I don’t think this problem can be laid entirely at the feet of financial illiteracy. I think it is more a product of emotion winning out over reason. Not that people are financially literate, but even if they were, they would fall for the same old pitch that leads so many to ‘care’ more than think, to vote with their heart not their mind.
A high school grad should be able to read a credit card bill, and answer questions like this: If you pay the minimum, but continue to charge X dollars per month, what will the balance be in one year? They should be able to know how many years it will take to pay off a loan given a principal of x dollars, y% interest, and z monthly payments. If they can't do that, the high schools have failed to teach basic math and the student is certainly not ready for college level.
You are correct.