More states are now requiring students to take courses that address economics or personal finance to graduate, according to a new report from the Council for Economic Education.
The group, which tracks legislation and standards around these subjects, releases a survey of states every two years.
This year’s report found that 21 states now require students to take a course that covers personal finance, up from 17 in 2018. Iowa, Kentucky, Mississippi, Ohio, and South Carolina added the requirement, while Florida dropped it.
And now in half of all states, students have to take an economics course, or a class that incorporates economics content, in order to graduate. Three states added these requirements over the past two years: Hawaii, Ohio, and Wyoming.
Understanding how money and the economy work are critical skills for young adults, advocates of financial education say. When students leave high school, they’re poised to start making their first serious financial decisions: How much should they take out in student loans for college? Or how do they save and budget their wages from their first full-time job?
Research has suggested that teaching how to navigate these questions can lead to better financial outcomes for young people. One study, which my colleague Stephen Sawchuk wrote about, compared recent high school graduates in three states that required financial literacy courses with recent grads in states without those mandates.
By some measures, the young people in those three states were in better financial shape than their peers: They generally had higher credit scores and were less likely to have accounts that were 30 or 90 days behind on payments.
And forthcoming research from Montana State University shows that learning about personal finance could help students make better choices around paying for college. Students in states with financial education graduation requirements were more likely to apply for financial aid and select low-cost financing options on student loans.
Building ‘Readiness’ for Financial Decisions
This year’s report found that there’s a gap in which students have access to financial literacy instruction. In high schools where fewer than a quarter of students were eligible for free or reduced lunch, about 62 percent of teenagers said they had the option to take the subject. In schools with more students from low-income families, where at least 75 percent of the population received free or reduced lunch, only about 52 percent of students said they could take a personal finance class.
“If this is a path to economic stability and economic mobility, we’re leaving those who are already behind, behind even more,” said Nan J. Morrison, the president and CEO of the Council for Economic Education, in a call with reporters on Wednesday. Access to these courses is a “social justice issue,” she said.
See also: Financial Literacy Transforms Students’ Lives. Here’s Where to Start (Opinion)
But not all financial literacy instruction is created equal. At least one expert has cautioned schools and districts to look carefully when searching for curricula on the subject.
Anand Marri, a professor of education who recently served as dean of the University of Rochester’s school of education, helped develop a financial literacy program at Teachers College, Columbia University.
In an interview with Education Week in 2016, he suggested that teachers turn a critical eye to programs developed by banks.
“If the point of the curriculum is to create more clients, that could be a problem,” he said.
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