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Teaching by Topic: Personal Loans

Here are a bunch of tips, learning objectives, worksheets, and pre-built lesson plans to help you build your curriculum to teach students about personal loans!

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Personal finance is fluid, and things change frequently. Sometimes, things come up that people can’t afford, and that’s where personal loans come in. Students should know where to go to get a personal loan, how to understand the terms, and how to qualify. Let’s see learning objectives (according to the National Standards for Personal Finance Education), lesson plans, worksheets, games, and activities to help your students fully understand personal loans.

National Standards for Personal Finance Education

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K – 4th Grade

Tips for Teaching About Personal Loans

Your young students learn about borrowing and how to be responsible. Use character-building activities and lessons to increase their self-awareness and have them reflect on decision-making frequently.

Learning Objectives

  • Managing Credit 4-1a: Explain why a person who borrows $100 to buy something, often must pay back more than $100 at a future date.
  • Managing Credit 4-1b: Describe the reasons why businesses and individuals sometimes lend money to others.
  • Managing Credit 4-2a: Identify goods and services that people often purchase with credit.
  • Managing Credit 4-3b: Discuss why a person might be reluctant to lend money or personal possessions to someone who has a history of not repaying previous loans.

Lesson Plans

  • KMLP 3rd Grade – Interest: The pros and cons of interest are the focus of this lesson. Kids watch a video and read a book about borrowing responsibly and learning about personal loans.  
  • KMLP 4th Grade – Managing Credit: Students learn what credit is, see why some people get loans while others don’t, and dive into interest rates. They also understand credit scores and how they impact your ability to get a loan.
  • Introduction to Borrowing: In this lesson, students brainstorm things they may borrow and then learn how people can also borrow money. They look at why people borrow and what kinds of purchases may require a loan.  
  • Economics for Children: This free book has several chapters written in kid-friendly language to teach about borrowing and loans. You can pull content to tailor lessons for your students.
  • Kids and Cash: This lesson dives into interest, demonstrating that it can benefit savers and negatively impact borrowers. Students see the convenience and safety of borrowing from a bank.

Worksheets

  • Responsibility Game: Pairs complete this worksheet and try to win the game, boosting their sense of responsibility.
  • Rights and Responsibilities: This worksheet builds knowledge of what we have the right to and what we should do as responsible individuals. Teachers can connect these concepts to financial ideas like credit and borrowing.
  • Budget Worksheet: This worksheet shows students how to budget and includes a reflection component on making good decisions.  
  • Borrowing FAQs: This worksheet asks students to respond to common questions about borrowing.
  • Calculating Interest: This worksheet (scroll down to the last page) shows kids how to calculate interest and then provides loan-interest practice problems.

Teacher Guides by Grade Level

5th – 8th Grade

Tips for Teaching About Personal Loans

Students at this level know about loans and how to be responsible borrowers. Expand their knowledge by showing them how to shop for the best deals and loan terms. Have them frequently work in pairs and groups, explaining their reasoning and logic.

Learning Objectives

  • Spending 8-2b: Explain the types of information most helpful in making a purchase decision.
  • Spending 8-3a: Evaluate information about goods and services based on reliability and accuracy of the source.
  • Managing Credit 8-1a: Identify financial institutions and businesses that offer consumer credit.
  • Managing Credit 8-2a: Describe how lenders advertise loan costs to potential borrowers.
  • Managing Credit 8-3a: Describe the effect of higher interest rates and longer loan terms on the total cost of a loan.

Lesson Plans

  • KMLP 5th Grade – Credit and Debit: Students learn that credit comes in many forms, including different types of loans. They see how credit scores factor into their loan acceptance and terms.
  • KMLP 8th Grade – Managing Credit: Your kids learn about various types of loans and can identify risky versions. They read a credit report to see what factors influence creditworthiness.
  • Understanding Your Credit Score: This lesson provides an in-depth look into credit reports and scores. Kids break down the sub-categories that influence their scores and see how minor adjustments can lead to significant increases.
  • Keeping Score: Why Credit Matters: Students should know where their creditworthiness stands if they’re in the market for a personal loan. This lesson shows them how to approach the lender confidently, knowing their credit score and how it should impact their loan.
  • Establishing Credit: This lesson teaches kids about credit, its importance, and how to maximize their scores to get the best loan conditions. They watch videos and complete hands-on calculations and activities to analyze credit scores. 

Worksheets

  • Interactive: Shady Sam: This worksheet accompanies the game “Shady Sam” and gives students a place to reflect and check their comprehension. 
  • Using Your Credit – BizKids: This set of worksheets lets students practice finding how credit can directly impact their financial situations.
  • Simple Interest Real-Life Activity: Kids complete this worksheet to see how different interest rates impact their personal loans.
  • Beginner’s Budget and Money Management: This worksheet shows students the basics, including writing checks and seeing if loans are a good idea for everyone.
  • Simple and Compound Interest: This worksheet requires students to calculate simple and compound interest math problems, showing how each affects total loan amounts.

Games and Activities

  • Shady Sam: This game lets students step into the shoes of a predatory lender to learn their tactics and how to avoid them.
  • Misadventures in Money Management: This interactive game lets students learn about money dangers and how to escape them in an engaging interface. They see that taking on too much debt can hurt their finances.
  • Loan Myths and Realities: Students break down statements about lending and determine if they are true or false in this activity.
  • Break the Bank: In this game, kids work as bankers giving good loans to customers and then need to stop the evil payday lenders from ripping off consumers.
  • Financial Literacy Skills: This resource pack includes loans and credit activities to allow students to gain a deeper understanding.

Teacher Guides by Grade Level

9th – 12th Grade

Tips for Teaching About Personal Loans

High school students may need a personal loan sooner than they realize. Whether taking money out for school, cars, living expenses, or unexpected costs, they need to know how much they can afford and get reasonable terms. Use practical, hands-on activities as much as possible.

Learning Objectives

  • Spending 12-1a: Identify their short-term and long-term financial goals.
  • Spending 12-9a: Explain how having a system for financial record-keeping can make it easier to make financial decisions.
  • Managing Credit 12-1b: Compare the cost of borrowing $1,000 using consumer credit options that differ in rates and fees.
  • Managing Credit 12-3c: Compare monthly mortgage payments for loans that differ in repayment period, amount borrowed, and interest rate.
  • Managing Credit 12-10a: Describe how failing to repay a loan can negatively impact a person’s finances and life.

Lesson Plans

  • KMLP 9th Grade – Basic Economics: This lesson focuses on wants and needs, keeping kids on track to afford the things they need the most. They learn about scarcity and choice, deciding if personal loans are a good path to take to fulfill their expenses.
  • KMLP 12th Grade – Managing Credit: Students see the dangers of high-interest loans in this lesson. They learn to steer clear of these loans and maintain good credit histories to qualify for better personal loans. 
  • KMLP 12th Grade – Spending: Your high schoolers look at spending in today’s society, analyzing how people are influenced by social media and advertising and may overspend. They see how to budget for major purchases, using personal loans as a tool to reach their goals.
  • Debt: The Good, The Bad, and The Ugly – BizKids: In this lesson, students see the pros and cons of personal loans and other forms of credit. They learn about budgeting and compound interest and see how to evaluate – and fix – stressful financial situations.
  • Personal Finance Unit – Credit and Interest: This lesson pack covers credit, credit reports and history, influences on scores, and personal loans. It includes PowerPoints, worksheets, and interactive activities.

Worksheets

  • Qualifying For Loans: This worksheet walks students through the qualification process, allowing them to see who would get a loan and with what terms. 
  • Down Payments and Loans: In this worksheet, students compare different loan conditions to see how down payments can reduce monthly and total costs.
  • Loan Repayment: This straightforward worksheet lets kids calculate simple interest on a loan.
  • Getting Banked: In this worksheet, kids research a local bank to become comfortable with their services, including loans and standard interest rates.
  • Consumer Loan Checklist: This worksheet shows students the specific information they need to know when applying for a personal loan, which they can fill out on the form.

Games and Activities

  • Shopping In Credit City: Students play a game that shows them the dangers of interest on personal loans and credit through real-world situations they may encounter.
  • Personal Loan Application: This activity demonstrates how students would fill out a personal loan application, giving them valuable experience. 
  • Loans and Credit: This activity requires students to solve word problems by comparing how interest rate and loan length change total payments.
  • Banking Basics Card Game: This hands-on activity covers the many services banks offer, including personal loans and typical terms.
  • Credits and Loans: This activity includes a PowerPoint and handouts students complete about loans, interest, payments, and debt.

Teacher Guides by Grade Level

More Teacher Resources

About the Author

Peter Brown

Peter Brown is a National Board Certified teacher with over two decades of experience in the classroom. He loves working with students of all ages in many subjects, but particularly in practical areas like money education, to help kids achieve their goals. When he is not teaching or writing about financial literacy, you can find him surfing, hiking, skiing, or traveling to new places.

Last updated on: December 12, 2022