Some good news came out of Providence last week.
Last Wednesday, Governor Dan McKee signed into law legislation (2021-H 5491, 2021-S 0349) that will require statewide standards in consumer education for public high schools. The legislation directs the Council on Elementary and Secondary Education and the Rhode Island Department of Education to develop instruction standards on personal finance or consumer economic topics, including installment purchasing, budgeting, credit and the law, employment and income, saving, investing, and money management. These standards must be developed and approved no later than Dec. 31, 2021. This means that personal finance classes are required to be offered in public schools by the start of the 2022-2023 school year.
“Financial literacy is key to a young person’s future success” Governor Dan McKee
The bill signing took place at a ceremony at Tolman High School. “Financial literacy is key to a young person’s future success,” said Governor Dan McKee. “This legislation paves the way for our public high schools to provide young people with the skills they need to achieve their financial goals. It will also help us ensure that every Rhode Island high school student is equipped with tools to prepare them for economic opportunity after graduation. Thank you to everyone who played a role in getting this bill over the finish line for the students of Rhode Island.”
“Now more than ever, a strong working knowledge of personal finance is essential for young people as they enter adulthood” General Treasurer Seth Magaziner
The bill was requested by the office of the General Treasurer as a result of a 2019 Treasury Department report that recommended mandatory financial literacy courses for college students. “Now more than ever, a strong working knowledge of personal finance is essential for young people as they enter adulthood,” said General Treasurer Seth Magaziner. “As Treasurer and a former public school teacher, I know firsthand the positive long-term impact providing this education will have on our State. Now more than ever, a strong working knowledge of personal finance is essential for young people as they enter adulthood. I want to thank the many educators, students, parents, colleagues in the General Assembly, and members of my Office for their years of partnership to ensure that all students have the financial skills they need to succeed.”
“Knowledge is power, and knowledge about how money works empowers students to improve their economic futures” Education Commissioner Angélica Infante-Green
Multiple states are pushing personal finance bills
Rhode Island is not the only state trying to improve the financial literacy of its students. According to Next Gen Personal Finance’s bill tracker, 25 states in the U.S. have introduced legislation that would add personal finance education to their high school curriculum. Student debt and a heightened interest in economic inequality are behind the efforts. A growing number of studies show the effectiveness of financial literacy when taught by well-trained teachers. A study released in March by researchers at the University of Wisconsin and Montana State University reported a spike in teacher participation in personal finance education programs.
“Knowledge is power, and knowledge about how money works empowers students to improve their economic futures,” said Education Commissioner Angélica Infante-Green. “Financial literacy has long been a priority for students, and we’re excited that this bill will help ensure that every Rhode Islander graduates with a greater understanding of how to manage their personal finances. We look forward to working with students and advocates to help break cycles of poverty and make sure that all families can benefit from our economy.”
However, the quality of the personal finance curriculum offered by high school varies by state and school. Only six states require high school students to complete a semester-long course that focuses on personal finance. Some states permit shorter courses or allow the content to be included in another class.
“How can we expect our children to become financially successful adults if we do not teach them the core aspects of our financial system when they are in school?” Senator Sandra Cano
Even in states that don’t require personal financial instruction, some schools choose to teach it — such as the Tolman High School, where the signing ceremony was held. However, others ignore the subject completely.
“Many young people just don’t understand the complexities of credit and debt — what it means to have a mortgage that’s underwater, or how high interest rates can bury them in debt for their entire lives,” said Representative Mia A. Ackerman (D-Dist. 45, Cumberland, Lincoln). “They don’t understand that paying the minimum on their credit card bills will keep them paying forever.”
Does requiring personal finance education help?
The good news is that mandated personal finance education does seem to help, according to research from the National Endowment for Financial Education. “Exposure to financial education in these states shifts students from all backgrounds from high-cost to low-cost financing, thus changing student behavior and driving better outcomes when it comes to paying for college.”
“How can we expect our children to become financially successful adults if we do not teach them the core aspects of our financial system when they are in school?” said Senator Sandra Cano (D-Dist. 8, Pawtucket), who chairs the Senate Education Committee in Rhode Island. “This bill will ensure that our children leave the public school system with a firm and knowledgeable grasp on basic financial concepts that will help them succeed in their adult lives.”
SuperMoney’s Financial Literacy Scholarship
The mission of SuperMoney is to help all Americans achieve their financial goals. So, we applaud all efforts that improve the financial literacy of Americans. That is why we set up SuperMoney’s Financial Literacy Scholarship. This scholarship seeks to celebrate students who share our same mission and provides a $1,000 award twice a year to students who want to help Americans improve their financial wellness through continued education. Governor Dan McKee signed into law legislation (2021-H 5491, 2021-S 0349) last Wednesday that will require statewide standards in consumer education in public high schools.
Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.