https://www.nytimes.com/2018/01/19/your-money/states-financial-literacy-classes.html

Through decades of substantial growth and development, a common complaint about the American school system remains: it focuses far too little on practical life skills, leaving students unprepared for the adult world.

Recently, there has been an effort of remediation by encouraging financial literacy education. In response to the concerns about the lack of financial knowledge many students graduate with, this effort has spawned delays and controversies in certain states and provoked a debate on the effectiveness of this curriculum. 

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Currently, 25 states require students to take a financial literacy course to graduate— up from 13 in 2010— and many are hoping this will address Americans’ need to improve their financial illiteracy.

The problem was detailed by the National Bureau of Economic Research in 2019: 57 percent of Americans are currently financially illiterate.

This has hurt the economic standing of many, with Americans collectively having more than 1 trillion dollars in credit card debt. 28 percent of adults have no retirement savings, and 37 percent of adults say that they’d struggle to pay an unexpected 400 dollar expense. This, combined with increased economic woes that have further hurt people’s checkbooks, have led many to support these new requirements.

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These efforts have been popular, with 88 percent of Americans supporting the new course requirements and with bills to introduce them frequently receiving bipartisan support. However, many challenges have accompanied this shift, with a multitude of states struggling with implementation issues and controversies.

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For example, delays have plagued some state programs: in early 2019, Iowa passed Bill SF139, which required students to take a half credit of a financial literacy course. The changes were supposed to be for the class of 2021, but the changes were delayed by two years due to implementation challenges.

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Implementation problems have also played out in other states, including New Hampshire. Starting with the class of 2027, New Hampshire students are required to take a financial literacy course to graduate. New Hampshire also allowed students to gain course credit through extracurricular activities with the Learn Everywhere Program, which was established in 2018 by Bill SB485. PragerU, a controversial conservative media organization, sought to use the program to offer a financial literacy course that could be used to fulfill the requirement. Many opposed this move due to the controversial nature of PragerU and concerns over potential political bias in the course. The course was also criticized by the Director of the New Hampshire School Administrators Association for its lack of academic challenge, with the only assignments being multiple choice quizzes.  Ultimately, the course did end up getting approved, but questions were raised about potential conflicts of interest involving the state New Hampshire Education Commissioner Frank Edelbut, who was an important part of the approval process. During the approval process, Edelbut spoke at a PragerU event in California and received free lodging from the organization. Edelbut also waited until news organizations investigated the transaction to report it, which he was required to do by New Hampshire state law. 

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Beyond specific implementation struggles in certain states, there is also the question of if financial literacy classes are actually effective in preparing students for the real world. 

Data currently shows  conflicting results: According to a 2016 research summary by the Center for Economic Education, financial literacy education was shown to decrease severe delinquency rates, increase adults’ net worth, and encourage financially responsible behaviors. However, a less recent 2014 study found that financial literacy classes had a negligible effect on financial behaviors, with the limited effects further decreasing over time. The fact is that many students pay little attention in their classes and forget most course material when the classes end. This behavioral pattern is likely still present in financial literacy courses, which explains  why they may not be as effective as they seem. Ultimately, more research is needed in this field to determine if these classes are truly effective and have the ability to provide their claimed benefits. 

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As the debate around financial literacy classes continues in state legislatures and in academia, this topic will remain an important one, with it affecting students and their futures.

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Citations (MLA):

Bernard, T. S. (2010, April 9). Working Financial Literacy in with the three R’s. The New York Times. https://www.nytimes.com/2010/04/10/your-money/10money.html 

Council for Economic Education. (2016, November). Making the Case for the Need for Economic and Financial ... Council for Economic Education. https://www.councilforeconed.org/wp-content/uploads/2016/11/2016.11_Research-Summary-for-the-Website.pdf 

Epperson, S. (2023, December 16). More than half of U.S. high school students will take a personal finance class before graduation, following the passage of a new Pennsylvania Law. CNBC. https://www.cnbc.com/2023/12/16/more-than-half-of-us-high-school-students-will-take-a-personal-finance-class-before-graduation-following-the-passage-of-a-new-pennsylvania-law.html 

Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2013, October 2). Financial Literacy, financial education and downstream financial behaviors (full paper and web appendix). SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2333898 

Gibson, S. (2023, October 6). While Prageru sought state approval, Education commissioner provided support behind the scenes. New Hampshire Public Radio. https://www.nhpr.org/nh-news/2023-10-06/while-prageru-sought-state-approval-education-commissioner-provided-support-behind-the-scenes 

IA - SF139. BillTrack50. (n.d.). https://www.billtrack50.com/billdetail/1043513 

New Hampshire Department of Education. (n.d.). Learn Everywhere Fact Sheet. New Hampshire Department of Education. https://www.education.nh.gov/sites/g/files/ehbemt326/files/inline-documents/learneverywherefactsheet.pdf

Survey takes stock of state financial education requirements. Federal Reserve Bank of Minneapolis. (2010, October 1). https://www.minneapolisfed.org/article/2010/survey-takes-stock-of-state-financial-education-requirements 

Vox. (2024, March 7). Why financial literacy education in the US sucks. YouTube. https://www.youtube.com/watch?v=0uvurQcj0fs 

Which states require financial literacy for high school students?. Ramsey Solutions. (2024, March 11). https://www.ramseysolutions.com/financial-literacy/states-require-financial-literacy-in-high-school 

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