As a sociology professor, I lecture not only on K-pop, but also about race, immigration, stratification and inequality. Personal finance is not a typical subject matter for a college course, but maybe it should be. After the 2008 financial crisis in the US, I talked about how more houses were “underwater” when I realized that college students did not understand the structure of mortgages. Since then, I’ve given an entire lecture on mortgages by explaining interest rates, credit scores, amortization schedules, and how little borrowers pay toward the principal during the first half of the life of a mortgage. It continues to be one of my most popular lectures. It also reminds me that young adults are desperate to learn more about personal finance and that, as a society, we fail to teach youth these subjects as they move towards adulthood. Young adults may also feel pessimistic about their financial futures, which is even more reason to teach them the basics of personal finance.

I just gave my “mortgage lecture” last week, and my students were so engaged that they began asking me other questions related to personal finance. One student even asked if she could attend my office hours to talk about her finances. I told her that I did not offer financial advice (!), but would be happy to explain some concepts. Another student said that he and his generation could not think about plans for marriage or child-rearing unless their finances were in order, and that goal seemed out of reach.

In a 2025 Teachers Insurance and Annuity Association of America survey, US adults correctly answered about 49 percent of its financial literacy index questions. Questions covered topics on borrowing, saving, earnings, investing and comprehension of risk. This percentage has been stable from 2017 to 2025. Moreover, Black and Hispanic Americans showed lower rates of financial literacy than Asian and White Americans. Notably, among different cohorts, Generation Z (born 1996-2003) exhibited the lowest rates of financial literacy.

In the US, the median price for a single-family home is about $410,000. The typical first-time buyer might put a 10 percent down payment and borrow 90 percent of the house's value, or about $369,000 in this example. Given that our median interest rate for a 30-year fixed-rate mortgage is 6.4 percent, the buyer would pay $2,308 per month. What was shocking to my students was that by the end of the 30-year period, the buyer would have paid $830,922 total and $461,922 in interest. If you have a mortgage and pay attention to such things, you would know that most of the payments at the beginning of the mortgage go towards the interest rather than the principal. With a 30-year mortgage, you would have only paid off half of the loan at Month 255 (after 21 years). Somehow, this sounds more than 6.4 percent per year.

They learned that because in the US, before our 2008 financial crisis, many people, especially minorities and poor people, were offered adjustable interest rate mortgages. This artificially kept their payments low, at first. After interest rates adjusted upward and with falling house prices, some homeowners became underwater on their loans — in other words, they owed more than their house was worth.

There is no evidence that young people in South Korea are more knowledgeable about personal finances than their American counterparts. South Korea’s Ministry of Economy and Finance conducted a survey on financial literacy among children. This is not directly comparable to the US survey, but the results were concerning for two reasons. First, it showed a decline in financial literacy from 2022 to 2024. Moreover, there was no evidence that older children are more knowledgeable than younger ones. Actually, in 2024, the highest scores were sixth graders (compared to eighth graders and 10th graders).

Certainly some young people in Korea aspire to purchase their own homes. However, it is unrealistic for most young adults, especially in Seoul. Business Insider reported in 2023, the average home sale price in 2022 in Seoul was $876,215, while the average salaries for young adults were $26,600 to $37,660. Currently, South Korea has set the maximum mortgage in Seoul to 600 million won (about $420,000). If the typical young person bought an apartment for $880,000, they would have to come up with $460,000 in cash and borrow the remaining $420,000 for their mortgage. A 30-year mortgage at 4 percent interest would cost about $2,005 per month. This is not affordable for someone making $30,000 or $40,000.

While I don’t think increased financial literacy is enough to offset the feelings of desperation among young people, it might give them a sense of agency and lead them to make better choices. Certainly, no one should acquire credit card debt from buying luxury goods. The TIAA study found a clear relationship between financial literacy and financial well-being, and wouldn’t we all prefer to feel more secure about our money?

Grace Kao

Grace Kao is an IBM professor of sociology and professor of ethnicity, race and migration at Yale University. The views expressed here are the writer’s own. — Ed.


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