Can Congress Help Boost the Nation's Financial Literacy?

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Late last year, the SEC released a comprehensive report on the state of financial literacy in the U.S. It looked at numerous studies and surveys on the topic, and came to a rather depressing, albeit not surprising, conclusion: Both children and adults are failing.
  • In a 2008 Jump$tart Coalition survey, high school seniors (the most recent available) correctly answered less than half (48.3 percent) of the questions, an all-time low for the survey. College students fared a little better, answering 62 percent of the questions correctly.
  • Nearly 70 percent of the participants outright failed a quiz on basic money knowledge in a 2010 Northwestern Mutual Life Insurance study to determine Americans' general financial knowledge.
  • In the real world, Americans aren't doing much better than they are at taking money quizzes: 75 percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts, perhaps a result of their lack of financial literacy.

While most people recognize the importance of teaching personal finance, only four states require a minimum of one semester of financial literacy education and only 20 states require that the topic be taught within another subject area in order for students to earn a high school diploma.

Clearly, the state of financial education hasn't gotten much better since the recession -- a recent reminder that what we don't know can crush us.

Financial Literacy for Students Act

Sen. Kay Hagan (D-N.C.) aims to change the dismal record of educating children and teens about personal finance. Sen. Hagan, a former banker and current chair of the Subcommittee on Children and Families, recently reintroduced the Financial Literacy for Students Act.

Under current federal law, individual school districts and states are left to create and implement financial literacy education. (When Sen. Hagan was a state senator in North Carolina, she passed a law to include financial education in North Carolina's high school civics courses.) The Financial Literacy for Students Act would create incentive grants for states that agree to provide financial literacy education in Title I public elementary and secondary schools. In addition, the bill encourages states to provide professional development for teachers so they can teach financial literacy.

"The Financial Literacy for Students Act was one of the first bills I sponsored after I was elected to the Senate," says Sen. Hagan. "I'm a former banker and have always believed teaching personal finance is critical. The experiences people had during the recession were a disastrous consequence of what people do when they don't understand the implications of taking out a mortgage, taking on student loan debt or credit card debt."

Are We Finally Ready To Learn Our Lessons?

The Financial Literacy for Students Act was introduced in 2009 and 2011 and died in committee both times. This time around, Sen. Hagan hopes to attach her bill to the reauthorization of the Elementary and Secondary Education Act, also known as No Child Left Behind.

"Last time around, there were a lot of other things on the agenda, so the bill stayed in committee," Sen. Hagan says. "But now I think the recent financial crisis has led a lot of people to believe that if we can do a better job educating our kids it will be easier for people to handle their finances."

Sen. Hagan says that no additional money would be required from the federal government if this bill passes because the funds would come from the existing fund for the improvement of education. States would need to apply for grants from that fund to support financial literacy education.

One change in the bill for this session of Congress is that it will encourage states to form partnerships with community-based organizations, financial institutions, and local businesses to carry out the required activities. The bill has been endorsed by Operation HOPE, Junior Achievement, the Council for Economic Education, North Carolina Council for Economic Education, and the American Bankers Association.

In a subcommittee hearing on financial literacy in April, both Republican and Democratic senators expressed support for financial literacy education. Sen. Mike Enzi (R-Wyo.), the ranking minority member and one of only two accountants in the Senate, said, "I'm here to tell you that I feel a new urgency about the importance of educating people about issues related to finances from a young age."

Sen. Hagan plans to seek bipartisan support for her bill when she returns to Washington next week. "Financial education isn't rocket science," she says. "We just haven't taught it in the past."

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gfulremtec

Wanda---My company has developed an interactive web based curriculum that is being used by numerous high schools around the country to effectively address the financial literacy need. Pre and post tests have shown average score increases from failing to passing for the majority of the students. I believe that the adult/parent knowledge needs to be addressed but we have found that this segment of the population wants to get financial education in one hour lunch and learn sessions which are not adequate to obtain the level of education needed. More information is on www.timemaps.biz .

May 06 2013 at 11:57 AM Report abuse rate up rate down Reply
Wanda Thibodeaux

I agree that schools might be able to reinforce some good financial concepts. But statistically speaking, studies are showing that the financial education kids get in schools isn't improving financial literacy that much. This isn't to say that it can't be useful, but rather to say that it appears that those who develop the programs need to do some more research about what an effective curriculum is before they try to make this a requirement. Otherwise, it's just spending more money and hoping things work out. Plus, no program can possibly come close to the 12+ years parents have to model concepts and habits. I think this kind of approach ignores how to help the parents learn so they can be better models.

May 06 2013 at 7:42 AM Report abuse rate up rate down Reply
Harrillfam2

I can't stop laughing,Can Congress Help Boost the Nation's Financial Literacy?" Congress is in the top of the class for finical illiteracy! They would be great professors at teaching subjects like lying , cheating, extortion, how to be bought off by the highest bidder(lobbyist),counterfeiters,and being self centered idiots!!!!!!!

May 05 2013 at 10:48 PM Report abuse +2 rate up rate down Reply
mrspelosi

badbadevan
The Tea Baggers are the feeble minded lackey's of the Koch Bothers.

________________________________

It is such a shame that you continue to post such low class and uneducated remarks. Perhaps tomorrow you could enroll in some bahavioral counseling doll. You appear to be out of control dear.

May 05 2013 at 9:39 PM Report abuse +1 rate up rate down Reply
mrspelosi

badbadevan
You're not all there

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Darling it is so sad to see that your still off the wagon. When was the last time you attended one of your meetings or at least called your sponsor dear?

May 05 2013 at 9:36 PM Report abuse rate up rate down Reply
sailcatter

Are you kidding? Congress doesn't understand financial literacy. Why would they consider themselves fit to instruct the rest of us?

May 05 2013 at 7:07 PM Report abuse rate up rate down Reply
teaparty.usa.usa

6000 AMERICAN TEA PARTY BIKERS RODE IN CONNECTICUT TODAY TO RAISE MONEY FOR THE SANDY VICTIMS THAT WERE BOMBED N KILLED N MAIMED FROM OBOMBUS LETTING IN HIS ILLEGAL IMMIGRANTS "BREAK" INTO AMERICA . ! "TEA PARTY USA !~~"TEA PARTY USA !~~"TEA PARTY USA !~~TEA PARTY USA !~~"TEA PARTY USA !~~OBOMBUS IS KILLING AMERICANS A COUPLE AT A TIME. !

May 05 2013 at 6:56 PM Report abuse +6 rate up rate down Reply
Barbara

Yes they can, but the question is Will They. I would bet not. It is in the best interest of the Government and Corporate America to keep the American people at the lowest possible education level as possible ( just enough education to do minimal tasks). If the American people get to educated it would be dangerous to their well being.

May 05 2013 at 6:07 PM Report abuse rate up rate down Reply
bzh484

Aministration and Congress, keep your nose out of education.
Let the States create their own systems.

May 05 2013 at 4:16 PM Report abuse +2 rate up rate down Reply
mbhbburge

Yes, they can. If the TeaParty Repubs in the House just leave -- along with their single digit IQ's, and take John "where are the jobs" Boehner" with them. That would be a good start.

May 05 2013 at 2:52 PM Report abuse -3 rate up rate down Reply