How each US state is shaping the personal finance IQ of its students

CNBC – 2/5/2020 (reprinted)

By Eric Rosenbaum
Click here to view the full article

KEY POINTS

High school students go on to make better financial decisions in states that require personal finance coursework.

That includes how to pay for college, taking out loans and loan repayment, avoiding payday lenders and credit card debt.

Five states have no personal finance standard or requirement in public school: Alaska, California, Montana, New Mexico and Wyoming, according to the 2020 biannual Survey of the States from the Council for Economic Education.

Americans choose where they live for many reasons, including access to a quality education for their children. But families may not pay close attention to one educational standard that varies from state to state and can have big implications for financial well-being and, in particular, student debt: high school personal finance content.

There’s increasing evidence that students who are required to learn financial literacy as part of a state’s education curriculum make better financial decisions across multiple, and critical, early adult-life money decisions. That includes how to pay for college — understanding available grants and financial aid, as well as government vs. private student loans — and avoiding payday lenders and credit card debt.

“Research shows that these requirements make a difference,” said Nan Morrison, the president and CEO of the Council for Economic Education, which released its biannual Survey of the States on Wednesday, a detailed state-by-state look at the economics and personal finance standards and requirements in K–12 state education systems.

“College debt is real, and kids in the last population bump are living with it now … and having kids now. … The need to be financially responsible is not going away,” Morrison said. Individuals need to be “on the ball and in control” earlier in life, she said, and the first step is financial literacy.

Six states require stand-alone course

Only six states require a stand-alone personal finance course to be taken in high school — Alabama, Iowa, North Carolina, Tennessee, Utah and Virginia. But Morrison said integration of personal finance content into existing classes — such as math, economics, civics and career and technology courses — is the most important step. “Is five to eight hours in a course ideal? No? But it is still good for kids starting at zero,” she said.

The Montana State University professors find in their research that mandating financial literacy education is more important than the specific format in which it is taught. Improvements in college financing decisions do not results from personal finance being taught as a stand-alone course, they found, but from the critical decision to enact a state-level, top-down mandate.

It’s a social justice issue. Better education equips kids with the tools to make better decisions, to understand their first paycheck and take better care of themselves and their families.

– Nan Morrison
_{PRESIDENT AND CEO OF THE COUNCIL FOR ECONOMIC EDUCATION}

The Council for Economic Education cited recent data from Next Gen Personal Finance, a nonprofit that provides free resources for personal finance content, illustrating why these mandates are…