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US schools falling short in financial literacy, credit unions can help

Most K-12 education programs lack standards requiring personal finance coursework.

It's no secret that the U.S. does not score high in regard to financial literacy.

A recent study by the National Association of Federal Credit Unions once again confirmed this fact, and the attention has now turned toward schools and their lack of personal finance education. Several published studies have shown that there is a gap in such education and that the deficiency needs to be eliminated.

States regulations aren't up to par
According to a study by the Council For Economic Education, in 2011, only 13 states listed personal finance education as a requirement for graduation. Additionally, only 14 states imposed a standard that such courses are a mandated part of high school curriculums, and only five states required testing.

In 2014, the numbers did not improve much, as the graduation requirement rose to 19 states, the curriculum requirement increased to 17 states and the testing mandate inched up to six states.

A separate study of 65,000 first-year college students - conducted by Everfi and sponsored by Higher One - showed the consequences of such gaps in personal finance education. The 2014 Money Matters on Campus report found that students who had such education were more accurately able to answer questions related to personal finance and more adept at managing their money. The most recent results mirror those of the year prior, indicating a need for more advocacy toward increasing financial education in schools.

Improving financial literacy in students is crucial
Personal finance habits have a large potential to affect economic stability. Not only can a lack of financial literacy make it harder for an individual to manage their money, but lenders can suffer as a result of irresponsible borrowers. Truly, if the mass amount of student debt is any indication of how the problem works on both micro and macro levels, there is a need for reform.

"These results show the need to start financial literacy education in the K-12 setting and for institutions to provide educational programs early on in a student's college experience that take into account attitudinal, behavioral and demographic differences," said Mary Johnson, director of financial literacy and student aid policy at Higher One. "It's critical that young adults receive a sound financial education as they make long-lasting decisions about college and how to finance their education."

The Money Matters study authors included a call to action for policymakers, practitioners and educators to lead the charge toward implementing more financial literacy courses in the K-12 setting. Additionally, they suggested colleges and universities make such education part of introductory coursework.

Where credit unions can step in
Members of the community, including businesses, can also play an integral part in the goal of improving the financial literacy of the nation's students. According to Credit Union Insight, credit unions can provide resources to fill the gaps in education until there are policy changes to address the issue.

Many educational institutions lack the funding or resources to begin such programs, and without legislative intervention, it may be some time before personal finance can become part of curriculums. In addition to obstacles in the schools themselves, there may be setbacks with getting legislators to actually pass a law requiring more financial education, as bills can take months to clear a vote.

Some financial institutions already provide resources to schools and volunteer time to also be present in the classrooms and teach students about money management. Besides addressing a widespread gap in American education, credit unions can also further promote their brand image and reach out to potential customers.