Developing financial literacy is important for high school students. Proper knowledge about common financial concepts can help them ace financial management later in life. One of the most vital concepts students must learn to secure their financial future is debt. Learning what debt is, how it works, and applying smart budgeting tips can help them make better financial decisions, avoid debt traps, and prevent monetary distress.
While debt may seem simple, it can be a fairly complex concept to understand even for us adults. Therefore, teaching debt to students requires more than just a few lectures in class. Interestingly, topic-based financial literacy activities help a lot in strengthening student knowledge. Activities provide hands-on learning and encourage students to think and analyze critically.
In this post, we have shared some interesting debt activities for your students to indulge in so they can gain a solid understanding of this tricky financial concept.
Debt activities to help students understand various debt concepts
In this section, you will find ten activities to help your students master debt concepts. Let’s have a look at them in detail.
1. Crack the Code with Debt Bingo
The first fun activity for reinforcing different debt concepts is Debt Bingo. You can either create a debt bingo by including debt-related vocabulary and taking their printouts or give students blank Bingo sheets so they can fill in all the debt vocabulary they have learned till date.
When your students are ready with their sheets, don’t call out words included in debt vocabulary. Rather, read out their definitions, one at a time. Your students will have to identify the word through its definition and then mark it on the sheet. Continue the activity and distribute rewards to winners.
2. How to Get Out of Debt?
Conduct this simple yet effective activity wherein students make individual flowcharts to show what steps they would take in case they find themselves trapped in debt. It would be better if you discuss the topic before conducting this activity so your students have some idea on how to go about it.
Look for steps like accessing debt amounts, finding details, making a repayment plan, etc. in your students’ work. Reward students with the best flowcharts and discuss their work with other students in your class.
3. Dealing with a Debt Collector
A debt collector is a person or collection agency that comes into the picture when one fails to pay off debt on time. While most individuals make it a point to repay their debts within the stipulated time, situations like job loss may make debt repayment difficult. One must therefore be aware of their rights and how to deal with a debt collector.
Help your students practice dealing with debt collectors by conducting a partner activity. Ask one student to take up the role of borrower while the other student becomes a debt collector. Give them a scenario so they can demonstrate how they will handle the situation.
For example, the collector makes initial contact, provides written notice, negotiates a settlement, and takes legal action if required. On the other hand, the borrower displays the right approach to handling the debt collector. For instance, confirming the legitimacy of the debt collector, asking for details and proof of debt, understanding their rights, and working on a repayment plan after confirming the debt.
4. What Would You Do?
This activity involves asking “What Would You Do?” questions. Write one question on one Q card and prepare as many cards as the total number of students in your class. Place the cards in a bowl and give them a nice mix. Invite your students to pick one card from the bowl and brainstorm their answer for 10-15 minutes. Then, call them forward, one at a time, to share their question and answer with the entire class. Some questions you could include are:
- What would you do if you lost your job and couldn’t make your monthly debt payments?
- What would you do if you were offered a loan with very high interest rates?
- What would you do if a debt collector called you about a debt you don’t remember?
- What would you do if your credit card balance kept increasing each month?
- What would you do if a friend asked you to co-sign a loan they may not be able to repay?
- What would you do if you had multiple debts and couldn’t afford to pay them all?
- What would you do if your income increased—would you spend more or pay down debt?
5. Tell the Difference: Good or Bad Debt
Not all debts are bad. For this reason, students need to understand what makes a debt good or bad. Ideally, any debt that serves as an investment—for example, paying a mortgage to buy a house or taking a student loan to land a high-paying job in the future—is good debt. On the contrary, using credit cards for expensive vacations or dining in fancy restaurants are bad debt.
To help students understand and reinforce the difference, hand one red and one green card to every student in your class. Now, read out scenarios focusing on either good or bad debt and ask your students to display the green card if they think it is a good debt and the red card if the scenario talks about a bad debt.
After every scenario, share the correct answer and have students give one point to themselves for the right answer and none if their answer is wrong. In the end, let students count their total scores. You may now reward students with the highest scores if you want. This activity is also great for assessing how well your students have understood the concept of good and bad debt.
6. How Much Student Debt Can You Afford?
An activity like this one can help students analyze if their career choice is good enough to help them pay off their student loan after graduation.
For this activity, create a hypothetical scenario including details like:
- Amount of student loan offered (say, $27,000),
- Monthly loan payment (say, $300)
- Budget allocation for loan repayment (say, 10% of monthly income)
Ask students to write down their top 3 career choices and their starting gross annual incomes. Now, let them calculate their gross monthly income and the value of budget allocation for each career choice.
Ideally, if the budget allocation for loan repayment is higher than the amount that must be paid every month, the career choice will be a good fit in terms of student loan affordability.
Through this activity, students can figure out how much student debt they can afford and which career will help them repay their debt easily without causing a financial burden in the future.
7. Poster Making: Secured vs. Unsecured Debt
Debt is divided into two categories – secured and unsecured debt. Help your students understand the differences by asking them to make a poster on this topic. Ask them to highlight how the two categories are different from one another using their research and creative skills.
They can also include a few examples of secured (mortgages, auto loans, etc.) and unsecured (credit cards, personal loans, etc.) debt to display their understanding on the subject.
8. Out of Control Debt
When students know what can lead them to a pool of unmanageable debt, they are more likely to stay away from such practices. Therefore, conduct an activity wherein your students make a presentation on 5-8 things that might lead them to out-of-control debt.
You can divide your class into pairs or groups of 4–5 students for this activity. Students can then share the presentation in class and talk about why and how the things they have pointed out lead to the accumulation of excessive debt.
9. Calculating Debt Ratios
A debt ratio is a simple metric that indicates a person’s financial situation. A person with a lower debt ratio is more financially stable than someone with a higher debt ratio. Understanding the meaning of this metric can support students in determining their financial stability and serve as a guide for financial planning and debt management.
For this activity, prepare 5–6 scenarios that students can ponder upon to calculate debt ratios. When your students finish calculating the ratios, review their answers and invite students to share their thoughts on why certain scenarios result in higher debt ratios and what can be done to improve the financial situation. You may also talk about how this metric can help students use their credit wisely.
10. Debt Repayment Strategies
Learning effective strategies to pay off debt can help students manage their debts effectively. The three most popular strategies to pay down debt are the Snowball Method, Debt Avalanche, and Debt Consolidation.
Divide your class into groups and assign one strategy to every group. Ask your students to research and find as much information as possible related to the strategy in a week.
Have them prepare a presentation, an illustration, a chart, or anything they feel appropriate to help them present the information they have gathered. Pick one day and invite groups to share their knowledge with other students.
Final thoughts
In current times, borrowing money to cover big expenses like buying a home or college tuition is quite common. People who get into debt without understanding its nuances often get into financial trouble. To prevent such mishaps, students must understand the benefits and risks of taking debt. They must also learn to use it to their advantage without accumulating an unmanageable amount of debt.
Participating in activities like the ones shared in this post can provide clarity on how debt works and other important aspects of it. We hope your students will enjoy working on these activities and build a strong foundation to support their financially secure future.
I am Priyanka Sonkushre, a writer and blogger. I am the person behind “One Loving Mama,” a mom blog. Equipped with a Bachelor’s degree along with an MBA, my healthcare background helps me deeply understand learning difficulties. I know how challenging it can be for parents to find the right resources to help their children excel in life. So, here I am to blend my healthcare expertise with my parenting experience to create valuable and helpful resources for parents and teachers supporting children with learning differences. If you wish, you can follow me on Facebook and LinkedIn.