The following op-ed by Secretary of Education Arne Duncan, Secretary of the Treasury Timothy Geithner, and Obama White House Senior Advisor Valerie Jarrett appeared on the Huffington Post website. See also the April 28 press release.
While Americans from Wall Street to Main Street focus on much-needed financial reforms that will set and enforce clear rules across the financial marketplace, we also need to recognize that most Americans don’t have the knowledge and skills they need to make the right financial decisions for themselves and their families.
Last year, the FINRA Investor Education Foundation’s National Financial Capability Study, conducted in consultation with the Department of the Treasury, found that too many Americans are giving away their hard-earned dollars to bank and credit card fees. Most don’t maintain a rainy-day fund for emergencies.
Few are able to perform basic interest calculations necessary to compare the cost of a loan or to figure out how much to try to save. On just about all measures, the study found young adults are the least money-savvy.
In December, the administration announced the National Financial Capability Challenge, a partnership between the Departments of Treasury and Education focused on promoting financial education among high school students and assessing their knowledge of personal finance. The results are in. More than 2,500 teachers and 76,000 students in all 50 states participated in the voluntary exam, which shows interest is strong. But the scores were disappointing. The average student is just squeaking by with 70% correct. Students failed to answer basic questions about credit cards, car insurance, and compound interest. This shows we have a lot of work to do.
Luckily we have important models to follow. For example, at Stonewall Jackson High School in Manassas, VA, teacher Terri Carson helps students manage the student-run credit union and includes a financial literacy boot camp in all her classes. She had over 100 students take the Challenge. Over half of them scored in the top 20% nationally; 17 had perfect scores. Those results are commendable, and Carson is working to replicate them. She is hoping to work with her school and the Prince William County School District to make sure that all students demonstrate a basic understanding of personal finance in order to graduate.
Today we are recognizing Carson and many teachers and students who participated in the National Financial Capability Challenge, for their commitment to financial education. We hope to see more locally driven efforts to make youth financial education a priority in schools across the country. At the same time, we’ll be doing our part at the federal level. In our schools, we will promote a well-rounded education that includes financial literacy. We will give consumers the information and education they need to make smart financial choices. And we will work to provide all American families with access to the bank accounts they need to manage their daily finances.
The agenda is clear. Let’s pass serious financial reform. Let’s promote financial access. And at the same time, let’s make sure that we are providing all Americans — especially our youth — with the financial education they need to succeed in this increasingly complex, fast-moving economy. Their futures — and ours — depend on it.
Secretary Arne Duncan, Treasury Secretary Timothy Geithner, White House Senior Advisor Valerie Jarrett