Below is a selection of the many studies showing the benefits of effective financial education programs. (If you know of research that ought to be added to this list, please contact us!)
Effective Classroom-based Financial Education Improves Financial Knowledge and Behaviors
How do we know? From “A review of youth financial education: Effects and evidence” published by the Consumer Financial Protection Bureau in April 2019.
- “Starting early with age-appropriate and relevant financial education and consistently reinforcing those lessons can pay dividends over the course of a lifetime.”
- State-mandated high school financial education:
- Improves credit scores
- Decreases default rates
- Reduces non-student debt
- Shifts student debt from high-interest to low-interest sources
Students who receive mandated financial education in high school make better student loan borrowing decisions when it’s time for them to go to college.
How do we know? From the Effects of State-Mandated Financial Education on College Financing Behaviors study by Carly Urban, Ph.D. and Christiana Stoddard, Ph.D., Montana State University. (2018)
- Increases acceptance of grants and subsidized federal loans at better rates.
- Decreases the amounts of more expensive private loans.
- Also, decreases the likelihood of carrying a credit card balance.
Effective financial education in high school can improve credit scores and lower delinquency rates for young adults.
How do we know? From the State Financial Education Mandates: It’s All in the Implementation study by Carly Urban, Ph.D., Montana State University; Maximilian Schmeiser, Ph.D., Federal Reserve Board; J. Michael Collins, Ph.D. Center for Financial Security University of Wisconsin-Madison; and Alexandra Brown Federal Reserve Board (2015)
- More rigorous financial education mandates lead to greater financial well-being for young adults.
- There was a significant reduction in the likelihood that someone who had high school financial education would subsequently become 90+ delinquent on a credit account.
- The authors concluded, “[I]f a rigorous financial education program is carefully implemented, it can improve the credit scores and lower the probability of delinquency for young adults.”
Most high school students don’t have the money management skills they need.
How do we know? From “Enhancing Retirement Savings with School-Based Financial Education” by Annamaria Lusardi, Ph.D., academic director of the Global Financial Literacy Excellence Center and Denit Trust Chair of Economics and Accountancy at the George Washington University School of Business; and Carlo de Bassa Scheresberg, senior research associate at the Global Financial Literacy Excellence Center.
- Most young Americans are not financially literate enough to successfully navigate the complex retirement landscape.
- Making financial education universally available in schools “is critical to future Americans achieving a secure retirement.”
Americans know that classroom-based financial education works.
How do we know? From “Where Financial Education Has the Greatest Impact,” a 2017 survey conducted by the National Endowment for Financial Education® (NEFE®) in partnership with Right About Money.
- 74% of US adults believe that financial education in K-12 schools would lead to the best results in creating financial well-being.