Written by Andrew Keshner
“COVID-19 has made it very clear around the world how unprepared people are facing shocks.”
The number of high school students required to receive personal finance instruction before graduation is about to rise significantly, but some financial literacy experts say dark memories of the early days of the pandemic may be one factor in the increase. states.
Nan Morrison, president and CEO of the Council on Economic Education, said, “The pandemic has really exposed the fact that many Americans have never really had financial resilience, and that people It really opened my eyes.”
“The pandemic has certainly hit some communities harder economically than others,” she added. “All children will have access if they meet the requirements.”
Thirty-five states, including the newly added states of Florida and Pennsylvania, now have no part in high school graduation requirements, according to a report released by Mr Morrison's organization last week. Current or future regulations are in place to include personal finance-related subjects in the Department.
That's an increase of 12 states from 2022, when the organization's biennial report found 23 states had such mandates in place or scheduled to go into effect. Between 2020 and 2022, only two of her states adopted personal finance education requirements.
According to the latest report, 20 states now require or are ready to require a semester's worth of personal finance instruction, up from nine states in 2022.
Policies promoting personal finance education continue to expand. In Washington, the state House of Representatives recently passed a bill that would require high school students to take half a credit in financial education. In California, a group is gathering signatures for a November ballot measure that would require high school students in the Golden State to take a semester-long personal finance class.
“It feels like the boulders are starting to roll down hill very quickly,” said Christopher Caltabiano, chief program officer at the Council on Economic Education. For him, the main driver is the growing evidence that financial instruction in the classroom helps students in their financial lives. There's also an element of following the leader as state legislators learn about the new requirements, he added.
But Caltabiano said the pandemic played a role, even if it was secondary.
In 2020, stay-at-home orders forced many businesses to shut down, millions of people lost their jobs, and the federal government provided trillions of dollars in relief to families and businesses suddenly unable to pay their bills. I came up with a plan. The government's response included three stimulus checks, expanded unemployment benefits, and an extended suspension of student loan payments.
“We need this everywhere,” said Annamaria Lusardi, a senior fellow at the Stanford Economic Policy Institute who also teaches financial literacy classes at Stanford University. “It's become very clear around the world what we're going to face.”
Lusardi's research traces the line between financial literacy and financial “vulnerability” during acute economic crises.
After reviewing survey data from April 2020 and May 2020, Lusardi and his co-authors found that people who scored high on three questions about interest rates, inflation, and stock diversification were more likely to We determined that there was a high possibility that they would answer that they had $2,000 available. Emergency.
He said the pandemic did not create a need to increase financial literacy, but rather revealed the “cost of financial illiteracy.” Mr. Lusardi stressed that this is not a burden for people who are not financially literate. “That's because it's not in school.”
The need for more financial know-how existed even before the pandemic. A 2019 study by the FINRA Investor Education Foundation, the education arm of the government-chartered nonprofit organization that regulates the securities industry, found that financial literacy is declining across all demographics, but especially among 18- to 34-year-olds. It is declining.
He said Pennsylvania Sen. Chris Gebhardt, a Republican, was not responding to the economic burden of the pandemic when he proposed a bill that would require high school students in the state to take a personal finance course.
He is trying to break a long-standing pattern in which too many people learn about money “by making bad financial decisions and learning from their mistakes.” “I think there's a better way,” he said.
Still, he said the pandemic had highlighted people's “perilous” financial situation, which may have contributed to his support for the bill.
Gebhardt's proposal came as part of an omnibus education policy bill passed in December. Starting in the 2026-2027 school year, ninth-grade teens in all Pennsylvania schools, not just public schools, will be required to take one personal finance course.
While the details will vary depending on school districts determining their curriculum, Gebhardt said the bill provides guidelines to discuss personal finance basics such as budgeting, credit cards, investing and insurance.
Gebhardt said students are entering a complex economic environment where spending and investment decisions can be made as easily as a tap on a smartphone. “We wanted to give them a financial foundation to make financial decisions.”
As with many other products during the pandemic, the financially illiterate population may face supply chain challenges.
John Pelletier, director of Champlain College's Center for Financial Literacy, said there is a shortage of educators trained enough to teach personal finance. The center offers classes that teach teachers how to teach this topic.
She said financial literacy teachers typically have certifications in other subjects, such as social studies, family science, consumer science, business or mathematics.
“If we're going to mandate this, we have to make sure these educators are trained. That's where I'm concerned,” he said. “My concern is that people may consider this a failure without training.”
In fact, “financial education is most effective when there is a rigorous curriculum, specific courses focused on personal finance (rather than incorporating these concepts into other classes), and trained teachers.” said Professors Lusardi and Olivia Mitchell of the University of Pennsylvania. The Wharton School wrote in a magazine article last fall:
It is also important to provide financial education after high school, including at university and in the workplace, he added. “Acquiring financial knowledge is a lifelong process, as significant financial challenges vary by age,” he added.
Last year, 1.7 million students enrolled in a one-semester personal finance course in high schools across the state. That number is expected to rise to 6.4 million by 2028, according to projections in a December report authored by Pelletier.
It's no coincidence that financial literacy efforts have increased in the wake of the pandemic, the report says.
Tim Lanzetta, co-founder of Next Gen Personal Finance, says the good news is that teachers are increasingly looking to learn about financial literacy for their students and themselves. The nonprofit's services include free teacher workshops and curriculum to schools.
Over the past four years, more than 17,000 teachers have accumulated more than 430,000 hours of training and instruction through Next Gen's certification courses, online modules, and in-person workshops, he said. Teachers and students play an important role in promoting improved financial literacy, he said.
“Once you learn this for yourself, you become a believer,” he said.
-Andrew Keshner
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03/09/24 0810ET
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