F is for Finance: Should public schools mandate financial literacy education?

Starting this year, Ohio public high school students are required to take a financial literacy course to graduate. Senate Bill 1 was signed into law by Gov. Mike DeWine on October 28, 2021. Similar bills to mandate a financial literacy course were proposed in 2015, 2017, and 2020; however, did not receive bipartisan support. Last year, Ohio joined 25 other states that initiated personal finance education legislation.

Why should personal finance education be taught in schools?

Some parents are uncomfortable discussing personal finances at home. In 2017, a T. Rowe Price Survey observed that 69% of parents were hesitant about discussing financial matters with their kids. Personal finance education teaches students about banking, debit and credit cards, mortgages, investments, payday lending, rent-to-own products, credit reports, credit scores, etc. Acquiring this knowledge may prevent students from making financial decisions that lead to years of debt.

How effective is personal finance education?

MoneyRates.com conducted a study to measure how personal finance education programs at state-funded high schools improve financial behavior. The study divided the 50 states and the District of Columbia into two groups: those with a personal finance coursework requirement and those without. To assess the financial behavior of each group, the study evaluated average credit card balances and personal bankruptcy rates. The study found on average that people in states that have a personal finance coursework requirement had less credit card debt than people in states without the requirement. The first study result is promising; however, the second study result is not. Average personal bankruptcy rates were higher in states with a personal finance coursework requirement than in those states without it.

How can personal finance education programs become more successful?

1.     Provide educators with resources to implement personal finance education programs.

2.     Compare the financial education curriculum in each state against states with successful personal finance education programs and modify the curriculum as needed.

3.     Advocate for personal finance education programs in public high schools in states without them.