HOPKINTON — The yearly City Financial Assembly drew couple sights and only one particular comment — a lady requesting cuts that would reduce any tax maximize at all — leaving members of the City Council with pretty much no input to operate with as they search for to finalize a spending budget proposal for the 2022-23 fiscal yr.
The yearly meeting on Tuesday evening was held in a hybrid structure, with citizens equipped to go to both equally in-particular person at Hopkinton City Hall or by personal computer by Zoom. It drew only a constrained turnout — 3 residents attended on the net but chose not to communicate — with Diamond Hill Highway resident Lori Ultsch the only just one to stand up and converse.
Ultsch questioned a handful of fees, together with significant improves in the proposed police funds, and expressed aggravation that taxes would go up at all in a year wherever people are going through increased expenses on almost just about every front.
“As a taxpayer, I loathe to see my taxes just keep heading up. People are looking at increased costs, high gasoline charges, and electric costs are heading up. As people, we are truly up in opposition to it,” Ultsch claimed.
“We want far more financial growth in this city, and that’s what it boils down to,” she added.
The proposed funds just before the City Council phone calls for a $28.12 million blended normal federal government, instruction and capital spending plan that involves $448,855 in further shelling out in excess of the present fiscal calendar year, not like Hopkinton’s contribution to the Chariho Regional University District.
When it arrives to general govt, police expenditures account for one particular of the greatest calendar year-in excess of-yr will increase, with the proposed price range expanding by $108,925 about the present fiscal yr. Overall, the proposed spending budget accounts for $256,745 in new investing, not including money projects.
Council President Stephen Moffitt Jr. said the raise was mainly the outcome of contractual obligations connected to salaries and positive aspects, which the town was expected to spend in the latest fiscal year even however the city experienced not authorised a budget at referendum in 2021, primary to a zero enhance in non-schooling funding.
With the latest proposal, normal federal government expending would increase by 3.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} all round. In addition to contractual obligations and power prices that account for a massive part of the increase, town officials claimed the spending plan also involves $159,500 to fund a comprehensive revaluation as essential by the state at the very least when each and every 9 years.
At the town’s present tax amount of $18.53, an average household with an estimated value of $300,000 would pay back $5,559.
“With the adjust in the ’22-’23 funds, it would outcome in a full tax monthly bill of $5,571 for the typical resident, an raise of $12,” Moffitt explained.
City Council member Scott Invoice Hirst, who has been vital in new months of the College Committee and district directors that he refers to jointly as “the Chariho Establishment,” was important of any raise in college shelling out and spoke from the district’s strategies, stating he wishes the district to perform an outdoors administration examine that would include things like a line-by-line evaluate of all district bills to enhance efficiencies and discover financial savings.
Hirst questioned the motives of the School Committee, a thing he has finished at each and every conference in 2022 involving funds discussions, and claimed they would never ever take into consideration an outside the house administration research because “there would be no profitable for them.” He also questioned the complacency of people in the district, who he promises have not held faculty officers accountable.
“If you aren’t keen to keep Chariho accountable for their finances, which a good deal of persons don’t, then it’s genuinely irrelevant to the rest of the city,” Hirst explained.
With the annual assembly now total, the council has until finally Monday to make any extra alterations in advance of the spending plan is marketed and sent to referendum. People will have a chance to choose portion in an all-day referendum on the finances on June 14 at Hopkinton City Corridor, 1 Townhouse Highway, from 7 a.m. to 9 p.m.
For extra data, which include a copy of the proposed spending plan, check out the town’s web-site at hopkintonri.org.
MIAMI, May 05, 2022 (GLOBE NEWSWIRE) — Laureate Education, Inc. (NASDAQ: LAUR), which operates five universities across Mexico and Peru, today announced financial results for the first quarter of 2022.
First Quarter 2022 Highlights (compared to first quarter 2021):
New enrollments increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
Total enrollments increased 11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
On a reported basis, revenue increased 8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $209.6 million. On an organic constant currency basis1, revenue increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
Operating income for the three months ended March 31, 2022 was $9.0 million, compared to operating loss of $(86.4) million for the three months ended March 31, 2021, which was mainly driven by impairment charges of $56.7 million that were largely attributable to impairment of the Laureate tradename.
Net loss for the three months ended March 31, 2022 was $(44.7) million, compared to net loss of $(164.9) million for the three months ended March 31, 2021, which was mainly driven by impairment charges.
Adjusted EBITDA for the three months ended March 31, 2022 was $27.2 million, compared to Adjusted EBITDA of $9.7 million for the three months ended March 31, 2021.
1 Organic constant currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items.
Eilif Serck-Hanssen, President and Chief Executive Officer, said, “I am very encouraged by the momentum in the business. Our strategic growth initiatives that play to our unique strengths in Mexico and Peru are having a positive impact on our performance, and as a result we are increasing our guidance for the year.”
First Quarter 2022 Results
New enrollments for the three months ended March 31, 2022 increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared to new enrollment activity for the three months ended March 31, 2021, and total enrollments were up 11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} compared to the prior-year period. The first quarter represents the primary intake cycle for Peru, and results for the first quarter of 2022 were strong, with new and total enrollments in Peru increasing 5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} and 14{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, respectively, compared to the prior-year period. Mexico’s new enrollments were up 15{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} compared to the prior-year period, and total enrollment was up 7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, following its secondary intake cycle completed in the first quarter of 2022.
For the three months ended March 31, 2022, revenue on a reported basis was $209.6 million, an increase of $14.9 million, or 8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared to the three months ended March 31, 2021. On an organic constant currency basis, revenue increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. Operating income for the three months ended March 31, 2022 was $9.0 million, compared to an operating loss of $(86.4) million for the three months ended March 31, 2021, which was predominantly driven by impairment charges of $56.7 million. Net loss for the three months ended March 31, 2022 was $(44.7) million, which was primarily attributable to a discrete tax expense, compared to net loss of $(164.9) million for the three months ended March 31, 2021, which was mainly attributable to the impairment charges described above. Basic and diluted loss per share for the three months ended March 31, 2022 were $(0.25).
Adjusted EBITDA for the three months ended March 31, 2022 was $27.2 million, compared to Adjusted EBITDA of $9.7 million for the three months ended March 31, 2021.
Balance Sheet and Capital Structure
Laureate has a strong financial position with significant liquidity. As of March 31, 2022, Laureate had $294 million of cash and gross debt of $156 million. Accordingly, total cash, net of debt, was $138 million as of March 31, 2022.
In addition, $74 million of the Walden sale transaction value was paid into an escrow account, which will be released in full or in part to Laureate in August 2022 pursuant to the terms and conditions of the escrow agreement.
Increase to Share Repurchase Program
On March 14, 2022, Laureate announced that its board of directors approved an increase in the Company’s existing share repurchase program, from $600 million to $650 million, to acquire shares of the Company’s common stock. As of March 31, 2022, the Company has repurchased approximately $556 million of shares under the authorization. The Company expects to complete the repurchase program during 2022, dependent on market conditions.
Outlook for Fiscal 2022
Laureate is updating its full-year 2022 guidance to reflect an improved outlook.
Based on the current foreign exchange spot rates2, Laureate currently expects its full-year 2022 results to be as follows:
Total enrollments are now expected to be in the range of 410,000 to 416,000 students, reflecting growth of 6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an organic basis versus 2021;
Revenues are now expected to be in the range of $1,190 million to $1,206 million, reflecting growth of 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an organic constant currency basis versus 2021; and
Adjusted EBITDA is now expected to be in the range of $326 million to $334 million, reflecting growth of 22{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-25{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an organic constant currency basis versus 2021 (up 29{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-32{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an as-reported basis).
Reconciliations of forward-looking non-GAAP measures, specifically the 2022 Adjusted EBITDA outlook, to the relevant forward-looking GAAP measures are not being provided, as Laureate does not currently have sufficient data to accurately estimate the variables and individual adjustments for such outlooks and reconciliations. Due to this uncertainty, the Company cannot reconcile projected Adjusted EBITDA to projected net income without unreasonable effort.
Please see the “Forward-Looking Statements” section in this release for a discussion of certain risks related to this outlook.
2 Based on actual FX rates for January-April 2022, and current spot FX rates (local currency per U.S. Dollar) of MXN 20.48 and PEN 3.82 for May 2022 – December 2022. FX impact may change based on fluctuations in currency rates in future periods.
Conference Call
Laureate will host an earnings conference call today at 8:30 am ET. Interested parties are invited to listen to the earnings call by dialing 1-855-307-2849 (for U.S.-based callers) or 1-703-639-1262 (for international callers), and requesting to join the Laureate conference call, conference ID 7763447. Replays of the entire call will be available through May 12, 2022, at 1-855-859-2056 (for U.S.-based callers) and at 1-404-537-3406 (for international callers), conference ID 7763447. The webcast of the conference call, including replays, and a copy of this press release and the related slides will be made available through the Investor Relations section of Laureate’s website at www.laureate.net.
Forward-Looking Statements
This press release includes statements that express Laureate’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, ‘‘forward-looking statements’’ within the meaning of the federal securities laws, which involve risks and uncertainties. Laureate’s actual results may vary significantly from the results anticipated in these forward-looking statements. You can identify forward-looking statements because they contain words such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘estimates’’ or ‘‘anticipates’’ or similar expressions that concern our strategy, plans or intentions. All statements we make relating to (i) guidance (including, but not limited to, total enrollments, revenues, and Adjusted EBITDA), (ii) our current growth strategy and other future plans, strategies or transactions that may be identified, explored or implemented and any litigation or dispute resulting from any completed transaction, (iii) any anticipated share repurchases or cash distributions and (iv) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. All of these forward-looking statements are subject to risks and uncertainties that may change at any time, including with respect to our current growth strategy and the impact of any completed divestiture or separation transaction on our remaining businesses. Accordingly, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations are disclosed in our Annual Report on Form 10-K filed with the SEC on February 24, 2022. These forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law.
Presentation of Non-GAAP Measures
In addition to the results provided in accordance with U.S. generally accepted accounting principles (GAAP) throughout this press release, Laureate provides the non-GAAP measurements of Adjusted EBITDA, and total cash, net of debt (or net cash). We have included these non-GAAP measurements because they are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans.
Adjusted EBITDA consists of income (loss) from continuing operations, adjusted for the items included in the accompanying reconciliation. The exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key input into the formula used by the compensation committee of our board of directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Total cash, net of debt (or net cash) consists total cash and cash equivalents, less total gross debt. Net cash provides a useful indicator about Laureate’s leverage and liquidity.
Laureate’s calculations of Adjusted EBITDA and total cash, net of debt (or net cash) are not necessarily comparable to calculations performed by other companies and reported as similarly titled measures. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. Adjusted EBITDA is reconciled from the GAAP measure in the attached table “Non-GAAP Reconciliation.”
We evaluate our results of operations on both an as reported and an organic constant currency basis. The organic constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates, acquisitions and divestitures, and other items. We believe that providing organic constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate organic constant currency amounts using the change from prior-period average foreign exchange rates to current-period average foreign exchange rates, as applied to local-currency operating results for the current period, and then exclude the impact of acquisitions and divestitures and other items described in the accompanying presentation.
About Laureate Education, Inc.
Laureate Education, Inc. operates five universities across Mexico and Peru, enrolling more than 375,000 students in high-quality undergraduate, graduate, and specialized degree programs through campus-based and online learning. Our universities have a deep commitment to academic quality and innovation, strive for market-leading employability outcomes, and work to make higher education more accessible. At Laureate, we know that when our students succeed, countries prosper, and societies benefit. Learn more at laureate.net.
Key Metrics and Financial Tables (Dollars in millions, except per share amounts, and may not sum due to rounding)
(1) Organic Constant Currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items. Other items include the impact of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets. Organic Constant Currency is calculated using the change from prior-period average foreign exchange rates to current-period average foreign exchange rates, as applied to local-currency operating results for the current period. The “Organic Constant Currency” {ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} changes are calculated by dividing the Organic Constant Currency amounts by the 2021 Revenues and Adjusted EBITDA amounts, excluding the impact of the divestitures.
Consolidated Balance Sheets
IN MILLIONS
March 31, 2022
December 31, 2021
Change
Assets
Cash and cash equivalents
$
293.8
$
324.8
$
(31.0
)
Receivables (current), net
129.1
152.0
(22.9
)
Other current assets
68.7
67.5
1.2
Property and equipment, net
516.9
499.5
17.4
Operating lease right-of-use assets, net
384.5
384.3
0.2
Goodwill and other intangible assets
715.7
689.6
26.1
Deferred income taxes
47.8
38.7
9.1
Other long-term assets
47.7
48.6
(0.9
)
Long-term assets held for sale
6.6
6.2
0.4
Total assets
$
2,210.7
$
2,211.3
$
(0.6
)
Liabilities and stockholders’ equity
Accounts payable and accrued expenses
$
186.6
$
182.9
$
3.7
Deferred revenue and student deposits
97.1
44.0
53.1
Total operating leases, including current portion
412.8
415.3
(2.5
)
Total long-term debt, including current portion
152.6
153.7
(1.1
)
Other liabilities
303.4
263.4
40.0
Current and long-term liabilities held for sale
11.7
10.8
0.9
Total liabilities
1,164.1
1,070.0
94.1
Redeemable noncontrolling interests and equity
1.7
1.7
—
Total stockholders’ equity
1,044.9
1,139.6
(94.7
)
Total liabilities and stockholders’ equity
$
2,210.7
$
2,211.3
$
(0.6
)
Consolidated Statements of Cash Flows
For the three months ended March 31,
IN MILLIONS
2022
2021
Change
Cash flows from operating activities
Net loss
$
(44.7
)
$
(164.9
)
$
120.2
Depreciation and amortization
14.4
22.7
(8.3
)
Loss on impairment of assets
0.1
57.7
(57.6
)
(Gain) loss on sales and disposal of subsidiaries and property and equipment, net
(0.7
)
16.5
(17.2
)
Gain on derivative instruments
—
(29.3
)
29.3
Loss on debt extinguishment
—
0.1
(0.1
)
Deferred income taxes
4.4
84.4
(80.0
)
Unrealized foreign currency exchange gain
(0.8
)
(23.7
)
22.9
Income tax receivable/payable, net
27.0
(16.7
)
43.7
Working capital, excluding tax accounts
44.3
25.6
18.7
Other non-cash adjustments
9.9
39.1
(29.2
)
Net cash provided by operating activities
53.9
11.3
42.6
Cash flows from investing activities
Purchase of property and equipment
(1.2
)
(11.7
)
10.5
Expenditures for deferred costs
—
(1.9
)
1.9
Receipts from sales of discontinued operations, net of cash sold, and property and equipment
9.2
30.8
(21.6
)
Payments on derivatives related to sale of discontinued operations
—
(18.3
)
18.3
Net cash provided by (used in) investing activities
7.9
(1.1
)
9.0
Cash flows from financing activities
Decrease in long-term debt, net
(9.2
)
(52.7
)
43.5
Proceeds from exercise of stock options
11.5
—
11.5
Payments to repurchase common stock
(102.2
)
(145.2
)
43.0
Financing other, net
(4.3
)
(1.2
)
(3.1
)
Net cash used in financing activities
(104.1
)
(199.2
)
95.1
Effects of exchange rate changes on Cash and cash equivalents and Restricted cash
11.2
(6.9
)
18.1
Change in cash included in current assets held for sale
—
(3.5
)
3.5
Net change in Cash and cash equivalents and Restricted cash
(31.1
)
(199.3
)
168.2
Cash and cash equivalents and Restricted cash at beginning of period
345.6
867.3
(521.7
)
Cash and cash equivalents and Restricted cash at end of period
$
314.4
$
668.0
$
(353.6
)
Liquidity (including Undrawn Revolver)
$
703.8
$
971.4
$
(267.6
)
Non-GAAP Reconciliation
The following table reconciles Loss from continuing operations to Adjusted EBITDA:
For the three months ended March 31,
IN MILLIONS
2022
2021
Change
Loss from continuing operations
$
(45.4
)
$
(164.5
)
$
119.1
Plus:
Equity in net income of affiliates, net of tax
(0.1
)
—
(0.1
)
Income tax expense
48.0
112.9
(64.9
)
Income (loss) from continuing operations before income taxes and equity in net income of affiliates
2.4
(51.7
)
54.1
Plus:
Foreign currency exchange loss (gain), net
3.6
(28.2
)
31.8
Other expense, net
1.2
—
1.2
Gain on derivatives
—
(29.3
)
29.3
Interest expense
3.7
23.5
(19.8
)
Interest income
(2.0
)
(0.7
)
(1.3
)
Operating income (loss)
9.0
(86.4
)
95.4
Plus:
Depreciation and amortization
14.4
22.8
(8.4
)
EBITDA
23.4
(63.6
)
87.0
Plus:
Share-based compensation expense (2)
2.8
1.3
1.5
Loss on impairment of assets (3)
0.1
56.7
(56.6
)
EiP implementation expenses (4)
0.9
15.3
(14.4
)
Adjusted EBITDA
$
27.2
$
9.7
$
17.5
(2) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC Topic 718, “Stock Compensation.” (3) Represents non-cash charges related to impairments of long-lived assets. (4) Excellence-in-Process (EiP) implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company’s system of internal controls over financial reporting. The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs incurred in connection with the dispositions. The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the run out of programs that began in prior periods.
“Used to play pretend, give each other different names We would build a rocket ship, and then we’d fly it far away Used to dream of outer space, but now they’re laughing at our face saying ‘Wake up, you need to make money’, yeah.”
Twentyone Pilots, Stressed Out
I believe there are a handful of big topics that are worth really digging into in the asset management world right now: the future of fixed income, the evolution of ESG, tokenization, the ethics and impact of indexing, and the shifts in our understanding around portfolio theory. Those are the big heady topics I’ll be wrestling with for a long while.
Underneath the hood, however, there are 20–30 key influencing issues that are worth understanding, because they’ll underpin the future of finance, and last time I looked, my business card said Financial Futurist.
Top of mind for me has been financial education.
The Problem With Money
Financial education in this country isn’t great, and the need for it has never been more pressing — indeed, it’s the whole issue behind the recent FINRA request for comments that spurred me to actually submit a comment letter and for the media to realize, “Hey, this might be a big deal.”
FINRA does real work on this topic, publishing an every-three-year National Financial Capability Study where they ask 25,000 Americans “How’s it goin’?” in various money-related matters. It’s where we get all the scary statistics like, “Only 46{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of Americans have any rainy day funds at all,” and “35{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of Americans only pay their credit card minimums.”
The subset of folks who self-classify as “investors” aren’t any better: Only one-third could score 50{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} or higher on a basic 10-question test. (Not to brag, but I got a 10 out of 10.)
However, FINRA isn’t the only researcher coming to this conclusion. A widely cited 2015 study by Standard and Poor’s on financial literacy suggests that roughly 57{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of U.S. adults could be considered financially literate. Outside of the U.S., Nordic and European countries fare a bit better, while emerging markets fare much worse. But I’m not going to bore you with data; it’s well-established that as a country, we don’t know as much about how money works as we should.
From a public policy perspective, we have adopted a singular approach, which is to try to wedge financial education into the schools. I’m all for this, and indeed, there has been some progress in getting money education in the curriculum. We have dozens of non-profits trying to help educators figure this out, too. But according to the Council for Economic Education, which surveys state requirements, while the numbers aren’t getting a lot worse, they’re not getting a lot better either:
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Source: FINRA
Most policy makers have focused on that hollow black line: the number of states requiring some economics or financial education course to be completed as a requirement of high school graduation. Currently, about half do. Furthermore, according to a March 2022 poll by the National Endowment for Financial Education, 80{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of U.S. adults believe that students should have to complete at least one semester of financial education.
Change is coming, but it’s coming slowly, and it may not be enough to move the needle, as there’s scant evidence that this financial education is keeping up with how fast the economy and markets change.
It’s not that there aren’t resources available. It’s actually shocking how many resources are out there. There’s the National Endowment for Financial Education, a Denver non-profit that’s been building out resources and conducting research since the 1970s, originally as part of the College for Financial Planning. (Yes, the folks who made up the CFP designation.) Meanwhile, Next Gen Personal Finance approaches the problem more directly by educating educators and giving them the tools they need to include financial education in the classroom. They’ve got a full-year curriculum for high school, which covers everything from opening a checking account to behavioral economics. (Seriously, their lesson on Arrogance and Echo Chambers# should be required to leave the Trinity/Wall Street subway station.)
Of course, actually working with teachers to build curricula is hard, thankless work, which is why most asset management industry efforts tend to prioritize flash over substance. I love Fidelity, but color me skeptical about their attempt to bring financial education into the “Metaverse” by posting some text on the walls of a virtual office building that folks will presumably read on their way to the virtual dance floor at the top. (Because nothing makes me wanna get my VR-helmeted-dancing-in-my-office groove on like learning about ETFs.) (Yes, I know Decentraland doesn’t actually have a VR-compatible client, just a super-low-poly, 1995-era game client, but I did it in VR anyway, because I’m a pedant.)
Me, touring Fidelity’s “Stack” in Decentraland
Still, the industry does make an effort. They produce the content. Blackrock has an education center, Vanguard sponsors a classroom effort called My Classroom Economy with programs for K-12, and so on down the line. Almost every major financial institution offers, at minimum, a lip-service nod to educating future customers and, in many cases, genuinely thoughtful education.
Our failures to actually teach people about money are not rooted in content, but in compassion and context.
Financial Compassion
I believe the biggest issues we face in teaching people about money are linguistic and cultural. In the asset management world, we’re buried in jargon and lingo. The celebrities #FinTwit talks about rarely rise above the fold in non-financial newspapers, until they’re caught in scandal or become part of the Western billionaire-capitalist oligarchy and thus too powerful to ignore.
The very phrase “financial literacy” is one of the biggest problems, says Tyrone Ross, financial entrepreneur, Twitter phenom, and founder of LearnToMoney.org, which develops foundational video content targeting young people who were skipped over when it came time to learn about money as kids.
“I don’t say ‘financial literacy,’” he says. “Literacy — overall — was an issue in our household, and that bleeds into the stigma with ‘literacy.’”
I’ll admit my own failure of insight — the phrase “financial literacy” has always made me feel uncomfortable, but I’m not sure I could have articulated why until Ross said the phrase out loud. The word “literacy” itself is only commonly used in its negative context. It’s like the word “remedial” in that it carries weight and judgement whether intended or not. Someone who legitimately needs financial education and is aware that they need financial education is probably the most likely to be turned off by the idea that they’re “financially illiterate.”
While I fear we’re stuck with the phrase “financial literacy,” what we can do is mold the conversation and better define what we mean by it — and what we don’t.
Financial compassion is about asking questions, real questions, emotional questions, without judgment or preconception, says Cherry: “How do you feel about your money situation? Your money thoughts? Share with me about your life and your money, your knowledge, your culture, your experiences. Let’s get better informed about where you are and how you feel about it.” This applies even if the person on the other side of the table is a 13-year-old and not a prospective financial planning client. The important questions, the emotional ones, are the same at 13 as they are at 73.
But that’s rarely how financial education is structured. All the great curricula on financial education is facts and figures — exercises designed to instill knowledge in bog-standard, American academic pedagogy. Present some facts, complete an exercise, take a test. From my own narrow experiences of raising kids, helping out in schools, and observing in classrooms, there’s little room for real compassion and connection in the modern classroom, despite the best efforts of great teachers. There’s rarely time to have the one-on-one conversations and establish the emotional connections necessary to learn about money effectively.
To improve financial literacy in this country, we don’t need more textbooks. It’ll take cash and labor. Maybe an Americorps for Financial Education. But until then, it’s mostly going to take creativity.
TikTok: The Kids Are All Right?
My most refreshing find of the pandemic era has been the TikTok channel? of Kyla Scanlon. Now 24, Scanlon deeply understands the business, having worked at Capital Group prior to the pandemic, and she’s rapidly become one of the most important voices in financial education precisely because, well, she’s smart, 24, and on TikTok.
Also, she’s hilarious. Scanlon can explain a rough inflation print in 45 seconds, while cracking a joke about how “avoidant personalities” are our hope against inflation. She uses the language of her peers to tap into the actual zeitgeist the finance world is overlooking: a nihilistic world where young people distrust, even hate, money.
“I have two groups of friends,” she explains. “I have my ‘finance friends,’ and my other ‘regular people’ friends. And they hate money. Anytime they bring it up, they’re just like, ‘You suck, shut up.’”
It’s not just that “traditional” finance isn’t cool enough for Zoomers (which explains some of the allure of crypto of course — NFTs are nothing if not both cool and hilarious). There’s a foundational, widespread lack of faith in institutions and systems among Millennials and Gen Z that surpasses even Gen X at their most disaffected and cynical.
“I think there’s a lot of nihilism,” Scanlon said when asked why the gallows humor of her TikTok channel lands so well with her audience. “2008 led to a lot of ‘life sucks’ thinking, and the pandemic compounded all of that, and now there’s a war going on. We’re seeing the crumbling of our systems in real time, no offense to the government. It’s not great for anybody,” she continued. Laughter is one way to deal with it, but neither despondent nihilism nor dark jokes make for sound investment strategies. Instead, it gives birth to the oft-touted investment anti-philosophy of “YOLO” (meaning, “you only live once”).
YOLO investing is an expression of nihilism to the core and is also behind the rise of one of the greatest success (ish) stories of the pandemic: Robinhood.
App-Mania?
That brings us full circle, back to why FINRA became so nervous about the state of financial education in the first place: meme-stock trading by Robinhood users.
Why now? It’s not just because of Wall Street bets. It’s about the numbers:
Since the pandemic, an incremental 12.5 million folks started using Robinhood, meaning roughly 10{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of American adults. Schwab’s still bigger, with over 30 million users, but it’s a shocking user base increase for a platform that didn’t functionally exist a few years ago, and which breaks the mold of a staid, trad-fi trading platform. (The problems with Robinhood’s gamification of trading have been well covered elsewhere. My hot take is that it successfully gamified the exact behavior any financial educator worth their salt would’ve tried to discourage: frequent trades that take big bets and try to time the market. It’s like Robinhood made smoking cool again.)
But while FINRA’s attention may be on Robinhood because it’s big and flashy and public, the entire fintech space is crammed with app-based finance tools. Indeed, adding “money” to apps, no matter what their original intention, has become such a prominent practice that it has spawned a new terminology: ‘embedded finance’, or the idea that literally everything is fintech.
On the one hand, I have a knee-jerk negative reaction to embedded finance. After all, I spent a few thousand words last year on one particular application of this maxim: “play-to-earn” gaming. At the time, I referred to it as a “capitalist hellscape,” so I’m not exactly on the fence about this issue.
But financial education may in fact be one of the places where I’m actually excited about the concept of “embedded finance.”
Mike Gleason is the CEO of Learn and Earn, a non-profit financial education firm that’s, yes, an app-based fintech company. But instead of Learn and Earn being just another way to squeeze folks for money with a UX-prodded dopamine hit, the app leverages the power of these new technologies in another way.
How? It started with some foundational work by Dr. William Elliot at the University of Michigan, who found, over a decade of research, that saving for college — that is, saving literally anything for college, no matter how little — skyrocketed a student’s chances of graduation. Specifically, having as little as $500 in a savings account for a lower or middle-income child increases the likelihood they will graduate college by a factor of five.
500{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. That’s a lot.
Of course, neither the research, nor I, would suggest that this is causality. It’s not the money that’s magic. More likely, it’s everything else that surrounds that act of savings.
“It wasn’t really dependent upon the amount of money,” explains Gleason, whose team worked with Dr. Elliot and key partner Junior Achievement to build a program from the core insight. “There was something about the mindset of having something for the future.”
Thus Learn and Earn was born. The idea was actually pretty simple: If having anything saved for college matters, then we should help as many kids as possible to save something.
So the team at Learn & Earn started beating the bushes for donations, which they’ve received in spades, not just from Junior Achievement and its donor network, but also Tiger Woods, the Winklevoss twins, and the Milken Institute. They built a simple app loaded with Duolingo-style quizzes and activities on financial basics: e.g., What’s an entrepreneur? How does a credit card work? By completing questions, kids actually get real money in a real investment account (albeit one that has parental locks and other limitations in place).
It’s… good. Really good. This style of learning — quiz show with retests — genuinely works on an app format. (I’ve witnessed my wife’s journey to the top of the Duolingo leaderboards first hand.) It’s gamification done well. But more importantly, its gamification done right. From the kid’s perspective, they do what they do best — absorb new information — and in so doing get money that can be supplemented by their own earnings and parents’ contributions and so on. Then they get to see what happens with their money in their account.
In Learn and Earn’s case, that investment account is through Ant Money Advisors, an RIA, and the investments themselves are limited to a selected list of ETFs and individual stocks. As we learned through Robinhood’s rise, news-cycle relevance and brand connection with individual stocks really helps drive engagement.
“[Kids] become much more engaged when they start picking stocks,” says Gleason. “They start reading literature and wanting to know ‘why did Amazon go down today?’ That’s interesting.”
Interesting but not surprising. I was the same way when I bought my first share of stock in 1984. (As I recall, it was Deere.)
That’s the core of real education. I’m a wonky New England son-of-a-professor, so I have a pretty positive view towards formal education. But I have an infinitely positive view on “farm education.” Farm education is when you go down to the chicken coop that you ignored all summer and clean out all the grime. After that, you clean it every week. Farm education is learning about engines by trying to make new piston rings out of fence wire because the field needs haying and the Deere dealership doesn’t have parts. You get in there and get your hands dirty, and the world teaches you whether you got it right.
Approaches like Learn and Earn are farm education for finance. Hands dirty, making mistakes, with real money — but no stigma associated if and when failure happens. It’s financial compassion, as expressed in a fintech app.
A Way Forward
In talking with Scanlon, I was struck by her explanation for why she does what she does: “My big theory is that people don’t understand what it means to be an economic entity. So I try to make content helping people understand what the economy means and this broader structure that they exist in.” Any American under the age of 60 most likely was brought into the world as an economic entity. For the most part, our entire lives have been surrounded by the influence, presence, absence, and score-keeping of this one thing — money — that almost all global societies have decided projects power and societal value above all else. That’s just the real world. It makes no sense to be for it or against it, any more than it makes sense to be for or against air.
Those of us who have some claim towards adulthood have an obligation to the next generations to compassionately communicate that simple message: This is it. This is how we keep track, and this is where you fit.
While it feels profane to invoke David Foster Wallace’s This is Water in an article about money, I have had the close of it stuck in my head ever since I started down this rabbit hole:
It is about the real value of a real education, which has almost nothing to do with knowledge, and everything to do with simple awareness; awareness of what is so real and essential, so hidden in plain sight all around us, all the time, that we have to keep reminding ourselves over and over:
“This is water.”
Wallace is making a much grander point about keeping perspective on the unknowns, and indeed, expressing a pathway from awareness to enlightenment in the moment. But he’s also talking about recognizing the soup you’re sitting in.
Like it or not, money is the water in which we, as a society, raise our children. They are born into it, and they’ll likely die in it, surrounded by it their entire lives. We’ve got an obligation to teach kids how to swim. We have to do it compassionately, in a way that they’ll understand and internalize, if for no other reason that otherwise they’ll drown.
For more news, information, and strategy, visit ETF Trends.
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U.S. Instruction Secretary Miguel Cardona delivers remarks at the department’s Lyndon Baines Johnson Creating in Washington, D.C., on Jan. 27, 2022.
Chip Somodevilla | Getty Photographs
Short term alterations to the troubled Public Support Mortgage Forgiveness System have resulted in extra than 110,000 people with scholar debt receiving all-around $6.8 billion in reduction.
The new figures from the U.S. Division of Training display how several borrowers are benefiting from the plan fixes declared by the Biden administration past yr. Hundreds of thousands much more could however see their credit card debt discharged as section of the energy. The ordinary sum of credit card debt reduction per borrower is shut to $60,000, in accordance to the Education and learning Office.
The community company bank loan forgiveness was signed into regulation by then-President George W. Bush in 2007, and lets nonprofit and federal government staff members to have their federal pupil financial loans canceled immediately after 10 yrs, or 120 payments. The Buyer Money Security Bureau estimates that a person-quarter of American personnel could be eligible.
However, the method has been plagued by issues, producing men and women who basically get the reduction a rarity.
Debtors generally feel they’re having to pay their way to financial loan cancellation only to discover at some issue in the process that they never qualify, commonly for bewildering technological reasons. Lenders have been blamed for misleading debtors and botching their timelines.
The reforms below the Biden administration contain reassessing borrowers’ timelines and counting some payments that have been previously ineligible due to the fact, say, a borrower was unwittingly in a nonqualifying compensation program.
To begin, you want to act promptly, claimed Mark Kantrowitz, a increased instruction qualified.
That is for the reason that the Biden administration’s new policies for community service bank loan forgiveness are slated to expire on Oct. 31.
If you have either a Federal Family members Schooling Loan (FFEL) or a Federal Perkins Financial loan, which do not typically depend for public assistance financial loan forgiveness but now temporarily do, you will need to have to consolidate those into direct loans with your servicer.
“It usually takes 30 times to 45 times for the consolidation to manifest,” Kantrowitz said.
“Borrowers should do this even if they really don’t count on to have 120 payments by the deadline, as the previously ineligible payments will depend only if they do this,” he additional.
In addition, borrowers will also have to confirm that their function was deemed public provider for any stretch of time that they are striving to get counted toward forgiveness. To do so, you are going to want to file with your servicer a so-called employer certification sort for each and every job you have had all over your timeline.
Borrowers at present jobless or not operating in general public service might even now qualify for forgiveness now, so extensive as they’ve designed 120 qualifying payments in the earlier, Kantrowitz additional.
Also, continue to keep in thoughts that months throughout the government’s payment pause and curiosity waiver on federal college student financial loans, which has been in result since March 2020, depend towards the program, even if you haven’t been spending.
Some debtors look to be receiving forgiveness immediately just after the government’s auditing of these accounts.
Nevertheless, having these methods will make certain you profit.
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