As Consumer Protections Dwindle, Schools Push Financial LiteracyJune 10, 2019
This is a preview of the Summer 2019 issue of The American Prospect magazine. Subscribe here.
In early January, with near-unanimous support, New Jersey legislators passed a law mandating financial literacy instruction for all middle school students across the state. The law says that lessons should provide students with the skills for “sound financial decision-making” and that topics addressed should include budgets, savings, credit, debt, insurance, investment, “and other issues associated with personal financial responsibility.” Courses could involve teaching 11-year-olds how to save for retirement, or 12-year-olds about mutual funds. The primary sponsor of the bill pledged to keep fighting until schools start teaching the topics as early as kindergarten, insisting the next generation couldn’t afford to wait.
Across the country, a movement to teach financial literacy in public schoolshas gained tremendous traction. Nineteen states now require financial education to graduate, according to the Council for Economic Education, up from 13 in 2011. In 2018, 29 states and Puerto Rico introduced bills around financial literacy, and 17 states enacted laws or adopted resolutions.
The movement mirrors a similarly vigorous push in Washington to promote financial literacy. In just 2019, Congress introduced at least six pieces of legislation to promote financial education—ranging from a House resolution to “support the goals and ideals of Financial Literacy Month” (which falls in April) to a Senate bill that competitively awards grants to school districts that teach financial literacy. The push has gained even more momentum thanks to Kathy Kraninger, the new head of the Consumer Financial Protection Bureau. She announced in April that her federal agency will focus less on enforcement action and more on education.
Legislators from both parties have embraced financial literacy—undeterred by both its cost and the dearth of research supporting its effectiveness. They argue that in a world where citizens must make ever more complicated and high-stakes decisions, empowering the public to be competent economic actors is the most important thing we can do.
But critics counter that nothing would make financial institutions happier than placing the onus of responsibility on individual consumers. Indeed, some of the most enthusiastic backers of financial literacy come from the financial services industry itself—with banks, investment firms, and insurance companies eager to sponsor trainings and school curricula, even as they lobby hard against regulation for their own businesses.
THE NATIONAL MOVEMENT to teach financial…