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110th CONGRESS, LEGISLATIVE ISSUES A - Z

FINANCIAL LITERACY

ISSUE: The average American high school senior lacks a basic knowledge of personal financial affairs. A nationwide survey conducted in 2004 by the Jump$tart Coalition for Personal Financial Literacy 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).

Senator Akaka (D-HI) and Reps. Biggert (R-IL) and Hinojosa (D-TX) introduced resolutions in their respective houses to declare April as financial literacy month.

Senator Corzine (D-NJ) has introduced the following three bills to address financial literacy needs of both youth and adults. The TANF Financial Education Promotion Act of 2005, S. 923, would amend the Social Security Act to require a State to promote financial education under the Temporary Assistance for Needy Families (TANF) Program and to allow financial education to count as a work activity under that program

The Education for Retirement Security Act of 2005, S. 924, establishes a grant program to enhance the financial and retirement literacy of mid-life and older Americans and to reduce financial abuse and fraud.

The Youth Financial Education Act, S. 925, provides grants to State educational agencies to develop and integrate youth financial education programs for students in elementary schools and secondary schools.

CUNA POSITION: CUNA strongly supports all efforts to bring financial literacy to youth as well as adults. 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.

CUNA has partnered with the National Endowment for Financial Education (NEFE) and the Cooperative Extension Service to provide schools with free workbooks on financial literacy that can easily fit into an existing curriculum. CUNA is also partnered with the Jump$tart Coalition and serves on the Board of Directors. Additionally, 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.

CUNA established April 17-23, 2005 as National Credit Union Youth Week. The annual National Youth Saving Challenge that takes place during that week brought in $4.62 million--more than triple last year's deposits of $1.39 million--from 280 reporting credit unions.

OPPOSING VIEWS: There is no real opposition on this issue.

IMPACT ON CREDIT UNIONS: Many credit unions have volunteered their time to teach the materials to better prepare students for college, covering issues such as credit cards, interest, minimum payments, and checking accounts. And, many credit unions also are providing similar training to adults in their communities.

In the 2002/2003 school year, more than 55,000 students are using the NEFE program through credit union involvement. Credit unions are more than half-way to their goal of reaching 1,000 schools with over 598 schools involved in the CUNA/NEFE partnership.

STATUS/OUTLOOK: Senator Akaka’s legislation, S. Res. 88 which designates April 2005 as Financial Literacy for Youth Month, passed the Senate on March 17, 2005.

H.Res. 148, introduced by Reps. Biggert and Hinojosa also designates the month of April as Financial Literacy Month. H.Res. 148 passed the House of Representatives on April 6, 2005.

S. 923 was referred to the Senate Financial Committee on April 27, 2005.

S. 924 and S. 925 were referred to the Senate Committee on Health, Education, Labor, and Pensions on April 27, 2005.

CUNA participated in a meeting on March 14, 2005, led by the Treasury Department, to develop a national strategy for the Financial Literacy and Education Commission (Commission) -- created by the FACT ACT. The purpose of the meeting was to elicit ideas for how the commission can fulfill its mission of reaching out to consumers of all ages and backgrounds to encourage financial literacy.

CUNA also testified at a hearing in the Financial Institutions Subcommittee on September 28, 2006, entitled “Improving Financial Literacy: Working Together to Develop Private Sector Coordination and Solutions.”

110th CONGRESS, LEGISLATIVE ISSUES A - Z

FINANCIAL LITERACY

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