CFPB Gathers Educators and Advocates to Explore Financial Education Effectiveness
July 29, 2014
July 29, 2014
By: Kim Vu, Executive Director, Northwest Credit Union Foundation
Last week I was invited to attend a gathering hosted by the Consumer Financial Protection Bureau at the Federal Reserve Bank’s Los Angeles Branch to convene with a group of approximately 60 financial education advocates, spanning across credit unions, banks, nonprofits, academia and public agencies. The purpose of the gathering was to discuss the early findings of the Program for International Student Assessment’s (PISA) examination of 15 year olds’ proficiency in financial literacy across the globe. Administered every three years, PISA tracks student performance in the areas of reading, mathematics and science literacy. PISA also tracks cross-curricular competencies such as problem solving and critical thinking. Financial literacy was included in the latest student assessment to create the first global baseline for youth financial proficiency and help countries think about how to effectively teach students about personal finance.
The 200-page report covers details of the PISA assessment and the results from 16 countries. PISA scores range between 0-1000 and among the participating countries, the US ranked in the middle with average score of 500. Shanghai, China scored the highest of all countries with an average score of 600. The assessment also looked at proficiency, rating students’ knowledge of the subject between 1-5; 5 being fully proficient. Eighteen percent of US students scored at or below level 2 and nine percent scored at level 5, which translates to 1 in 6 students being below proficiency. Fifty percent of the students surveyed have a bank account and of that, sixty-nine percent earn income from a job.
As a response to the assessment findings, CFPB has published a policy recommendation for advancing K-12 financial education. Panelists throughout the day from the US Department of Education, US Department of Treasury, Center for Public Policy and other nonprofit and community leaders from the City of Los Angeles and City of San Francisco shared best practices and discussed opportunities for collaboration among agencies present in the room.
So, what’s the takeaway for financial educators and advocates? Classroom education, alone is not enough. Application is KEY! Programs that have seen success in application are in-school branches, student-run community branches and youth job readiness programs that incorporate financial education as a major component. Students participating in these programs—that are also equipped with their own youth savings account to interact with (and generally seeded by a public or private entity)—have the highest financial literacy proficiency, based on the PISA results.
Financial education directly ties to opportunity, access and equity. Understanding the basics of personal financial management, having access to banking services, and direct interaction with a personal banking account will close the inequity gap in our communities. The NWCUF offers a variety of partnerships and resources to help your credit union reach youth in your communities through financial education. For more information, visit our website or email us at firstname.lastname@example.org.
To learn more about the key findings of the PISA assessment survey, visit the Organization for Economic Co-operation and Development (OECD).
Questions about this story? Contact Lynn Heider: 503.350.2225, email@example.com.
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