The vast majority of states fail to deliver anything close to reasonable personal finance instruction in grades K-12, a new report finds. But in an encouraging development, the report also documents a grass roots movement among individual school districts that is helping to offset paralysis at the state level.
Just five states get an A for financial education, according a “report card” from the Center for Financial Literacy at Champlain College. That is the same number awarded on the center’s last report in 2015. Other results were mixed. States receiving a B fell to 19 from 20. But those receiving an F also fell, to 11 from 12.
The overall trend is “slow but steady progress” in teaching financial literacy in schools, the report concludes. So, at least the direction is up. But middling success on this front should be seen as disturbing.
Financial education has been on the national radar in a big way since the Great Recession. We have an urgent problem that calls for meaningful action.
Four in 10 adults give themselves a grade of C or lower in financial literacy, according to a study from the National Foundation for Credit Counseling. A third of adults have no savings; 60% do not have a budget and 22% do not pay their bills on time. Financial education in schools could help turn that around.
Yet relatively few students are exposed. Just 16.4% of students are required to take a personal finance course to graduate from high school, found a study from the nonprofit Next Gen Personal Finance.
That abysmal figure is reflected in the report from Champlain College, which looked at public schools in every state and, among other criteria, determined how financial education factors into graduation requirements. Researchers also reviewed state laws. The five states that earned an A together have just 9% of the nation’s public high school students.
That means 91% of public high school students receive less than optimal exposure to this critical subject. Including states that earned a B brings the total public high school population getting a financial education to just 38%, according to the report.
So, which states are killing it? Alabama, Missouri, Tennessee, Utah and Virginia score an A. Here’s why: Tennessee and Utah both require a half-year stand-alone course in personal finance. Alabama and Virginia both require that personal finance instruction be part of some other full-year course, which equates to a half-year dedicated course on money. Missouri allows local school districts to choose either a half-year stand-alone course in personal finance or commit half of a full-year course in some other subject to personal finance.
Utah is seen as the gold standard. The state also requires that students submit to an end-of-course assessment and that educators teaching this course have formal training in financial planning, credit and investing, and consumer and family economics.
The importance of teacher training cannot be overestimated.
Just one in five teachers believe they are qualified to teach personal finance.
Those who feel confident in the subject matter jump to 80% from 38% after some training, according to the report.
Bringing up the bottom with a grade of F are Alaska, California, Connecticut, Delaware, District of Columbia, Hawaii, Massachusetts, Pennsylvania, Rhode Island, South Dakota and Wisconsin. These states do not require personal finance even as part of another course and they do not require schools to offer it as an elective. Check your state here.
Despite the sobering figures, hopeful signs exist. Financial education has had the support of every president since George W. Bush. So far, the Trump administration appears to be on board—though the likely defanging of the Consumer Financial Protection Bureau poses risks to this commitment.
“Progress slowly and steadily is being made in the states on this topic since the great recession,” says John Pelletier, director of the center at Champlain. For example: Alabama went from a grade F to A; Florida, grade D to B; Maine, grade D to B; and Washington state, grade F to C. States in the process of making changes that could increase their grade materially include Arkansas, Delaware, Nevada and Vermont. Other states doing more on this front include Illinois, Texas, Virginia and West Virginia.
For example, Arkansas recently passed a law that will require more substantive personal finance education in high school, beginning with the class of 2021. Delaware has created a financial literacy task force that has recommended mandatory financial literacy education standards for grades K-12. Texas now requires all high schools to offer personal financial literacy as a half-year social studies elective in addition to an economics/personal finance requirement.
Of course, it isn’t all forward motion. Idaho and Louisiana appear to be backsliding, requiring fewer hours of personal finance instruction, according to the report.
Bright Spots Beneath the Surface
Financial education will always be a difficult subject for educators. States are in charge of their public-school curriculums, and in many states it is left to individual school districts to make key decisions on what and how they teach.
So, some failing grades in the new “report card” from the Center for Financial Literacy at Champlain College are not as awful as they sound. “In many states, the focus on personal finance is being moved forward at a grass roots level by the great efforts of educators, school boards, principals and superintendents,” says John Pelletier, director of the center.” This is being done in states where no clear mandate exists.”
For example, Wisconsin is a Grade F state doing many things to promote financial literacy. Officials have an Office of Financial Literacy, and the Governor's Council on Financial Literacy awards grants to individuals and corporations making a difference. Without a mandate, 64% of Wisconsin school districts have a personal finance requirement for graduation, up from 44% in 2013. The state also hosts the National Institute of Financial and Economic Literacy, which provides teacher training.
In Vermont, which gets a grade D and has no personal finance mandate, the number of high schools requiring a stand-alone course in personal finance as a graduation requirement has increased to 20% from 3% in 2011, and another 50% of high schools offer personal finance electives—a rate that is nearly double what it was in 2011.
Meanwhile, Washington State, Iowa, Indiana, Missouri, Texas, Ohio and Florida have taken specific steps aside from any federal programs to ensure that college students better understand loans and debt.
Other grass roots programs abound, pushing financial education down to middle schools and into communities, and sponsoring teacher training. State treasurers nationwide have become especially attuned to the need for financial education and in many states have taken the lead in promoting programs and laws that support the movement.
Five Keys to High School Financial Literacy
What are the primary elements of a successful student financial literacy course? According to the Center for Financial Literacy at Champlain College, there are five:
Topics must be taught in a course that students are required to take as a graduation requirement.
Teacher training is critical. To effectively educate students about personal finance, we need confident, well-trained educators.
Funding is needed to ensure that these classes are offered to all high school students.
Quality assessments on knowledge and behavior are needed to make sure that the high school classroom personal finance training is working.
Educators need easy access to quality curriculum, lesson plans, calculators, videos, games, applications, activities, projects, case studies, articles and expert volunteer speakers.