisome.

Sallie Mae asked these individuals four questions related to credit and interest, and fewer than one in four got all four of these correct.

1. Interest accumulation: 
Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
a. More than $102
b. Exactly $102
c. Less than $102
d. Not sure

2. Effects of payment behavior on credit cost: 
Assuming the following individuals have the same credit card with the same interest rate and balance, which will pay the most in interest on their credit card purchases over time?
a. Joe, who makes the minimum payment on his credit card bill every month
b. Jane, who pays the balance on her credit card in full every month
c. Joyce, who sometimes pays the minimum, sometimes pays less than the minimum and missed one payment on her credit card bill
d. All of them will pay the same amount in interest over time
e. Not sure

3. Impact of repayment term on cost of credit: 
Imagine that there are two options when it comes to paying back a loan and both come with the same interest rate. Provided you have the needed funds, which option would you select to minimize your total costs over the life of the loan (i.e., all of your payments combined until the loan is completely paid off)?
a. Option 1 allows you to take 10 years to pay back the loan
b. Option 2 allows you to take 20 years to pay back the loan
c. Both options have the same out-of-pocket cost over the life of the loan
d. Not sure

4. Interest terminology: 
Which of the following best defines the term “interest capitalization”?
a. The type of interest charged on high-balance loans
b. The addition of unpaid interest to the principal balance of a loan
c. Interest that is charged when you postpone payments on your loan

The answers are 1: A, 2:C, 3:A, and 4:B

The fact that we have an entire generation, largely college educated, who cannot answer these questions does not bode well for our future as a society.  Not knowing the answers to these could end up costing people a lot of money down the road. According to Market Watch, 83% of college grads carry a credit card as revealed by Sallie Mae, but only about six in 10 say they pay the balance(s) in full and on time each month. Coupled with the fact that nearly seven in 10 college students take out student loans, graduating with an average of nearly $30,000 in debt, the decline in financial intelligence is evident.

There are ways to learn the basics of personal finance. Dave Ramsey’s Total Money Makeover book was of the most help to many people, and Ramsey is perhaps the most well-known personal finance guru out there.  He takes a strick “no debt” approach that has worked not only for himself, buy countless others. He also offers an easy to follow guide which he’s dubbed “the baby steps” that will get people on the path to financial freedom.

Other resources are those such as Robert Kiyosaki’s Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Both books are excellent resources that teach the very basics about money and personal finance that no one is learning about in their public school educations.

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Author: Mac Slavo
Date: April 18th, 2019
Website: www.SHTFplan.com

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  1. Abaddon says:

    Wow! Actually the results are not surprising, but how simple these questions were is surprising. But what is more important? Having a basic understanding of financial math or social justice concepts. The latter will provide for all of your student loan debt to be forgiven – LOL.

  2. Anonymous says:

    Not surprising considering 90% of the public are more concerned about Hollywood,Sports,Social Media,and their Cellphone,than anything else..

  3. K in ATL says:

    Proof read your articles.

  4. Which would you rather have:

    A. $10,000 ?

    B. A penny that doubles every day
    for 30 days ?

    C. A penny that doubles every day
    for 31 days ?


  5. alfie says:

    I’m not a numbers guy and I didn’t go to college, but I do know enough to keep your credit card bill payed down or payed off competely or better yet , don’t use the damn thing at all. On a side note, 25 yrs ago, my son got a loan from a local credit union while in the army in Germany for a car. Some months later, a young woman called to verfiy information on the loan, when she was done she asked a question that really floored me ( and she admited to me that she was a college graduate ), she asked me where in the U. S. was Germany located? Duhhh

  6. alfie says:

    I’m not a numbers guy and I didn’t go to college, but I do know enough to keep your credit card bill payed down or payed off competely or better yet , don’t use the damn thing at all. On a side note, 25 yrs ago, my son got a loan from a local credit union while in the army in Germany for a car. Some months later, a young woman called to verfiy information on the loan, when she was done she asked a question that really floored me ( and she admitted to me that she was a college graduate ), she asked me where in the U. S. was Germany located? Duhhh

    • Yohan Smythe says:

      LOL … I remember when it was reported the people did not know that New Mexico was a state..they thought it was a part of Mexico.

    • john stiner says:

      I have not had a credit card for about 15 years now.

      I have never needed one since the banks came out with debit mastercards. It is the same as a credit card, but without borrowing money.

      It used to be you had to have a credit card to get a hotel room or buy something off the internet or mail order, but those are not resolved with debit cards.

      • The Deplorable Renegade says:

        JS, a debit card is the only plastic I have and need. I do some occasional online shopping but I limit that as much as possible.

      • Kevin2 says:

        A Debit MasterCard comes out of your account. Have a dispute on line and its your money. Have a classic credit card and they back you up. I have had them do so and see to it that my account balance was credited. I get Flyer Miles and use it virtually exclusively on line only. Regardless I immediately pay off the transaction and therefore never hold a balance. It’s the only thing I use on line for payment.

        • rellik says:

          That is how I use my card also. I forbade my wife to ever use her Debit card, and I revoked mine, but we both have credit cards and they are paid off monthly. I don’t use miles so much these days as I avoid flying, but I use other perks they offer.
          As for the main post I knew #1 right away, but the rest I had to think about. I never carry a balance so I really have no idea what the interest rate is, I never miss a payment, and never get penalized.
          In fact my credit score is down graded from perfect because they don’t have a recent history of me paying for a loan or credit line.

          • Genius says:

            Some banks DO back you up if someone frauds your debit card. I have had it happen 2 times and the bank refunded the money. Maybe if you have the absolute shittiest bank in the world like BOA or Chase you might have an issue. Use paypal for online stuff, I have never had a problem with them.

            • rellik says:

              I don’t do Bank accounts, only local Credit unions where I can walk in and grab the top guy by the neck. Same services, insurances, and protections as your rip off banks, but cheaper and most likely they are your neighbors.
              I use Paypal, but one time when buying a 26.5 mm Czechoslovakian flare pistol, the seller and I had to get creative as Paypal will not work with anything related to “guns”.

  7. I have never really been all that good with numbers but I am glad I managed to get these 4 questions correct. Maybe I’m better than I thought

  8. john stiner says:

    They may not know anything about credit card debt, but they sure know a lot about social justice and white privilege.

  9. Wilson says:

    people who cannot answer these questions go to work for the US government General Accountability Office, the IRS, and the Pentagon.

  10. Anonymous says:

    So, it’s a cult.

    Unattractive to people who can do the math, or it debilitates the critical thinkers.

    “The statistics are not looking good for the United States…”

    Yet, independence is never seriously discussed.

    • Yahooie says:

      “Yet, independence is never seriously discussed.”

      Interesting. When I grew up in the 50s, it was commonplace to discuss it whether at the dinner table, in TV shows, or school/church. It was considered a vital topic to explain and have it understood.

  11. You are forgetting a major component of surveys. There’s no point or reward for wasting time filling them out. The stats are definitely skewed because no one gives a shit because its a survey. Sallie Mae probably sent out that survey as an email multiple times and if it was filled out it was because they were tired of getting the damn survey. I doubt half that filled it out actually read the answers. A quick ABBA on answers and done. The survey means nothing.

  12. The Deplorable Renegade says:

    Millenials are shit heads.

  13. Kevin2 says:

    Dumbing the population down from being knowledgeable in US and world history, civics and geography is relatively easy while simultaneously not interfering with their ability to earn a living. Messing with basic math not too damn far from 1 + 1 = 2 and having them function is scary. It dramatizes the reliance on technology displacing thinking and shows how humans were once, at least a tiny cog in the machine, have now become insignificant.

    • Genius says:

      Yet humans continue to breed themselves out of existence.

      • Genius says:

        Excuse me while I go revel in my enslavement 🙁

      • Kevin2 says:


        I’m not completely sure but I think the birth rates in the developed world have dropped significantly and are continuing to drop. The birth rates in the developing world is where the increase is. This is linked to immigration from the 3rd world into ours. One caveat to this are the first world “baby factories” of the multi generational welfare recipients.

        • Genius says:

          Ya I hear ya. Where the hell is Hitler when you need him dammit?

          • Kevin2 says:

            You don’t feed ants and then use insecticide. The problem is paying people to breed. I’m not heartless, things happen. You have a child or more, income is lost, ok we’ll help get you on your feet; no more kids. If you have an additional child we’re not aborting them, we’re taking them away from you and you’ll receive zero economic gain. Wait until the Northern Europeans with their extremely generous social programs especially for expectant mothers and a year or so post birth get a good dose of the professional breeders they’re importing.

  14. Anonymous says:

    2 is not c because missed payments, or less than the minimum payment, generates a penalty, not interest – so technically a and b are the same.

  15. Montana Guy says:

    Can you imagine how many Americans today can balance their checkbook?

  16. Kevin2 says:

    When currency was divorced from inherent value with the abandoning of Bretton Woods in August 1971 it was inevitable that individual economic irresponsibility would trail the creation of money on demand. We always heard, “money doesn’t grow on trees” but it does; you however don’t own the tree.

  17. aljamo says:

    I freaking hated math in lower school. Still do to this day. Today it’s called funny or twisted math. Our government excels in bogus hocus pocus math. Some call it finagling more for them and less for the peonic masses.

    • rellik says:

      Unless you got up to Algebra, all you dealt with was Arithmetic.
      I had a lot of problems switching from numbers to variables. like a,b,c, x, y, & z, you first get in Geometry and Algebra. Wait till you get to i,j,k!
      In my opinion it is all up to your instructor and how much time they have to spend with you and how hard you work at it. Once you “get it”, it is, incredibly simple. Hard part will become writing all those Greek letters.

      • Kevin2 says:


        I used elementary engineering with simple algebra which I bastardized with math in transposing that surprised “real” engineers when I employed it. My “world” was the dynamic not design. What is the pressure drop if we do this, how much fuel, what is the efficiency, that sort of thing. Power operations is dirty finger nail engineering and I was cut to be a dirty finger nail type of guy.

  18. Anonymous says:

    Yeah we’re fucked.
    Remember who’s going to be taking care of you when you’re old.
    Soylent Green. It’s made of you.

  19. Bert says:

    No, but the grads can answer this one:

    Who has more assets after ten years:

    (a) an unemployable unwed welfare mother of four children, or
    (b) a stupid legal citizen working taxpayer who has to work for minimum wage due to the fact that there are tens of millions of illegal aliens willing to work for minimum wage or less.