Many young adults are woefully unprepared to manage their personal finances. One approach to solving what some are calling a financial literacy crisis is to supplement the education that American children already receive. Implementation of financial literacy programs is typically left to state governments, but one House bill would mandate such a program in Department of Defense schools, and bring financial education to tens of thousands of students.
Flunking financially
Financial illiteracy comes with an enormous price tag for Americans and their families. The International Federation of Accountants estimates that a lack of personal finance knowledge costs U.S. adults nearly half a trillion dollars each year. So how do we promote financial proficiency in a nation where an estimated two-thirds of adults can’t pass a basic financial literacy test? Some say to start in schools.
There is no federal government mandate requiring that public schools teach financial education concepts. The decision of what and how to teach in public schools is largely left to each state to decide. And while more states are recognizing the long-term benefits of teaching about personal finances, support for financial education in schools is disjointed at best.
However, a recent wave to introduce personal finance classes in many states is picking up steam as the benefits of such curricula are becoming increasingly understood. So, are financial literacy classes coming to high schools around the country? With each state that puts personal finances in the classroom, it seems increasingly likely.
What’s in the bill?
Riding the momentum behind financial literacy in schools is a short bill that could have broad implications at home and abroad. The Department of Defense Student Financial Literacy Act would add a personal finance requirement to the Department of Defense Education Activity (DODEA) system.
The bill is a quick read, adding a requirement for students to complete a “dedicated course of instruction in financial literacy” before they can graduate from a DODEA school. What that course might include is left open to interpretation in the bill’s current state, but such a course will likely cover fundamental concepts such as budgeting, saving money, and managing debt. A personal finance curriculum designed by the DODEA could provide a useful template for states looking to introduce their own financial literacy programs.
DODEA schools provide the families of military service members with a quality education, regardless of where they are stationed. The DODEA system provides K-12 education to an estimated 66,000 students in 160 schools across 11 foreign countries, seven states, and several U.S. territories. Reputed to be one of the best school systems in the country, the DODEA program could have a major impact on the conversation surrounding financial literacy in education.
What comes next?
The bill was introduced before the House last year and referred to the Committee on Armed Services and the Committee on Education and the Workforce. These committees would likely continue to flesh out the bill, adding clearer definitions around the required course of study should the bill become law. But there are a variety of hurdles to clear before the passage of the bill.
Turbulence in the House could prevent any action on the bill, much less a floor vote, before the legislative session expires. However, the bill enjoys broad bipartisan support, with 19 co-sponsors representing voters across the country. Even if the bill does not pass through the 118th Congress, lawmakers clearly have an appetite for financial literacy in the classroom.
While some states have introduced personal finance classes to their curricula, the fight against financial illiteracy is far from uniform across the country. The Department of Defense Student Financial Literacy Act could further the cause by introducing such a curriculum to highly-regarded DODEA schools. The political future of the bill is unclear, but representatives on both sides of the aisle have voiced their support.
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