CUNA Comment Letter

National Financial Literacy/Education Strategy

November 1, 2004

Department of the Treasury
Financial Literacy and Education Commission
Room 5001B
1500 Pennsylvania Ave., N.W.
Washington, D.C. 20220

RE: National Financial Literacy/Education Strategy

Dear Sir or Madam:

The Credit Union National Association is pleased to comment on the Financial Literacy and Education Commission’s (Commission’s) request for feedback on the development of a national strategy to promote the basic financial literacy and financial education of everyone in the United States. By way of background, CUNA represents approximately 90% of the nation’s approximately 9,400 state and federal credit unions. CUNA’s letter was developed under the auspices of our Federal Credit Union Subcommittee with a significant contribution from Phil Heckman, CUNA’s Director of Youth Financial Programs.

Summary of CUNA’s Position

Before discussing out position, CUNA would like to commend NCUA Board Chairman JoAnn Johnson for her work on the Commission as well as for her leadership within the credit union system to promote financial education. She has made financial education a priority in her Administration, bringing attention to a number of programs within the credit union system.

We do not think that it is necessary or desirable to develop new financial education programs at this time. Based on the experience of CUNA and credit unions, we believe that sufficient resources are currently available to educate consumers and increase their awareness of key financial matters.

CUNA commends the Commission’s efforts to promote financial literacy in the U.S. In particular, the recent launch of the national financial education website to serve as a clearinghouse and a coordinated point of entry for information about financial literacy/education programs and grants is a very positive step. The launch of the toll-free hotline that members of the public can use to obtain information about financial literacy/education issues is also commendable.

CUNA has a wealth of financial education resources tailored specifically to the needs of credit unions and their members, both online and in print, which could be adapted by other organizations.

Family members have an important responsibility when it comes to financial education. As the financial marketplace becomes more complex, it is important for parents, grandparents, aunts and uncles to encourage younger family members to learn financial basics at a young age. Financial education should be viewed as a continual effort.

Efforts should be made to engage television and the mass media more fully to get the message out that financial education is an important goal for consumers.

While there are many programs and materials available, the Commission should create "Best Practices" or guidelines that identify key elements of effective financial education programs/materials focusing on issues that form the core of a solid financial education program.

The Commission should look for ways to reach out to individuals of modest means to help further their financial education.

Employers should be encouraged to promote in the workplace the importance of financial education and offer convenient programs and resources to their workers.

We agree with the observation of NCUA Board Chairman Johnson and others that perhaps the best way to address the issue of financial education is to utilize a multi-faceted approach. In that connection, we recommend guidelines from the Commission include components that focus on user-friendly information; the use of partnerships to provide programs and materials; distribution; rewards and incentives for participants in programs; and standards for qualified educators. (We discuss these in our letter below).

Discussion of CUNA’s Position

Credit unions have a long-standing commitment to the financial education of their members. CUNA assists credit unions educate their members through our Center for Personal Finance (Center). Available to CUNA members, the Center offers high-quality, easy-to-understand educational tools that teach members/consumers the key principles of finance. Specifically, the Center offers the following products, both online and in hard copy:

Web-based products
- To capture young members’ attention, credit unions can subscribe to Googolplex: The Credit Union Guide for Student Moneymakers. Googolplex is a linked, automatically updated youth magazine, divided into three interest and age levels. Each week young members will find something new, colorful stories and activities — a puzzle, game, quiz, or money-making story to help them learn to save for the future; learn to spend wisely; and learn to borrow responsibly.
- To help young adults (age 13-25) succeed financially, credit unions can link from their website to Guides to Independence. The Guides are online interactive courses that show teens and young adults how to use the credit union’s products and services prudently, such as budgeting, managing a checking and savings account and how to buy a car.
- Anytime Advisor is a suite of guides or coaches that a credit union may also include on its webpage that gives members tools that save them money and give them advice to make better financial decisions. The six interactive guides cover: new car buying; used car buying; home buying; checking account; credit management; and identity theft.
- Home & Family Finance Resource Center is an interactive online money management resource for adults. Content is updated daily and features tutorials and calculators that help credit unions educate their members.

Hard Copy Publications
- Home and Family Finance Magazine is a quarterly magazine that can be customized. The Magazine helps members make the best of their money and credit using credit union services. Each issue focuses on one specific financial literacy/education-related topic, such as borrowing for a home or car, or saving for retirement.
- The Fundamentals of Personal Finance is a collection of six easy-to-read handbooks that capture everything you need to know about managing your personal finances. The information is presented in a concise, straightforward manner. Easy to digest charts, sidebars and graphs explain the important points clearly. Titles include: "Your Budget Blueprint;" "Your Investment Choices;" "Your Path to Home Ownership;" "Your Insurance Options;" "Your College Savings Answers;" and "Your Retirement Guidelines & Goals."
- Statement stuffers that credit unions can send with their periodic account statements covering such topics as "What 0% Financing Really Costs;" "Bankruptcy: What Does It Cost You?;" "What a Roth IRA Can Do For You;" and "Check 21 Speeds Checking, Sinks Your Float." Many of the statement stuffers are also available in Spanish.

CUNA is actively involved with organizations that promote financial education. CUNA has partnered with the National Endowment for Financial Education (NEFE) and the Cooperative Extension System to develop the High School Financial Planning Program (HSFPP). The NEFE Program is a fully developed curriculum that credit union officials can use to team-teach personal financial planning topics with the regular classroom teacher. The HSFPP curriculum, provided at no cost to the teacher, school or student, consists 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.

CUNA also has a representative on the board of the Jump$tart Coalition for Personal Financial Literacy. The Washington-based Jump$tart Coalition is aimed at improving the personal financial literacy of young adults. Its purpose is to evaluate the financial literacy of young adults; develop, disseminate, and encourage the use of standards for kindergarten through college; and promote the teaching of personal finance.

In addition, CUNA is a member of the Consumer Federation of America’s (CFA’s) America Saves National Advisory Committee. America Saves is a consumer financial literacy initiative that supports saving and wealth-building campaigns for low- to moderate-income individuals throughout the nation. Community groups, religious groups, employers, unions, educators, and financial institutions work together to provide such services as counseling, pamphlets with savings tips and strategies, and motivational workshops to persuade local low- to moderate-income individuals to move down the —path to savings.” America Saves expands through local campaigns. In fact, this year "America Saves Through CUs” was launched. The National Credit Union Foundation, affiliated with CUNA, and CFA formed the partnership to increase the savings rates among lower-income credit union members and their communities.

In its request for comments, the Commission posed three specific questions. Our responses to those questions are below.

The Most Important Issues That The National Financial Literacy/Education Strategy Should Address and Why

While the Commission requested the three most important issues, we also wanted to add two more:

1. Permanent commitment
CUNA strongly believes that comprehensive personal financial education cannot be merely a long-term goal; it must be a continued effort. As financial services become increasingly complex and the range of financial products ever wider, consumers need an increasingly sophisticated understanding of the financial marketplace in order to make wise choices. Governmental policymakers at every level, working with the Administration and Congress, should be committed to the principle that financial literacy is a fundamental requirement for responsible and productive adulthood.

2. Parental involvement and advocacy
Parents are the first and primary source of influence in the development of each generation of consumers. They need the information and the tools to teach basic personal finance concepts in the home. With knowledge and guidance, parents can instill healthy attitudes about money and teach positive financial behaviors by word and example, beginning well before their children enter school. Parents, grandparents, aunts, uncles and other family members can set good examples by such things as living within their means and setting savings goals for the entire family. In addition, the collective voice of parents and relatives is a positive pressure that school officials and public policy leaders find hard to ignore. Basic life skills—including personal finance—should be at the top of educational priorities.

3. Reaching out to provide resources to individuals of modest means
We believe it is very important to ensure that individuals of modest means have ready access to financial education programs and resources. Many credit unions offer such resources and we commend them. We urge the Commission to consider working with community leaders and others to develop appropriate approaches for alerting such consumers to the availability of financial literacy resources.

4. Promoting responsible lending
Some credit card companies are targeting certain vulnerable segments of society, such as college students, single mothers and the elderly, and sending them unsolicited credit cards, encouraging those consumers to rack up debt. Some of those vulnerable groups are also going to check cashers, pawn shops and payday lenders. It is critical that these consumers be fully informed of the financial harm that can result from building up debt which they will not be able to pay back. The Commission should work with Congress to continue to address abusive lending practices.

5. Complexity of financial topics and services
Consumers are frustrated by sophisticated options, time pressures, conflicting priorities (i.e., should they save for retirement or for college costs), conflicting generational needs (aging parents and young children), and economic and life stage challenges. Consumers would be well served if the Commission can direct consumers to resources on how they can address these competing pressures.

Existing Resources That May Be Used To Address Those Issues And How They Could Be Employed

1. Credit unions
A number of credit unions have excellent financial education programs, including members of CUNA’s Federal Credit Union Subcommittee. We would welcome the opportunity to share that information with the Commission.

2. Mass media
Consumers are bombarded daily with messages from a plethora of media outlets. Utilizing the media could be an important delivery system to coordinate financial literacy messages and increase visibility for the overall national financial literacy/education strategy. The Commission should consider the development of public service advertisements and paid commercials for programs popular with children as well as teens. We also believe a dialogue should begin with producers of television programs geared toward children and teens. We also think greater use of the Internet to promote financial literacy would be beneficial to consumers.

We feel a coordinated effort—similar to the campaign by the Ad Council about teenage drug use—would yield positive results and promote public awareness.

3. Cooperative Extension System
With Extension agents in almost every county in the United States, this organization is well positioned as an effective delivery system for financial literacy messages, seminars, counseling, and train-the-trainer programs. One example is the nationwide dissemination of the NEFE Program.

4. Worksites
Research shows that financially stable workers are more productive; and employers should be encouraged to offer financial-related seminars to workers. We believe this could result in a win-win situation: workers who are financially literate, and improved productivity for the company.

For example, credit unions can partner with sponsor groups to provide worksite-based seminars on financial topics such as basic budgeting/spending, identity theft, wise use of credit and credit cards, management of checking accounts and debit cards, acquiring auto and home loans, investing basics, planning for retirement, insurance basics, and planning for college expenses, among others. In addition, employee assistance services should offer confidential financial counseling as a way to reach adults who find themselves in financial distress.

5. Analysis of existing financial-related curricula to identify gaps and provide coordination
Many different entities (private and public) have developed financial education curricula in the absence of a coordinated framework and without assessing what is already available. As a result, resources are duplicated, rather than being integrated as part of a larger and more coordinated plan that has measurable outcomes. CUNA strongly recommends that the Commission develop guidelines or —Best Practices” specifying the hallmarks of good financial education programs.

CUNA believes that a coordinated review at a centralized source would be useful in identifying gaps and providing incentives to focus on specific areas of new curriculum development. One model for a comprehensive effort might be the online clearinghouse that the Jump$tart Coalition for Personal Financial Literacy maintains for K-12 materials and programs.

Another area of need is for activities for parents. CUNA, in collaboration with credit union educators and Cooperative Extension curriculum and child development experts, is designing and testing a set of activities for parents to use to teach basic money concepts to preschoolers. The first set of eight activities will be available for download in PDF format at no charge early in 2005; a duplicate set in Spanish will follow. Distribution channels will include daycare and community centers as well as public libraries.

The Best Ways To Improve Financial Literacy And Financial Education In The United States

1. Requirements
We believe targeting the youth in this context via the school system would have tremendous results. There should be an emphasis on requiring financial education classes at all levels of education. This should start in the elementary school grades and be expanded in junior and senior high school. Schools should have consistent, reasonable standards at all grade levels regarding money skills/concepts, budgeting, saving, and investing. Another recommendation is that credit card issuers require consumers to demonstrate a basic understanding of credit before receiving their first credit cards.

To further increase consumer understanding of financial products and services, credit information such as fine print and compliance disclosures should be written in more understandable terms.

All qualified consumers should be encouraged to obtain a copy of their credit report on a yearly basis so that they can review it for accuracy. Consumers should be provided with easy-to-understand information as to how to correct inaccuracies and ways to improve their credit (score). One suggestion is for the Commission to post on the national financial education website user-friendly materials on understanding your credit report.

New immigrants should be provided with basic financial information in their native language related to earning, saving, and spending.

Parents should be encouraged to be proactive on behalf of their children regarding how schools teach basic money principles.

Generally, there is an increased need for reliance on financial counseling as a way to reach adults who find themselves in financial trouble. Any consumer considering filing for bankruptcy should be required to attend mandatory financial education to help him or her better understand the consequences of filing.

2. Partnerships
The Commission should encourage partnerships among a variety of entities: government agencies, Cooperative Extension System, schools, universities, civic organizations, women’s groups, financial institutions, investment companies, employers, the media, insurance companies. The Commission’s website should provide a current list of organizations which are willing to partner to provide programs and materials on financial education.

3. Incentives/rewards
We believe the Commission should develop an awards program to encourage financial literacy and bring even greater attention to notable efforts in financial education. Here are some other ideas for additional incentives:

The Commission should review the level of grant funds available to promote community partnerships to advance financial literacy, to develop and expand programs such as First Accounts, and to encourage states to include financial literacy as a curriculum requirement perhaps by providing subsidies to states that include financial literacy as a requirement in the curriculum in the schools in the state.

The Commission should encourage the creation and distribution of more free or low-cost personal finance games and other activities for use with preschoolers in the home as well as daycare, community, and cultural centers.

The Commission should bestow annual awards to individuals and organizations that make outstanding contributions to the field of financial literacy/education:
- Employers should be encouraged to recognize employees.
- Communities should be encouraged to recognize employers.
- Schools should be encouraged to recognize teachers and parents.
- Teachers should be encouraged to recognize students.
- The Commission should recognize news media that make significant contributions to the field of financial education.
- The Commission should honor a consumer financial educator of the year.

4. Qualified financial educators
Individuals and organizations providing financial education/counseling should be highly qualified. No business should exploit a consumer’s desire for increased financial education by subverting a training session into a sales pitch. Just as we have suggested guidelines in other areas on financial literacy, we urge the Commission to consider developing recommended standards for those who serve as financial educators.

We appreciate the opportunity to provide input into the development of the national financial literacy/education strategy, which is critical to the financial health of American consumers. CUNA looks forward to continue working with the National Credit Union Administration to assist credit union’s build upon their fine traditional dedication to financial education outreach to their membership and communities. CUNA has had the opportunity to discuss financial literacy/education issues with the Treasury Department in the past; and our Federal Credit Union Subcommittee looks forward to meeting with officials from the Office of Financial Education to discuss this important subject.

Sincerely,

Mary Mitchell Dunn
Associate General Counsel

Catherine Orr
Senior Regulatory Counsel

Cc: Dan Iannicola, Jr., Deputy Assistant Secretary

Credit Union National Association

Power of Association