Technical qualifications & financial capability

The second blog of today comes from Alison Pask, Managing Director (Financial Capability & Community Outreach) at The London Institute of Banking & Finance

LIBF logoSet out at the Spring Budget were the Government’s reforms to post-16 education, where, through £500m of additional funding, new technical qualifications were launched, to sit alongside A-levels.

The qualifications have been launched, not only to improve Britain’s standing, where it sits 16th out of the world’s 20 developed economies in terms of technical or vocational qualifications, but also to improve students’ employability and ensure they are “work-ready”.

As an organisation whose goal is to improve financial education for teenagers, we have worked with schools and colleges to raise financial capability, through our personal finance qualifications. We know from our work in this space that the ability to manage money is one of the most crucial life skills teenagers can learn and one that is valued highly by employers.

To support these reforms, the Government also announced it would be making available “maintenance loans” to students to fund their qualifications. Similar to student loans, finance will be made available and be paid back once a student enters the workplace, earning above a certain amount.

But this change, for us, presents a problem. As we have seen with the introduction of student loans, by offering students the opportunity to borrow money, we are assuming of them a level of financial understanding that many simply do not have. We are, essentially, forcing them to make long-term financial decisions they are not yet equipped to take.

Late last year, as part of our lobbying work, we released the latest version of our annual research project, the Young Persons’ Money Index. Carried out among 2,000 15-18 year olds in full-time education, the 2016 report found that the majority (58 per cent) do not receive any form of financial education. For those at the post-16 level it is even worse, where 65 per cent do not have any dedicated time put towards helping them understand money management and their own personal finances.

It can not come as a great surprise then that for many students when taking out a student loan, they largely do not understand the terms and conditions they have agreed to, nor, on a day-to-day basis, know how to plan and manage a sudden injection of cash into their bank accounts, when the loans are paid out. Without effective financial education in colleges, we run the risk of exacerbating this problem with the provision of maintenance loans to a whole new group of students whose financial capability has been overlooked.

Collectively, as stakeholders in the financial education space, we all have a responsibility to ensure students are given every possible chance to succeed, both practically and academically. We know from experience that students’ studies in the HE space are often negatively affected by worries over money and the day-to-day cost of living and we cannot allow this to repeat itself with technical education.

For more information on The London Institute of Banking & Finance’s financial capability programmes, please visit:

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