Students Not Taught Basic Finance

By BEN FELLER, AP Education Writer

WASHINGTON - More states are requiring students to learn about managing money, but personal finance remains a fringe topic in schools and a major source of federal concern.



Seven states mandate that students take a course about basic finances to graduate high school, according to 2004 survey results released Thursday by the private National Council on Economic Education. That's up from 2002, when just four states required such courses.


In the standards they set for schools, most states say they want money matters to be taught — 38 states include the ideas of saving, investing, risk management and other finance themes in their standards or guidelines, an increase from 31 states two years earlier. But the survey found many states don't enforce the standards, let alone require entire courses.


"There is more good economic and financial education being offered in schools than ever," said Robert Duvall, president of the national council, which released its findings during an economic literacy summit. "But as a subject area, it continues to be marginalized as an add-on in an already crowded curriculum. We need to keep pushing to make it part of the core."


Poor understanding of personal finance can cause more than a sloppy checkbook. As young people rack up credit debt or fail to save money, they can later find themselves with bankruptcies, home foreclosures and financial stresses that divide families, experts say.


The problem of bad money management is drawing more national attention as a public education issue. Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) has prodded schools to help teach kids financial literacy so they are not saddled by poor financial decisions as adults.


The Financial Literacy and Education Commission, which represents 20 federal agencies and commissions, is working on ways to help people navigate complex money decisions.


In a national survey last year, only 52 percent of high school seniors answered correctly questions about personal finance and economics. The students struggled, for example, with questions on income tax, stocks and bonds, credit card liability and retirement plans.


The new report says that the seven states requiring students to take a personal finance course are Alabama, Georgia, Idaho, Illinois, Kentucky, New York and Utah.


Relying on colleges to teach students about money is not a good approach, Duvall said, as many kids don't get that far, and college courses are more about theory than daily life.


Duvall's council wants all states to require an economics course, including personal finance. A total of 15 states require an economics course this year, up from 14 two years ago.


States can also reinforce economic themes in other courses, such as a math class on compound interest or a history class on the Boston Tea Party and taxation, Duvall said.


William Walstad, director of the National Center for Research in Economic Education, said states should unite those varied lessons in a well-defined sequence of courses — just as they do with math and science. He said advocates need to lobby with more urgency and unity.


"Time can hurt us if we don't keep pressing the case," Walstad said.


The number of states that included personal finance in their curriculum standards dropped from 40 to 31 between 2000 and 2002 before rebounding in the new survey.


Duvall said that was a reaction by states to No Child Left Behind, the 2001 federal education law that put a greater emphasis on state math and reading progress.


"We've had a couple of years to take that in stride and figure out how to not only put a rightful emphasis on language arts and mathematics, but also financial literacy," he said.