Income Gap in K-12 Financial Education Remains Despite Progress: Study

High schools across the U.S. have made notable progress in offering students instruction about economics and personal finance, the Council for Economic Education reported Wednesday.

Every two years, CEE analyzes data from the 50 states and District of Columbia on the state of K-12 economic and personal finance education.

The latest survey found, however, that despite the advances over two years, K-12 students in half the states and many lower-income children were still not assured adequate access to education on personal finance.

"After many years of little change, the 2020 Survey of the States shows real progress and a notable increase in the number of states with graduation requirements in both economics and personal finance," CEE president and chief executive Nan Morrison said in a statement.

"We're heartened that progress is happening, but there's still a long way to go to ensure equal access to these essential life skills, with students from lower-income households dramatically trailing their more affluent counterparts."

Advances and Retreats

The survey results showed that 21 states now require high school students to take a course in personal finance, a net increase of four states.

Iowa, Kentucky, Mississippi, Ohio and South Carolina added requirements since the 2018 survey, while Florida dropped its requirement.

In addition, 25 states currently require high school students to take a course in economics, with Hawaii, Ohio and Wyoming having joined the list of states since 2018.

On a less positive note, the survey found that although all states have some standards for schools teaching economics, the District of Columbia and five states do not include personal finance in their K-12 curriculum standards: Alaska, California, Montana, New Mexico and Wyoming.

And whereas more states are requiring economics and personal finance to graduate high school, economics testing has been abandoned in Indiana, Louisiana, Ohio, Oregon, South Carolina and Texas. And Oregon and Texas no longer test students on personal finance.

Requirements matter, CEE asserted. It noted research showing that students in states that have requirements exhibit more informed behavior around college financing, in particular those from poorer families.

In states lacking requirements, a 15-point gap in access to financial education exists between children from lower-income families and those from wealthier ones.

Financial education, CEE said, equips students to borrow more sensibly. It also increases applications for aid, the likelihood of receiving a grant and acceptance of federal loans — each a low-interest means of borrowing.

Financial education also lowers the likelihood of holding credit card balances and reduces higher-cost private loan amounts for borrowers. For poorer students, it cuts down on their need to work while enrolled, likely increasing their probability of graduation.

CEE said it makes free resources and professional development for teachers available to schools, whether or not they have state requirements for business and personal finance education.

It said parents and community leaders can take action by urging elected representatives or state treasurer or education officials to act to implement requirements.

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