WRITTEN STATEMENT OF THE CREDIT UNION NATIONAL ASSOCIATION (CUNA) ON FINANCIAL LITERACY AND SOCIAL SECURITY REFORM PRESENTED TO THE HOUSE FINANCIAL SERVICES COMMITTEE
APRIL 20, 2005
On behalf of the Credit Union National Association (CUNA), which represents about 90 percent of the 9,100 state and federal credit unions nationwide and their 86 million members, we ask that this statement be submitted as part of the record for the hearing of April 20, 2005 on financial literacy and social security reform. We are pleased that the Committee recognizes the need to continue to develop a national strategy to promote financial literacy, and we appreciate the opportunity to provide an outline of the programs and initiatives that CUNA and our member credit unions are involved in to promote financial education to both youth and adults. Though CUNA has no position on whether personal accounts should be a part of any Social Security reform, it is our hope that if legislation moves forward that permits financial institutions to offer such accounts, that credit unions are included as a viable option.
Credit Unions and Financial Literacy
Credit unions have traditionally made financial education a part of their mission, providing financial information and training to members on a one-to-one basis. Many of our member credit unions actively sponsor community and school-based educational programs and seminars, providing individuals with resources such as: how to maintain a checking account; how and what to look for when purchasing family transportation; how to complete a mortgage loan application; what is involved when applying to finance or repair a home. Many credit unions are actively working in schools to teach personal finance skills to children and teenagers. We also provide credit union staff as volunteers to read to elementary school children, participate in the "Partners in Excellence" program with the local school district, and provide scholarships to needy high school students to attend institutions of higher learning. All these services are provided at no cost and are open to credit union members and the communities they serve. Highlighted below are several key programs and initiatives that CUNA and its member credit unions are engaged in to promote financial literacy.
Jump$tart Coalition for Personal Financial Literacy
CUNA is an active member of the Board of Directors for the Jump$tart Coalition, an organization whose mission is to ensure that youth and young adults are equipped with the financial literacy skills that are necessary to make informed financial decisions. A nationwide survey conducted in 2004 by the Jump$tart Coalition examined the knowledge of 4,074 twelfth- graders in 33 states. The survey shows that high school students are reversing declining scores and are demonstrating increased aptitude and ability to manage financial resources such as credit cards, insurance, retirement funds and savings accounts.
On average, survey respondents answered 52.3 percent of the questions correctly--up from 50.2 percent in 2002 and 51.9 percent in 2000. However, students did not match the 1997 aptitude levels when 57 percent answered the questions correctly. The survey also shows that nearly 78 percent of the students have a savings and/or checking account with a bank, and that the 22 percent of students without any bank account scored lower (47.4 percent) than those who have a savings account (52.3 percent), a checking account (50.2 percent), and both savings and checking accounts (55.5 percent).
National Endowment for Financial Education (NEFE)
CUNA has formed a partnership with the National Endowment for Financial Education (NEFE) and the cooperative Extension Service to teach the High School Financial Planning Program® (HSFPP) to high school seniors across the nation. The HSFPP is a fully developed curriculum, consisting of six units that integrate easily into a number of existing high school courses, such as math, social studies, economics, and consumer or life science. HSFPP materials provide a basic introduction to personal financial planning, covering the impact of career and work factors on earnings potential, spending and saving money, using and managing credit effectively, protecting assets, and the time value of money. Students also are taught how to develop their own personal spending and savings plan.
CUNA underwrites the cost of printing course materials that are offered free of charge to any school requesting them, and credit union staff volunteer to either teach the course itself, or to train teachers how to teach it. CUNA CEO Dan Mica has commented:
"Recent surveys and polls show many young people today lack basic financial knowledge. That lack of knowledge directly relates to financial problems these young adults may face later in life, such as bankruptcy and difficulty in obtaining affordable credit. We want to help change that. Our partnership with NEFE and CES is a great way to put the credit union philosophy of 'people helping people' into action."
Thrive by Five: Pre-K Financial Education
To help parents teach healthy spending habits and behaviors from an early age, CUNA has developed and recently announced the "Thrive by Five: Teaching Your Preschooler about Spending and Saving," which is a program aimed at providing free resources to parents to teach basic money concepts to preschoolers. The "Thrive by Five" program was developed by CUNA with a grant from the National Credit Union Foundation and additional funds from the Ohio and Texas Credit Union foundations. A special task force of credit unions and Cooperative Extension educators developed the materials, had them reviewed by experts in child development, and tested them with three focus groups of parents and preschool children.
The "Thrive by Five" materials include eight activities parents can download at no charge to help teach their young children such concepts as waiting to spend money, how not to lose money, how money is used to buy something, that when money is spent, it's gone, and that having fun or giving gifts does not have to cost money.
National Youth Savings Challenge
CUNA has established April 17-23, 2005 as National Credit Union Youth Week, and has acknowledged a youth credit union week during April the past several years. As part of this week-long initiative that encourages youth participation in financial education throughout the year, CUNA is sponsoring the Saving Challenge for affiliated credit unions. This free Saving Challenge program helps credit unions build strong relationships with youth and their families, and encourages youth to make deposits at their credit unions. Goals of the Saving Challenge include an opportunity for youth to: open accounts; introduce themselves to the concept of setting financial goals and saving for them; visit the credit union and learn first hand they are welcome; and, empower themselves with the lifelong tool of financial education.
National Youth Involvement Board
CUNA's member credit unions created the National Youth Involvement Board (NYIB) in 1972 in order to gain grassroots input from individuals working in credit unions or CUNA's league affiliates to create a national system for the dissemination of information and resources regarding youth participation in the credit union movement. NYIB works with its participating credit unions to better prepare them to serve the projected 90 million-strong youth market. NYIB provides credit unions access to proven tools, techniques, and resources to learn the latest advancements in youth marketing, innovative ideas for educating youth about money, and a built-in network of peers with diverse experiences and valuable "best-practices."
CUNA's league affiliates and member credit unions have also worked to put student run credit unions and/or branches in schools. Involving students in the daily operation of a credit union provides them greater insight to financial safety and soundness, and provides them direct access to savings and other programs. A list of student run credit unions can be found here.
Though the ideal situation is to teach youth while they are young about financial best practices, CUNA and its member credit unions recognize the need and importance to offer adult financial literacy programs. Though credit unions already provide financial counseling and financial planning services to their members as a regular service, CUNA strongly supports the provision in the Bankruptcy Abuse and Consumer Protection Act (S. 256) that would require mandatory financial counseling-- ensuring individuals are fully apprised of all their options before making a decision that could prevent future access to financial services. CUNA has recognized another key component of financial literacy is outreach to the underserved and unbanked communities. CUNA has created a Hispanic Outreach Task Force, which is committed to helping credit union attract and serve members of the Hispanic community.
Additionally, CUNA's National Credit Union Foundation, with support from the Ford Foundation, implemented a nationwide financial literacy campaign called "Plan For It. Save For It" to address the need for increased savings among low-to-moderate income families. More than 4,000 credit unions currently use the "Plan For It. Save For It" guide to increase savings among low-income credit union members. In addition, financial literacy training contributes to the greater control of one's financial future and retirement savings, and can lead to the creation of an entrepreneurial class in local communities.
CUNA and its member credit unions have long been a leading advocate and implementer of financial literacy programs for members of all ages. CUNA strongly supports the creation of the Congressional Caucus on Financial and Economic Literacy in the House of Representatives, and continues to participate with the interagency working group established by the Fair and Accurate Credit Transactions Act, P.L. 108-159 to help implement the national financial literacy program. CUNA appreciates the opportunity to provide comments on our financial literacy outreach efforts, and looks forward to working with the Committee to bring the greatest access and awareness of financial literacy programs to our members and the general public.