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[Senate Hearing 113-737]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 113-737
 
  THE ECONOMIC IMPORTANCE OF FINANCIAL LITERACY EDUCATION FOR STUDENTS

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON CHILDREN AND FAMILIES

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   ON

 EXAMINING THE ECONOMIC IMPORTANCE OF FINANCIAL LITERACY EDUCATION FOR 
                                STUDENTS

                               __________

                             APRIL 24, 2013

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions
                                
                                
                                
                                
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                       TOM HARKIN, Iowa, Chairman

BARBARA A. MIKULSKI, Maryland            LAMAR ALEXANDER, Tennessee
PATTY MURRAY, Washington                 MICHAEL B. ENZI, Wyoming
BERNARD SANDERS (I), Vermont             RICHARD BURR, North Carolina
ROBERT P. CASEY, JR., Pennsylvania       JOHNNY ISAKSON, Georgia
KAY R. HAGAN, North Carolina             RAND PAUL, Kentucky
AL FRANKEN, Minnesota                    ORRIN G. HATCH, Utah
MICHAEL F. BENNET, Colorado              PAT ROBERTS, Kansas
SHELDON WHITEHOUSE, Rhode Island         LISA MURKOWSKI, Alaska
TAMMY BALDWIN, Wisconsin                 MARK KIRK, Illinois
CHRISTOPHER S. MURPHY, Connecticut       TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts

                                     
                      
                                     
                                       

                      Pamela Smith, Staff Director

        Lauren McFerran, Deputy Staff Director and Chief Counsel

               David P. Cleary, Republican Staff Director

                               __________

                 Subcommittee on Children and Families

                 KAY R. HAGAN, North Carolina, Chairman

BARBARA A. MIKULSKI, Maryland        MICHAEL B. ENZI, Wyoming
PATTY MURRAY, Washington             MARK KIRK, Illinois
BERNARD SANDERS, (I) Vermont         RICHARD BURR, North Carolina
ROBERT P. CASEY, JR. Pennsylvania    JOHNNY ISAKSON, Georgia
AL FRANKEN, Minnesota                RAND PAUL, Kentucky
MICHAEL F. BENNET, Colorado          ORRIN G. HATCH, Utah
CHRISTOPHER S. MURPHY, Connecticut   PAT ROBERTS, Kansas
ELIZABETH WARREN, Massachusetts      LAMAR ALEXANDER, Tennessee (ex 
TOM HARKIN, Iowa (ex officio)        officio)
                                       

                    Josh Teitelbaum, Staff Director

                                  (ii)

  

                            C O N T E N T S

                               __________

                               STATEMENTS

                       WEDNESDAY, APRIL 24, 2013

                                                                   Page

                           Committee Members

Hagan, Hon. Kay, Chairman, Subcommittee on Children and Families, 
  Committee on Health, Education, Labor, and Pensions, opening 
  statement......................................................     1
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, 
  opening statement..............................................     2
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    26
Murray, Hon. Patty, a U.S. Senator from the State of Washington..    29
Murphy, Hon. Christopher S., a U.S. Senator from the State of 
  Connecticut....................................................    31

                               Witnesses

Biggs, Curtis, Vice President, Wyoming Chapter, Jump$tart 
  Coalition for Personal Financial Literacy, Sheridan, WY........     4
    Prepared statement...........................................     6
Lipp, Nicole, Social Studies Teacher, Garinger High School, 
  Charlotte, NC..................................................     8
    Prepared statement...........................................     9
Lusardi, Annamaria, Ph.D., Academic Director for the Global 
  Center for Financial Literacy at The George Washington 
  University, Washington, DC.....................................    12
    Prepared statement...........................................    13
Pace, Cathy, President of the Credit Union Division, Allegacy 
  Federal Credit Union, Winston-Salem, NC........................    16
    Prepared statement...........................................    17
Richardson, Cy, Vice President, Housing and Community 
  Development, National Urban League, New York, NY...............    19
    Prepared statement...........................................    21

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    The Financial Services Roundtable............................    39
    National Association of Federal Credit Unions (NAFCU)........    40
    Credit Union National Association (CUNA) and National Credit 
      Union Foundation (NCUF)....................................    41

                                 (iii)

  

  THE ECONOMIC IMPORTANCE OF FINANCIAL LITERACY EDUCATION FOR STUDENTS

                              ----------                              

                       WEDNESDAY, APRIL 24, 2013

                                       U.S. Senate,
                     Subcommittee on Children and Families,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:31 p.m., in 
room SD-430, Dirksen Senate Office Building, Hon. Kay Hagan, 
chairman of the subcommittee, presiding.
    Present: Senators Hagan, Enzi, Murray, Franken, and Murphy.

                   Opening Statement of Senator Hagan

    Senator Hagan. Welcome, everybody. Let me welcome you to 
the first hearing in this Congress of the HELP Subcommittee on 
Children and Families. First of all, I want to thank all of our 
witnesses for being here. We are certainly looking forward to 
your testimony.
    I want to especially thank our Ranking Member, Senator 
Enzi, for all of his work and for his staff's work on this 
hearing. I sincerely look forward to working with you as we 
develop a bipartisan agenda and solutions for the challenges 
facing America's children and our families.
    It is certainly an honor and a privilege as the chairman of 
this subcommittee to be here. And we want to look at the 
essential building blocks of successful and secure individuals 
that start very early in life, of quality maternal and newborn 
healthcare, early childhood education, and financial literacy 
education, which is what we're going to be talking about today.
    With April marking Financial Literacy Month, I really do 
want to focus today on the economic importance of financial 
literacy for all of our students. I think having a basic 
understanding of financial concepts is an absolutely critical 
skill for establishing economic success and security. And it's 
especially true for college students who are taking out 
increasingly large loans to pay for their education. In fact, 
student loan debt in our country now exceeds credit card debt.
    Mistakes managing your money in the early years of 
adulthood can have long-term consequences on the ability to buy 
a first home, the ability to buy a car, the ability to start a 
family, the ability to save for retirement. It is all impacted. 
And for our military service members, the risks are especially 
great, since their careers may be delayed or put on hold 
because security clearances are also dependent on maintaining 
good credit.
    The ability to properly manage money makes each of these 
life milestones in building a career and family possible. But 
many of our high school graduates are entering college or the 
workforce almost completely unarmed with the basic knowledge, 
the basic skills that they need to manage their personal 
finances effectively. According to the 2008 Jump$tart Coalition 
survey, the last one for which data is currently available, 
only 26 percent of high school seniors received a passing 
score, and just 5 percent of high school seniors got a C or 
better. To me, that's depressingly low.
    The only good news we now know is that teaching personal 
financial literacy in grades K through 12 really does make a 
difference in how students manage their money. According to 
research published by the National Endowment for Financial 
Education, students from States where a financial education 
course was required had higher levels of financial knowledge 
and were more likely to engage in positive financial behaviors 
than students from States that did not have those requirements.
    And compared to other students, these young adults were 
more likely to save, less likely to max out their credit cards, 
less likely to make late credit card payments, and more likely 
to take just average financial risks. Unfortunately, the 
majority of States do not require financial education to be 
taught in schools at all. Only 24 States require a one semester 
course in personal finance, or require personal finance to be 
integrated into another course.
    I'm proud to say that when I was a State senator in North 
Carolina, I helped lead the effort that established North 
Carolina's financial education requirement. And I'm looking 
forward to hearing the testimony of a teacher from North 
Carolina about how that has impacted students' lives.
    Teaching financial literacy in elementary and secondary 
schools is bipartisan, and it's common sense. The Presidential 
Advisory Councils to both Presidents Bush and Obama recommended 
it. The American Federation of Teachers, the Council for 
Economic Education, the Jump$tart Coalition, the National 
Education Association, the National Endowment for Financial 
Education, and the National Urban League all support this 
concept. Survey after survey shows that more than 80 percent of 
teachers, students, parents, and the American public support 
it.
    I'm proud to give my Senate colleagues a chance to support 
that, too. This week, I will re-introduce the Financial 
Literacy For All Students Act to authorize grants to 
incentivize States to integrate financial literacy education 
into elementary and secondary courses and provide professional 
development for teachers so that the teachers are well prepared 
to improve the financial literacy of their students. That is a 
critical component of this legislation.
    I think this is a common sense solution, and I'm looking 
forward to working with all of my Senate colleagues to help 
pass this bill.
    I want to now give our Ranking Member, Senator Enzi, the 
opportunity to provide opening remarks.

                   Opening Statement of Senator Enzi

    Senator Enzi. Thank you, Madam Chairman. I appreciate your 
passion on this issue and look forward to working with you on 
the Financial Literacy Caucus.
    I want to thank all of our distinguished panel. We 
appreciate you taking time out from your life to come and share 
your knowledge and your experiences with us. It does make a 
difference. And I think the fact that you've taken the time to 
come highlights the importance of financial literacy, 
especially for the youth of our Nation.
    For many years, I've recognized the importance of being 
involved in financial literacy issues, such as working with the 
Wyoming Community Development Authority on first-time homebuyer 
education or working with the Wyoming Jump$tart program on 
financial literacy initiatives around the State.
    I've also worked on some initiatives in Washington. I've 
been a longtime sponsor of a Senate resolution designating 
April as Financial Literacy Month and have been the 
resolution's lead Republican sponsor since 2007. And I've got 
to say that the lead Democrat co-sponsor on that was Danny 
Akaka, who has now returned to Hawaii. I do miss him, but I 
think he's provided an absolutely spectacular replacement.
    I've been heavily involved in this issue, and I'm here to 
tell you that I feel a new urgency about the importance of 
educating people about issues related to finances and from a 
young age. I have four grandkids in Wyoming. I want their 
futures and the futures of children across the country to be 
successful. A part of ensuring their futures is teaching them 
principles early on that will plant the seed of sound 
decisionmaking that they can put into practice when they're old 
enough to start making their own financial decisions.
    Make no mistake. The economic environment they're growing 
up in is rife with challenges that will require this knowledge. 
With the increasing cost of higher education and the fiscal 
uncertainty surrounding programs like social security, future 
generations will need a more informed understanding of finances 
to have the opportunities they deserve and to appropriately 
save for retirement.
    Here are some numbers that illustrate the challenges we're 
facing as a country. According to the 2012 Consumer Financial 
Literacy Survey Report of the National Foundation for Credit 
Counseling, almost 42 percent or nearly 98 million adults in 
the United States gave themselves a grade of C, D, or F on 
their knowledge of personal finance, and four out of five 
adults admitted that they'd benefit from professional advice on 
everyday financial questions and functions.
    Additionally, two of every five adults in the United States 
or more than 93 million are saving less than they did in 2011, 
and almost 39 percent of adults say they have no retirement 
savings at all. We have to do better than this for future 
generations.
    We need to do better, but we're also in a unique situation 
in the country. We have a greater need than ever for financial 
literacy across the country and in Congress at a time when our 
country has so little money.
    So what we need to do now is to let the States continue 
their great work on improving financial literacy. We also need 
to take a look at financial literacy programs across Federal 
agencies to see what we're doing well and what we're not and 
how we can eliminate duplication.
    Again, I thank you, Madam Chairman, for holding the hearing 
on this important topic. I look forward to hearing from our 
distinguished panel, and I look forward to working with you 
more extensively on financial literacy for this Congress.
    Senator Hagan. Ranking Member Enzi brings a wonderful 
background in dealing with financial literacy to this issue. So 
I thank you also for your interest, and I look forward to 
working together as we move forward.
    We would now like to have the witnesses' opening remarks, 
and I would like to ask you to hold it to 5 minutes, a little 
less than 5 minutes, please. Our first witness is Mr. Curtis 
Biggs, vice president of the Wyoming Chapter of the Jump$tart 
Coalition. And I believe you're going to be introduced by your 
Senator.
    Senator Enzi. I'd love to. He just attended my Inventors 
Conference, which is one way that we try to improve the 
financial status of kids and adults where they can invent 
something, make it in Wyoming, ship it all over the world, and 
live wherever they want, which I know would be Wyoming, and I 
appreciated his attendance at that.
    He's joined us today from Sheridan, WY, which is where my 
wife and I grew up, and it's about an hour and a half from our 
home in Gillette, where we currently live. Curtis serves as the 
director of Dual Credit Programs for Sheridan and Gillette 
Colleges, where he partners with high schools to provide post-
secondary options to Wyoming students.
    He also represents the colleges in the National Association 
of Concurrent Enrollment Partnerships on several Perkins 
Workforce Investment Act, an issue I've championed for years, 
and Career Technical Education boards and committees. Curtis 
serves as the Youth Council chair on the Wyoming Workforce 
Development Council, supporting youth initiatives, including 
career and technical student organization initiatives across 
Wyoming.
    He's also the current vice president and president-elect of 
the Wyoming Chapter of Jump$tart. That's the primary reason we 
have him here. It's a program I've worked extensively with on 
financial literacy initiatives over the years. I appreciate his 
presence at the hearing today and look forward to hearing his 
perspective on financial literacy education in the K through 12 
age group.
    I'll have to apologize to all of the people, because I have 
a bill that's up on the floor, and I'm going to have to go 
manage amendments there. So I'll listen until my support staff 
on the floor is out of time, and then I'll have to leave.
    Senator Hagan. Thank you.
    Mr. Biggs, if you can begin your opening statement, please.

  STATEMENT OF CURTIS BIGGS, VICE PRESIDENT, WYOMING CHAPTER, 
JUMP$TART COALITION FOR PERSONAL FINANCIAL LITERACY, SHERIDAN, 
                               WY

    Mr. Biggs. Thank you, Madam Chairman Hagan, Ranking Member 
Senator Enzi--especially for that introduction. I appreciate 
it--and all Senators present for the opportunity to discuss 
both State and national level Jump$tart perspectives 
contributing to the economic importance of financial literacy 
for our students.
    Dedication to educating our youth in financial literacy is 
essential to a strong consumer and robust U.S. economy. 
Americans now owe more than they make, and financial literacy 
statistics for both youth and adult populations gravely reflect 
the need to integrate personal finance into the lives of our 
students at an early age, as pointed out by Senator Hagan.
    Dedication along with the national mission of Jump$tart 
Coalition for Personal Financial Literacy is to focus on this 
next generation of consumers. Striving to prepare youth for 
lifelong successful financial decisionmaking, Jump$tart is the 
voice of youth financial literacy. We believe that all 
consumers must increase their levels of financial literacy 
through effective education and information. Financial 
principals are basically the same for all ages, but how we 
reach and teach children, much different, how we frame the 
lessons, and how we evaluate our effectiveness is necessarily 
different when dealing with kids.
    As vice president of Wyoming's State coalition, I offer the 
support and perspective of the local as well as the national 
perspective for Jump$tart. I witness the seventh grade Mini 
Bank teller processing savings deposits for classmates while 
also sharing best practices with my cohorts and my colleagues 
from the other coalitions around the country.
    Collaboration is a critical component of Jump$tart. 
Jump$tart is not just a financial literacy organization. We're 
the organization that brings together those organizations that 
conduct and support financial literacy. An example of this 
collaboration in Wyoming is the Mini Bank Program, a 
partnership between Jump$tart partner First InterState Banks, 
community schools, and First InterState BancSystem Foundation, 
and Jump$tart.
    Serving hundreds of kindergarten through ninth grade 
students each year, there are now 23 Mini Banks throughout 
Wyoming and Montana, with a collected total account balance of 
$1.2 million. Through this program, students gain exposure to 
banking and behaviors that promote good savings habits and 
experience hands-on math and economic concepts.
    Dedicated partners and individuals from North Carolina to 
Colorado to our strong West Coast coalitions continue to 
provide similar dynamic programs through our Jump$tart. 
Jump$tart has about 150 national partners and a network of 49 
affiliated State coalitions, each one independently operated 
almost exclusively by volunteers.
    Jump$tart believes that educators are a huge factor in the 
effectiveness equation. As you mentioned, there is a distinct 
need for professional development amongst our professors. 
Jump$tart offers a great curriculum, but without the curriculum 
and the instructor, teachers won't necessarily have the same 
results.
    The National Education Conference, the Teacher Training 
Alliance, and the Jump$tart Clearinghouse provide the training, 
resources, and partner access to teachers that they need. Over 
900 have attended the conference to date. The Jump$tart 
National Educator Conference was launched in 2009 with seed 
money from Experian helping to get resources into the hands of 
those who need them. From State to State, coalitions also 
provide local financial literacy training.
    Jump$tart is publisher of the National Standards in K 
through 12 personal finance education, now in its third 
edition. Like many national subject matter standards, use of 
these standards is voluntary. Many States have used these 
standards as a starting point to build their own State 
standards.
    A flagship of Wyoming financial literacy programs is the 
annual Jump$tart Financial Literacy Conference for Youth. 
Another example of collaboration, Wyoming has partnered with 
Money Savvy Generation, implementing their curriculum into the 
1-day conference covering asset building, including budgeting, 
compound interest concepts, and various investment options. Now 
in its fifth year, the conference has served over 850 Wyoming 
youth.
    I close with Federal Reserve Chair Bernanke's thoughts. 
Education and teachers are on the front line of preventing the 
next financial meltdown. Jump$tart Coalition for Personal 
Financial Literacy is a committed stakeholder in the effort to 
implement the financial literacy boost our students need.
    HELP Committee interest in enhancing financial literacy 
opportunity for students is greatly appreciated. I thank you 
for your time and look forward to your questions.
    [The prepared statement of Mr. Biggs follows:]
                   Prepared Statement of Curtis Biggs
    Thank you Madam Chairman Hagan, Ranking Member Senator Enzi and 
fellow Senators for the opportunity to discuss both State- and 
national-level perspectives of Jump$tart contributions to ``The 
Economic Importance of Financial Literacy for Students.''
    Dedication to educating our youth in financial literacy is 
essential to a strong consumer and robust U.S. economy. Americans now 
owe more than they make (Bennett, 2006). Financial literacy statistics 
for both youth and adult populations gravely reflect the need to 
integrate personal finance into the lives of our students at an early 
age.
    The national mission of Jump$tart Coalition for Personal Financial 
Literacy is to focus on this next generation of consumers (i.e., 
students PreK-college.) Striving to prepare youth for life-long 
successful financial decisionmaking, Jump$tart is the voice of ``youth 
financial literacy.'' We believe that all consumers must increase their 
levels of financial literacy through effective education and 
information; financial principals are basically the same for all ages; 
but how we reach and teach children, how we frame the lessons, and how 
we evaluate our effectiveness is necessarily different when dealing 
with kids.
    As vice president of Wyoming's State coalition, with support and 
insight from our national Jump$tart Coalition, I offer both local and 
national perspectives on Jump$tart initiatives, challenges and 
successes. I witness the seventh grade Mini Bank teller processing 
savings deposits for classmates while also sharing and celebrating best 
practice amongst State and national coalition leaders and supporters at 
the annual events on Capitol Hill. Wyoming Jump$tart also prides itself 
on the steadfast congressional level support from Senator Enzi.
    Collaboration is a critical component of Jump$tart. Jump$tart is 
not just a financial literacy organization; we're the organization that 
brings together those organizations that conduct/support financial 
literacy. With vast geographic, demographic and educational territory 
to cover, coordination amongst financial literacy stakeholders is key. 
Jump$tart believes it contributes significantly to that part of the 
cause, identifying and bringing together varied participants in the 
effort (government, financial institutions, non-profits, academia, 
parents, teachers, etc.). At both the State and national levels, 
Jump$tart is the facilitator of collaboration and communication in this 
field. An example of this collaboration in Wyoming is the Mini Bank 
Program, a partnership between Jump$tart partner First InterState 
Banks, community schools, and First InterState BancSystem Foundation. 
Serving hundreds of K-9th grade students each year, there are now 23 
Mini Banks in Montana and Wyoming, with a combined savings of over $1.2 
million. Through this program, students gain exposure to banking and 
knowledge and behaviors that promote good savings habits, and 
experience hands-on math and economic concepts.
    Jump$tart has about 150 national partners from government, business 
and finance, non/not-for-profits, and education. Jump$tart is a network 
of 49 affiliated State coalitions; each one independently operated, 
almost exclusively by volunteers. Wyoming Jump$tart board members 
coordinate resources as well, in order to provide events and services 
statewide.
                              initiatives
    In recent years, Jump$tart has focused on teachers. We believe that 
educators are a huge factor in the effectiveness equation. A great 
teacher can make magic with a mediocre curriculum; but a great 
curriculum in the hands of a less-inspired teacher won't have the same 
result.
    The Jump$tart National Educator Conference was launched in 2009 
with seed money from Experian. The cost for teachers to participate is 
subsidized significantly. Our conference is not extravagant, but we 
strive to treat teachers very well--to thank them, acknowledge them, 
inspire them. In the spirit of the Coalition, our conference always 
features a multitude of diverse speakers, exhibitors, sponsors. While 
the overriding objective is to support the teachers; Jump$tart's 
secondary objective is to support its partners--giving them a platform 
for their products and programs; helping to get the resources into the 
hands of those who need them. Over the 4 years of the national 
conference, 961 teachers from across the country have been served. 
Thirteen Wyoming teachers have attended, in part, funded by Wyoming 
Jump$tart.
    Additionally, since 2007, Wyoming Jump$tart has continually 
provided local continuing education financial literacy training to high 
school teachers. Wyoming Family and Consumer Science and business 
teachers across the State participate via career & technical education 
pre-conference workshops and online interfaces.
    The Jump$tart Teacher Training Alliance is an alliance of five of 
the major, non-profit participants in the financial literacy space: 
Jump$tart, Junior Achievement, the Council for Economic Education, the 
National Endowment for Financial Education, and the Take Charge America 
Institute at the University of Arizona. The Alliance members worked 
with three ex officio Federal agencies: The FDIC, Department of 
Education, and Department of the Treasury, to create a model for 
conducting teacher training. Since the Alliance Model focuses on 
providing teachers with underlying financial knowledge--rather than 
teaching them how to use a program--it actually supports and 
facilitates use of all the many financial education programs already in 
existence.
    Celebrating Financial Literacy Month and Financial Literacy Day on 
Capitol Hill, Jump$tart also hosts the Jump$tart State Coalition 
Leaders' Meeting in Washington, DC, along with the Jump$tart Coalition 
Awards Dinner.
    Jump$tart is publisher of the National Standards in K-12 Personal 
Finance Education, now in its third edition. Like many national subject 
matter standards, use of these standards is voluntary. Many States have 
used these standards as the starting point to build their own State 
standards.
    Jump$tart operates the online Jump$tart Clearinghouse of financial 
education resources. There are currently over 800 resources listed. All 
resources are screened for listing--we do not allow marketing 
materials, anything unbiased, and anything with content that does not 
align with our national standards. These resources are not Jump$tart's; 
but rather, the resources published and provided by our partners and 
other participants. Currently the Jump$tart Clearinghouse is undergoing 
a major overhaul with two objectives: one, to upgrade the search 
technology to make it easier for educators and other users to find the 
resources that best fit their need; and two, to strengthen the listing 
criteria to ensure that users are finding the most effective resources 
available.
    A flagship of Wyoming financial literacy programs is the annual 
Jump$tart Financial Literacy Conference for Youth. Another example of 
collaboration, Wyoming has partnered with Money Savvy Generation, 
implementing their curriculum into the 1-day conference covering asset-
building, including budgeting, compound interest concepts, and various 
investment options. Now in its 5th year, the conference has served more 
than 850 Wyoming youth, grades 8 through 12.
    In closing, Jump$tart Coalition for Personal Financial Literacy is 
a committed stakeholder in the effort to implement the financial 
literacy boost our students need. Composed of knowledgeable and 
passionate partners, collaboration and advocacy, research and 
standards, and financial educational resources, Jump$tart is a catalyst 
for improving the financial literacy of pre-kindergarten through 
college-age youth. HELP Committee interest in enhancing financial 
literacy opportunity for students is greatly appreciated. I thank you 
for your time and look forward to your questions.

    Senator Hagan. Thank you, Mr. Biggs.
    Our next witness is Ms. Nicole Lipp, a social studies 
teacher at Garinger High School in Charlotte, NC.
    Ms. Lipp.

STATEMENT OF NICOLE LIPP, SOCIAL STUDIES TEACHER, GARINGER HIGH 
                     SCHOOL, CHARLOTTE, NC

    Ms. Lipp. Good afternoon. Thank you so much for having me 
here. I'm a civics and economics teacher to 10th graders, so 
this whole event today is totally up my kids' alley, and they 
are so excited that it's happening. So I'm excited to be a part 
of it.
    In 2005, I started implementing personal financial literacy 
into my classroom, and it was mainly because of my personal 
experience. Growing up, I had a mother who, thank God, taught 
me financial literacy, and little by little, whether it was 
saving $1 or it was saving $2, she would make us put it in our 
little piggy banks underneath the kitchen cabinet counter.
    We had a ledger, and we had to put ``plus $1'' allowance 
for the week of whatever. If we wanted to take out even 50 
cents for candy, she would ask us the questions, ``Is 50 cents 
worth--this is half of what you just made for your allowance. 
Is that candy worth it?'' And we had to sit there and kind of 
think about it, because 50 cents can be--I mean, it's very 
tempting.
    As we grew up, she also was a big proponent that instead of 
Christmas presents and birthday presents from aunts and uncles, 
she took that money and she invested it into our college 
savings accounts. And she always told us as little kids--we 
thought, ``Oh, we've got $25. We should be able to spend that 
on whatever.'' And now, I had no college debt when I graduated 
from college, and that $25 toy when I was six or seven is 
meaningless to me. I don't miss it at all, being 33 with no 
college debt.
    She instilled a lot of those things into us at a very, very 
young age. When I became an adult and I was able to buy my own 
house, they approved me for a loan that was ridiculous. It was 
around $300,000, and my husband and I made a combined salary of 
$50,000. They showed us this house, and it had the granite 
counter tops and these wonderful cabinets.
    I felt the twinge, knowing better, that, ``Oh, my gosh, I 
can afford this. The sales person says I can afford it.'' We 
didn't buy it. We bought one for half. I started thinking about 
my kids, because I've only taught in low-income schools for the 
last 11 years--about 60 percent to 70 percent with free and 
reduced lunch rates. Now, the school I teach at is title I. 
We're up in the 90 percent range.
    These kids didn't have my mom's voice in their head, and I 
had to somehow figure out how to get that to them. And in 2005, 
I came across a budget project that North Carolina had created, 
and I started tweaking it and playing around with it, and then 
I handed it to the kids. I gave them certain guidelines that 
went along with it.
    They had to put 10 percent of whatever they made away into 
savings, no matter what, and they weren't allowed to touch that 
part of the budget. If they wanted to get a bus pass instead of 
a car so they could afford a nicer apartment, they could make 
those decisions. But that 10 percent wasn't allowed to be 
touched at all.
    They also weren't allowed to count on having a spouse. And 
high schoolers all think that they are in love, and this was 
just such a shock to them. ``But you don't understand, Ms. 
Lipp. I love them and we're going to be together forever,'' and 
3 months later, it was over. So I told them, ``You have to do 
that because it's why women stay in bad marriages, and it's one 
of the leading causes of divorce.''
    Financial literacy and finances is a huge thing. It's not 
just understanding finances. It affects your emotional and your 
mental state, especially if you're trying to figure out how to 
budget.
    So I assigned this project, and they were angry. They 
didn't want to do it. They were fighting me left and right on 
it. And my kids have my cell phone number and they have my e-
mail address, and by that weekend, I started getting e-mails 
and text messages about the project, and I'm sitting at home, 
going, ``Oh, my gosh. OK. They got it. They got it.''
    And as the project went on, the questions kept coming. They 
were visiting banks. I sent them to go and compare and contrast 
banks and credit unions, and they were coming in with pictures 
of themselves with the bank person that they interviewed. And 
this went into their portfolio, and I'm laughing.
    But it started taking on this whole different shape that I 
had no idea was going to happen. Those kids that participated 
in that project are now graduated from college. One of them 
actually teaches with my husband, who is seated behind me. 
We've gotten to see what the effects of this project have been.
    A lot of them have said they opened up savings accounts. 
They understood that the stock market wasn't just for the rich 
people. They started to learn that there were things that they 
could do to take control of their financial future at 16 and 17 
years old instead of just thinking, ``OK, well, when I graduate 
from college or graduate from high school, I will now have to 
deal with bills.''
    It is imperative, imperative, that we do this. And I am so 
excited that we're talking about it on a Federal level, because 
it does--we can change the way things happen financially in 
this country.
    Thank you very much.
    [The prepared statement of Ms. Lipp follows:]
                   Prepared Statement of Nicole Lipp
    Early on in childhood, I was taught the lessons of financial 
literacy. Starting in elementary school my mom had my brother and I 
keep banks for our allowance in a cabinet in our kitchen. She had a 
ledger neatly tucked into each bank where we kept track of our spending 
habits to prepare us for balancing a check book. Each week we would 
pull out our bank and add our $1.00 to $2.00 allowance and log it in. I 
distinctly remember printing neatly and clearly on the graph paper the 
date, what the money was from and how much it was. In the end we had to 
total up the money in our banks so we could see how our saving was 
adding up. Each time we wanted to buy something, no matter how trivial 
it was, we had to return to our banks and deduct the amount with an 
explanation of our use for the money. Even as an elementary school 
student I began to understand the value of money and that buying a 50 
cent candy wasn't worth losing half of what I earned for the week. With 
her home banking system, my mom very carefully planted the seeds of 
financial literacy in my mind.
    Soon after graduating from college I moved to a new city 8 hours 
from my family and was immediately faced with tough decisions. Where 
was I going to live? Should I buy a new car? Where should I do my 
banking? In those moments, the financial lessons taught by my mom came 
clearly to mind and I was able to navigate the world of adulthood. When 
I went to buy my first house in 2003 my husband and I were approved for 
nearly $300,000 while only having a combined income of slightly over 
$50,000 a year. As the salesmen paraded us through the largest house 
they built, I felt a twinge of excitement seeing the granite counter 
tops, cherry cabinets, tile floors and so on. A part of me was pulled 
to trust the salesperson and buy the house. After all, with the 
adjustable rate mortgage he was offering, we could afford the initial 
year of payments and it was possible that we would have salary 
increases over the next 2 years to keep up with the increase in cost. 
In that moment the words of my mom rang through my ears and we chose 
instead to purchase a house within our means, actually listed at half 
of our approved loan amount.
    In 2005 it became evident just how far above their means people 
were living, as for sale signs and foreclosure notices appeared around 
my neighborhood. The people who bought more expensive houses on 
adjustable rate mortgages lost those houses, while we came out the 
other side of the recession relatively unscathed despite my husband's 
job loss, and pay freezes in the school system. I attribute this to the 
financial training I had throughout my childhood. As I looked at my 
students I realized that most of them didn't have my mother's voice in 
their heads. They didn't know what to do with their paychecks. They 
didn't realize there was a difference between a credit union and a 
bank. When I mentioned that I owned stock (once again because my mom 
invested when I was young) my students were blown away. They believed 
that the stock market was only for rich people. It became very clear to 
me that I needed to find a way to become my mother's voice for all of 
my students.
    With this goal in mind, I began to search for resources I could use 
to teach my students how to be financially sound. I stumbled across a 
budget project developed by the State of North Carolina. I realized 
that this project was the way to teach 20 years of my mom's financial 
lessons in one semester. I worked to tweak the project to make it user 
friendly and then passed it out to the kids. Almost instantly they were 
annoyed with the project. I gave my students 2 months to finish the 
project and it included getting an apartment, buying a car, budgeting 
for student loans, getting renters and auto insurance, visiting banks 
and much more. The kids were given a few rules:

    No. 1. You must live off the lowest salary posted for the career 
you want.
    No. 2. You may not account for having a spouse. Financial disputes 
are a major reason for divorce and one of the leading reasons women 
stay in abusive relationships. You must do it on your own.
    No. 3. You may not count on having scholarships because they are 
not a guarantee. Ask your parents if they will be helping you with 
college and if they aren't, budget for paying back student loans.
    No. 4. You may not count on your parents giving you a car or any 
furniture. You have to do it on your own.
    No. 5. Last, 10 percent of your income must be dedicated to 
savings. That is non-negotiable.

    They began their project grumbling about how their boyfriend or 
girlfriend was their soul mate and they would be together forever and I 
was being unreasonable. I was so nervous that they weren't going to 
catch on and were going to blow off the project. But then something 
miraculous happened . . . they started texting me and e-mailing me that 
weekend with questions about the project.
    Answering their questions became a part of my day, every day, for 
the next 2 months. They were calling utility companies to find out 
averages for the apartments they wanted. They were visiting banks and 
finding out the difference between savings accounts, checking accounts, 
IRAs, and CDs. They were coming to class with pictures of themselves 
with the bank workers. The project took on a life of its own and the 
grumbling stopped. Excitement replaced all their reservations and they 
were learning! I was so proud of them. On the day the project was due 
the kids were full of energy and were scrambling to put their 
portfolios together. When it came time to collect the projects the kids 
were more worried about getting their projects back than what their 
grades would be. I assured them that they would get them back and they 
would be theirs to keep and to use as a blueprint for their lives.
    I flipped through the pages of their projects and was amazed. My 
students found ways to live within their means by making sacrifices. 
They found roommates, chose to rent apartments on a bus route instead 
of buying a car, others took on additional extra jobs, and some decided 
to forego clothes shopping so they could eat out during the week. 
Sophomores in high school were able to make budgeting decisions that 
their own parents couldn't make. In that moment I knew that this 
project would forever be a requirement in my classroom.
    Fast forward to 2013, those students have now graduated from 
college, and are working in the real world. I recently heard from 
several of them on the impact that the project had on their ability to 
budget later in life.
    One former student, Dillon, wrote me that the budget project left a 
lasting impression on his spending and saving habits.

          ``I make sure I'm able to pay all my bills on time and still 
        save a little bite more in case something unexpected happens. 
        Now that I'm about to graduate college, I've managed my money 
        so well that I don't have any college bills or loans to pay off 
        because I realized the importance of `buying now instead of 
        paying later.' Learning the importance of saving money has 
        changed my life for the better, and I believe that it should be 
        emphasized in high school. Without the knowledge of properly 
        spending money I probably would have bought unnecessary things 
        with credit cards, just to discover later I don't have the 
        money to pay it back. Too many people I know live in debt 
        because of poor spending and investing habits. I'm happy to say 
        that because of this project, I will never follow that path.''

    Another former student, Shannon, echoed Dillon's reaction to the 
project. She wrote me that at first, she

          ``hated the budget project. However, the more I worked on it, 
        the more I enjoyed it. In the beginning it was just fun to plan 
        out my future, the way I wanted it to be. By the end, it was 
        eye-opening to see exactly how the financial aspects of my 
        decisions would play out, especially how my career choices 
        would affect my ability to afford the things I knew I would 
        want to buy. At this point in my life, I'm making these choices 
        all over again, but this time it's not for a grade. Now, the 
        consequences are real. I'm not as afraid about how to manage my 
        money as some of my other friends are, and that has to do with 
        the budget project. I was able to do it once before, so 
        hopefully I'll be able to do it again now.''

    All 11 years of my teaching experience have been spent in schools 
with high percentages of students who are from low socio-economic 
backgrounds. In many of my student's homes every penny counts and they 
need the skills to make their money work for them. The North Carolina 
Council on Economic Education (NCCEE) has a lesson about being a 
millionaire. The teacher reads a list of statements about millionaires 
and the students have to guess if it is true or false. It is amazing to 
watch the kids guess that millionaire's drive fancy cars or earned 
their money from the entertainment industry. They don't realize that 
most millionaires live within their means, too. My students learn that 
no matter where they are economically it doesn't mean it is where they 
have to stay.
    Garinger High School in the Charlotte-Mecklenburg School District, 
where I teach Civics and Economics, is among the poorest in the area, 
with a high percentage of students eating free and reduced priced 
meals. This year we began implementing the Stock Market game into our 
classes to help increase financial literacy. The feedback from the 
student's has been incredibly positive. Many of the students are 
realizing that the stock market isn't just for the wealthy. They are 
learning that they too can take control of their financial future and 
invest their money. We are striving to teach them the life lesson that 
the immediate gratification of buying new clothes or new shoes doesn't 
outweigh a fiscally sound future.
    I feel a great sense of urgency surrounding this topic because I 
have personally experienced the effects of learning financial literacy 
lessons early on, and have also helped teach these lessons to students 
who desperately need them. Becoming financially literate can give 
someone without a lot of money the knowledge needed to take control of 
their finances and the tools they need to break a cycle of overspending 
and debt.
    Since 2005, when North Carolina passed laws requiring that personal 
finance be taught to high school students, the State has been a leader 
in integrating personal financial literacy content into the curriculum. 
This year, students will be tested on their financial literacy for the 
first time.
    In Charlotte-Mecklenburg School District I have been a part of a 
team trying to prepare our teachers for the upcoming tests and new push 
of financial literacy. This past year we have worked hand in hand with 
the North Carolina Council on Economic Education (NCCEE) to train our 
teachers on how to teach financial literacy lessons. We have held three 
professional development sessions and provided each teacher with a set 
of curriculum called Virtual Econ 2.0. In these sessions teachers are 
given practical ways to implement financial literacy and each teacher 
is given support from the district as well as from the NCCEE so they 
can further their knowledge. Teachers have been given access to the 
Stock Market game for their students and the training as to how to 
teach it and integrate it into their lessons. We are making great 
strides to make our teachers feel comfortable with the content so they 
can seamlessly integrate it into their lessons.
    My classroom and my students are the greatest testimony as to why 
teaching financial literacy should be a must for students around the 
country. I live in an area that is still feeling the backlash of the 
financial crisis. Many people were taken advantage of by the banking 
system and made poor financial choices because they didn't know any 
better. We have a duty to educate our citizens no matter their economic 
status and give them the tools to create a sound economic future.
    Thank you for your time and the opportunity for me to be able to 
speak on behalf of educators to you about this urgent need in our 
country.

    Senator Hagan. Thank you very much.
    Our next witness is Dr. Annamaria Lusardi, the academic 
director of the Global Center for Financial Literacy at the 
George Washington University.
    Dr. Lusardi.

 STATEMENT OF ANNAMARIA LUSARDI, Ph.D., ACADEMIC DIRECTOR FOR 
    THE GLOBAL CENTER FOR FINANCIAL LITERACY AT THE GEORGE 
             WASHINGTON UNIVERSITY, WASHINGTON, DC

    Ms. Lusardi. Thank you very much, Senator Hagan and Senator 
Enzi, for the opportunity to speak to you about the economic 
importance of financial literacy for students.
    I am the director of the Global Center for Financial 
Literacy at George Washington University, and as part of my 
research, I develop tools for testing financial knowledge, 
conduct studies in financial literacy levels, and assess what 
the result of those studies mean for the United States. I'm 
here to tell you that the vast majority of Americans do not 
have the financial knowledge they need to fully participate in 
the economy or to make informed decisions about their own 
financial futures.
    This reality has implications for their lives and for the 
economic health of the economy. According to the 2009 Financial 
Capability Study, only 30 percent of the population can do a 
simple 2 percent calculation and has a basic understanding of 
inflation and risk diversification, concepts that are important 
in financial decisionmaking. The second wave of that study is 
about to be released, and it shows no improvement in the level 
of financial knowledge between 2009 and 2012.
    Financial illiteracy is not only widespread, but it is 
particularly severe among specific groups of the population, 
including people aged 18 to 25. These youths just out of school 
and young adults beginning their careers are less financially 
knowledgeable than the general population.
    When we focus on high school students, the findings are 
even more sobering. Data collected bi-annually by the Jump$tart 
Coalition show that only 7 percent of high school students can 
be considered financially literate. These statistics have 
troubling implications. Studies show that Americans who are not 
financially literate are less likely to participate in 
financial markets or to invest wisely. They are less likely to 
save and plan for their retirement.
    It's really important, and I think there are four reasons 
why academic research points to the launch of financial 
literacy efforts in schools. The first reason stems from the 
fact that financial illiteracy is widespread. This means that 
young people with poor financial knowledge are unlikely to 
learn from their parents, other adults, or peers.
    The second reason to include financial literacy in school 
has to do with equality. A failure to understand financial 
concepts is especially prevalent among certain demographics in 
the population. Data from the Jump$tart Coalition and other 
surveys show that white male students from college educated 
families disproportionately account for the small percentage of 
students who are financially literate. This distinction 
persists over the life cycle, and is strikingly robust across 
countries.
    Olivia Mitchell and I found this finding across as many as 
eight countries. And this is the case at all stages of the life 
cycle, from youth to old age.
    Another reason to focus on financial literacy in school is 
that it is a necessary skill for navigating today's complex 
world. This is so evident that the OECD last year added 
financial literacy to the topics it evaluates in its Program 
for International Student Assessment. Financial knowledge now 
joins math, science, and reading in those tests administered to 
15-year-olds around the world.
    The fourth reason why school is a powerful place to teach 
financial knowledge is a simple one. Young people need to 
understand how to make wise financial decisions before, not 
after, they are faced with life-changing decisions. Most 
notable among those decisions is whether or not to invest in 
higher education. Education beyond high school has a tremendous 
effect on financial literacy.
    Even though there is criticism about what to do and whether 
financial education is effective in high school, I think a lot 
of the recent studies really do find effectiveness, and 
particularly when schools require financial education and 
require a full course. There is also a great deal of material 
now available to teachers and schools to add financial literacy 
in their curriculum.
    For example, we have standards from the Jump$tart Coalition 
for Personal Financial Literacy and, more recently, the Council 
for Economic Education. Other countries, such as the United 
Kingdom, recently added financial literacy in their schools.
    There is a cornerstone of economic theory: Where you have 
well informed consumers, you will find vigorous competition and 
efficient markets. In other words, financial literacy is not 
only good for Americans because it allows them full 
participation in society, but financial literacy is also 
essential for business, the economy, the country, and in this 
age of globalization, the world.
    Thank you very much for this opportunity to be here.
    [The prepared statement of Ms. Lusardi follows:]
             Prepared Statement of Annamaria Lusardi, Ph.D.
    Ms. Chairwoman and members of the Subcommittee on Children and 
Families, thank you for the opportunity to speak to you about the 
economic importance of financial literacy for students.
    I am the director of the Global Center for Financial Literacy at 
the George Washington University. As part of my research, I develop 
tools for testing financial knowledge, conduct studies into financial 
literacy levels, and assess what the results of those studies mean for 
the United States.
    I am here today to tell you that the vast majority of Americans do 
not have the financial knowledge they need to fully participate in the 
economy or to make informed decisions about their own financial 
futures. This reality has implications for their lives and for the 
economic health of the country.
    According to the 2009 National Financial Capability Study, only 30 
percent of the population can do a simple 2 percent calculation and has 
a basic understanding of inflation and risk diversification, concepts 
that are important in financial decisionmaking. The second wave of that 
study is about to be released. It shows no improvement in the level of 
financial knowledge between 2009 and 2012.
    Financial illiteracy is not only widespread, but it is particularly 
severe among specific groups of the population, including people aged 
18 to 25. These youths just out of school and young adults beginning 
their careers are less financially knowledgeable than the general 
population.
    When we focus on high school students, the findings are even more 
sobering. Data collected bi-annually by the Jump$tart Coalition for 
Personal Financial Literacy show that only 7 percent of high school 
students can be considered financially literate.\1\ These statistics 
have troubling implications. Studies show that Americans who are not 
financially literate are less likely to participate in financial 
markets or to invest wisely. They are less likely to save and plan for 
the future. At the same time, they are more likely to rely on high-cost 
methods of borrowing. This is a serious problem. Remedying it is 
difficult, but adding financial literacy to the curriculum in schools 
would be a good start. Academic research points to four reasons why we 
should launch financial literacy efforts in schools:
---------------------------------------------------------------------------
    \1\ See Mandell, Lewis. 2008. Financial Education in High School. 
In Overcoming the Saving Slump: How to Increase the Effectiveness of 
Financial Education and Saving Programs. Ed. A Lusardi. Chicago: 
University of Chicago Press: 257-79.

    (1) The first reason stems from the fact that financial illiteracy 
is widespread. That means young people with poor financial knowledge 
are unlikely to learn from their parents, other adults, or peers. Only 
a small fraction of students currently have access to adults and peers 
who are financially literate.
    (2) The second reason to include financial literacy in school has 
to do with equality. A failure to understand financial concepts is 
especially prevalent among certain demographics in the population. Data 
from the Jump$tart Coalition and other surveys show that white male 
students from college-educated families disproportionately account for 
the small percentage of students who are financially literate. This is 
a distinction that persists over the life cycle. Women, African-
Americans, Hispanics, and individuals with few educational 
opportunities continue to display very poor levels of financial 
literacy--much lower than their counterparts--at middle age, before 
retirement, and into retirement.
    This finding is strikingly similar and robust across countries. In 
a study that compares financial literacy in eight countries--Germany, 
Italy, Japan, the Netherlands, New Zealand, Russia, Sweden, and the 
United States--Olivia Mitchell from the Wharton School and I found that 
women and those with low levels of education display disproportionately 
poor financial knowledge. This is the case at all stages of the life 
cycle, from youth to old age.
    (3) Another reason to focus on financial literacy in school is that 
it is a necessary skill for navigating today's complex world. This is 
so evident that the Organisation for Economic Co-operation and 
Development (OECD) last year added financial literacy to the topics it 
evaluates in its Programme for International Student Assessment (PISA). 
Financial knowledge now joins mathematics, science, and reading in 
those tests administered to 15-year-olds around the world.
    The PISA tests gauge whether students are prepared for future 
challenges, whether they can analyze, reason and communicate 
effectively, and whether they have the capacity to continue learning 
throughout their lives. These assessments are conducted every 3 years 
to help us understand if students near the end of compulsory education 
have acquired the knowledge and skills essential for full participation 
in society. Given these objectives, financial literacy seems to be an 
essential addition.
    (4) The fourth reason why school is a powerful place to teach 
financial knowledge is a simple one: Young people need to understand 
how to make wise financial decisions before--not after--they are faced 
with life-changing decisions. Most notable among those decisions is 
whether or not to invest in higher education. Education beyond high 
school has a tremendous effect on future financial security.
    At the same time, whether and how to finance higher education has 
changed dramatically in recent years. The cost of a college education 
has increased rapidly in the United States, surpassing the increase in 
both wages and inflation. This means that young people who pursue 
degrees often start their careers with substantial amounts of debt.

    Some past studies looking into the effectiveness of financial 
literacy programs in high school did not find encouraging results. One 
study found that students in States that required financial education 
scored no better in financial literacy tests than those in States that 
did not require financial education.\2\ However, subsequent analyses 
concluded that this research was incomplete since it did not account 
for course content, test measurement, teacher preparation, and the 
amount of instruction, just to cite some of the most important 
limitations. When researchers looked more closely at State education 
requirements, they found that when students are required to take a 
financial education course, they perform much better than students in 
States with no such requirements.\3\ Thus, there is evidence that 
requiring personal finance education may, in fact, be effective in 
increasing student knowledge--but only when it requires significant 
exposure to personal finance concepts.
---------------------------------------------------------------------------
    \2\ See the discussion in Mandell (2008).
    \3\ Tennyson, Sharon and Chau Nguyen. 2001. State Curriculum 
Mandates and Student Knowledge of Personal Finance. Journal of Consumer 
Affairs 35 (2): 241-62.
---------------------------------------------------------------------------
    Other researchers have looked at teacher preparation. They found 
that less than one-fifth of teachers were prepared to teach any of the 
six personal finance concepts normally included in financial education 
courses. Moreover, States requiring high school financial education do 
not necessarily provide or promote teacher training. As a result, State 
education mandates appear to have no effect on whether teachers take 
courses in personal finance, teach the courses, or feel competent to 
teach such a course.\4\
---------------------------------------------------------------------------
    \4\ Way, Wendy and Karen Holden. 2009. Teachers' Background and 
Capacity to Teach Personal Finance: Results of a National Study. 
Journal of Financial Counseling and Planning 20(2): 64-78.
---------------------------------------------------------------------------
    Other studies attempted to provide a more rigorous framework for 
evaluating financial education in high school, recognizing that 
students who take financial education courses are not a random sample 
of the population of students and test scores might not align with what 
is taught in school. In research published in 2010, economics 
professors William Walstad of the University of Nebraska-Lincoln and 
Ken Rebeck and Richard MacDonald at St. Cloud State University used a 
quasi-experimental method to assess a well-designed video course that 
covered fundamental financial concepts.\5\ The test was designed to 
measure improvements in financial knowledge. These researchers found a 
significant increase in the level of personal finance knowledge among 
students exposed to financial education, suggesting that conclusions 
from earlier findings were premature.
---------------------------------------------------------------------------
    \5\ Walstad, William, Ken Rebeck and Richard MacDonald. 2010. The 
Effects of Financial Education on the Financial Knowledge of High 
School Students. Journal of Consumer Affairs 44(2): 336-57.
---------------------------------------------------------------------------
    There is now a great deal of material available to help teachers 
and schools add financial literacy into school curricula and to improve 
the quality of that education. For example, we have national standards 
for financial literacy from the Jump$tart Coalition for Personal 
Financial Literacy and, more recently, the Council for Economic 
Education. The OECD also issued guidelines for financial education in 
high school,\6\ and its International Gateway for Financial Education 
serves as a global clearinghouse on financial education, providing 
access to a comprehensive range of information, data, resources, 
research, and news on financial education issues and programs around 
the globe.\7\
---------------------------------------------------------------------------
    \6\ Details are found at http://www.oecd.org/finance/financial-
education/48493142.pdf.
    \7\ For more information, see http://www.financial-education.org/
home.html.
---------------------------------------------------------------------------
    Other countries, such as the United Kingdom, recently added 
financial literacy in their schools.
    Young people--not only in the United States but also around the 
world--face a new economic environment with more complex financial 
markets. They will have more individual responsibility in investing in 
their own education and in planning for their own financial security 
during their working lives and into retirement. And they will be doing 
this, among other things, on a global scale.
    If they are going to do this well, they must be equipped with the 
right tools and skills. Just as it was not possible to contribute and 
thrive in an industrialized society without basic literacy--the ability 
to read and write--so it is not possible to successfully navigate 
today's world without being financially literate.
    There is a cornerstone of economic theory: Where you have well-
informed consumers, you will find vigorous competition and efficient 
markets. In other words, financial literacy is not only good for 
Americans because it allows them full participation in society, but 
financial literacy is also essential for business, the economy, the 
country and, in this age of globalization, the world.
    Thank you for this opportunity. I would be pleased to answer any 
questions.

    Senator Hagan. Thank you, Dr. Lusardi.
    And now, Ms. Cathy Pace, the current president of the 
Credit Union Division and recently named CEO of the Allegacy 
Federal Credit Union in Winston-Salem, NC.
    Ms. Pace.

    STATEMENT OF CATHY PACE, PRESIDENT OF THE CREDIT UNION 
   DIVISION, ALLEGACY FEDERAL CREDIT UNION, WINSTON-SALEM, NC

    Ms. Pace. Chairwoman Hagan, Ranking Member Enzi, and 
members of the subcommittee, thank you for the invitation to 
testify in front of the subcommittee today regarding the 
importance of financial literacy education for students. As you 
mentioned, my name is Cathy Pace, and I am the president of the 
Credit Union Division at Allegacy Federal Credit Union.
    Founded in Winston-Salem in 1967, Allegacy has grown to 
become one of the largest credit unions in North Carolina, 
serving nearly 120,000 members. Today, I will share with you 
information on two programs Allegacy supports, the Student Run 
Credit Union Program and the Center for Smart Financial 
Choices.
    In a struggling economy, the need for financial literacy is 
emphasized as millions in our State and across the country 
struggle to make ends meet. Recent statistics state that half 
of all Americans are living paycheck to paycheck, and 40 
percent of Americans say they live beyond their means.
    Fewer and fewer American youth are entering adulthood 
having learned the value of a dollar. This is an age-old saying 
that is falling on deaf ears, because we, as parents, 
educators, and financial stewards, are allowing it to happen. 
As member-owned financial institutions and cooperatives, it is 
in the interest of credit unions to have members that are 
financially literate.
    Therefore, credit unions engage in a wide variety of 
efforts aimed at ensuring that members of all ages have access 
to resources that help them make smarter financial choices. 
North Carolina credit unions demonstrate their commitment to 
financial literacy by providing financial counseling and 
education to more than 500,000 North Carolinians every year.
    At Allegacy, our professionals are playing a lead role in 
addressing this problem. We partnered with the Winston-Salem/
Forsyth County School District and established the Allegacy 
Student Run Credit Union Program. The program provides students 
with real-world financial experience and the necessary skills 
for financial responsibility.
    Allegacy's first student-run credit union opened in August 
2008 at Reagan High School, the first student-run credit union 
at the high school level in the State of North Carolina. 
Allegacy currently operates student-run credit union branches 
in seven of our high schools across the school district with 
1,354 members.
    The student-run branches allow students, parents, and 
faculty to enjoy the benefits and convenience of conducting 
their banking needs right on campus and offer a unique way for 
students to learn the responsibilities of handling cash, 
confidentiality, professionalism, computer skills, and 
marketing. The students staffing the branches receive classroom 
education required by the State's Business Advanced Studies 
Program. They are trained and supervised by professional staff 
and attend a 3-day training session at Allegacy that prepares 
them for the roles of customer service assistance and member 
service representatives.
    These students participate in the traditional audit process 
of a full service, freestanding credit union and build 
executive, marketing, and business plans to grow their 
location, membership base, and transaction activity. In 
addition to developing valuable life skills, students receive 
community service credit as well as high school class credit 
for their participation.
    The second program I'd like to speak to you about today is 
our financial literacy efforts for students and the broader 
population. Allegacy recently established the Center for Smart 
Financial Choices to be a trusted, reliable, and partial source 
of financial information and training. The creation of the 
center adds a new dimension to financial education, focusing 
its curriculum on a broad range of courses offering something 
for every age or life stage.
    The center's unique and creative model uses a variety of 
tools to accommodate different learning styles. Financial 
wellness guides assist students through the use of technology, 
individual and group instruction, visual aids, as well as 
hands-on activities. All courses offer a periodic review and 
adjustment component to ensure the application of the student's 
knowledge.
    Instruction is also provided after traditional work hours, 
at varying times of the day for shift workers, and includes 
Saturday classes. The center's volunteer staff is comprised of 
over 85 percent of Allegacy employees who provide expertise and 
curriculum content and teach the courses made available to the 
public.
    These are just a few of the examples of the center's 
program. We have a class titled Surviving in the World of Debit 
and Credit, which was created for approximately 30 economically 
disadvantaged youth ages 9 to 14. Also, we begin with grade 
levels fourth and fifth, and the center educates these students 
in order to understand market economy and the importance of 
developing a personal budget.
    And, finally, the Youth Financial Planning Council works 
with teens who are helping other teens to cover the topics of 
budgeting, saving, spending, and credit. Our efforts extend to 
all age groups and ensure our young adults have the resources 
necessary. The National Credit Union Foundation also 
complements and supports the coordination of the financial 
literacy efforts of the credit union system, cementing these 
efforts as a key part of the credit union philosophy of people 
helping people.
    Chairwoman Hagan, Ranking Member Enzi, and the members of 
the subcommittee, I would like to thank you for allowing us to 
be here today.
    [The prepared statement of Ms. Pace follows:]
                    Prepared Statement of Cathy Pace
    Chairman Hagan, Ranking Member Enzi, members of the subcommittee, 
thank you for the invitation to testify in front of the subcommittee 
today regarding the importance of financial literacy education for 
students. I appreciate you taking the time to hear my testimony. My 
name is Cathy Pace, and I am president of the credit union division at 
Allegacy Federal Credit Union. Founded in Winston-Salem in 1967, 
Allegacy has grown to become one of the largest credit unions in North 
Carolina with over $1 billion in assets and nearly 120,000 members.
    In a struggling economy the need for financial literacy is 
emphasized as millions in our State and across the country struggle to 
make ends meet. Recent statistics state that half of all Americans are 
living ``paycheck to paycheck'' and 40 percent of Americans say that 
they live beyond their means. Fewer and fewer American youth are 
entering adulthood having ``learned the value of a dollar.'' This age-
old saying is falling on deaf ears, because we as parents, educators, 
and financial stewards are allowing it to happen.
    Federal Reserve Chairman Bernanke has said,

          ``Consumers who can make informed decisions about financial 
        products and services not only serve their own best interests, 
        but, collectively, they also help promote broader economic 
        stability.''

    Financial education ``can play a key role'' in promoting financial 
planning such as budgeting and saving for emergencies and retirement, 
which will help households live better and be better positioned to 
handle financial shocks according to Chairman Bernanke. And, in 
coordination with parents and educators, financial institutions can 
play a vital role toward increasing the financial literacy rate of 
America's youth and young adults.
    For credit unions, financial literacy is part of our key mission. 
Credit unions were established to promote thrift and provide access to 
credit for provident purposes. As member-owned financial cooperatives, 
it is in the interest of credit unions and their memberships to have 
members that are financially literate; therefore, across the country, 
credit unions engage in a wide variety of efforts aimed at ensuring 
that members of all ages have access to resources that help them make 
smarter financial choices. North Carolina credit unions demonstrate 
their commitment to financial literacy by providing financial 
counseling and education to more than 500,000 North Carolinians every 
year. At Allegacy, our professionals are playing a lead role in 
addressing this problem.
    The importance of financial literacy education early on in a young 
person's life cannot be overstated. According to Hartford Financial 
Services Group, less than 24 percent of students and only 20 percent of 
parents say students are prepared to deal with the financial challenges 
that await them in the real world. Seventy-six percent of students 
report that they wish they had more help preparing for their personal 
finances.
    In an effort to combat these grim statistics, Allegacy has 
partnered with the Winston-Salem/Forsyth County School District and 
established the Allegacy Student Run Credit Union (SRCU) Program. The 
purpose of the program is to provide students with the real world 
experience of handling their own finances and the necessary skills for 
financial responsibility. Allegacy's first SRCU opened in August 2008 
at Reagan High School-Raider Student Credit Union, with the distinction 
of being the first SRCU at the high school level in the State of North 
Carolina. Allegacy currently operates student-run branches in seven 
high schools across the school district with 1,354 members. Allegacy 
intends to continue expanding this successful model to neighboring 
counties.
    The student-run branches are open 3 days a week during lunch for 
students, parents, and faculty to open new accounts, make deposits, 
withdrawals and transfers. Students can access their accounts if they 
need money for lunch or to deposit their paycheck if they have a part-
time job. Teachers and staff can take care of basic transactions 
without leaving their place of employment. The student-run branches 
allow everyone to enjoy the benefits and convenience of conducting 
their banking needs right on campus and offer a unique way for students 
to learn the responsibilities of handling cash, confidentiality, 
professionalism, computer skills and marketing.
    The students staffing the branches receive classroom education as 
required by the North Carolina Public Schools' Business Advanced 
Studies Program and are trained and supervised by professional staff. 
The students are also required to attend a 3-day training session at 
Allegacy in order to prepare them for the roles of Customer Service 
Associate (CSA) and Member Services Representative (MSR). These 
students participate in the traditional audit process of a full-
service, free-standing credit union location. They also build and 
execute marketing and business plans to grow their location's 
membership base and transaction activity. In addition to developing 
valuable life skills, students receive community service credit as well 
as high school class credit for their participation.
    In continuation of our efforts on early financial literacy 
education for students and the broader population at large, Allegacy 
recently established the Center for Smart Financial Choices to be a 
trusted, reliable, impartial source of financial information and 
training. The creation of the Center adds a new dimension to financial 
education, by focusing its curriculum on a broad range of courses that 
will offer something for every age or life stage.
    The Center's unique and creative model will use a variety of tools 
to accommodate different learning styles. Financial Wellness Guides 
will assist students through the use of technology, individual and 
group instruction, visual aids and hands on activities. All courses 
will offer a periodic review and adjustment component to ensure the 
application of the students' knowledge. Instruction will be provided 
after traditional work hours, at varying times of the day for shift 
workers and will include Saturday classes.
    The Center's volunteer staff is comprised of over 85 percent 
Allegacy employees who provide expertise and curriculum content as well 
as teach the many courses made available to the public. For example, 
the partnership with Winston-Salem/Forsyth County Schools Exceptional 
Children's Division created a comprehensive educational class on 
banking and making personal financial choices that was held on May 16, 
2012 with 12 students with developmental disabilities. The Center was 
also asked by ED-CORE 21st Century Leaders and Scholars Program to 
design a financial education program that would be unique, creative and 
engage youth. As a result, a class titled ``Surviving in the world of 
debit and credit'' was created for approximately 30 economically 
disadvantaged youth ages 9-14 in July 2012.
    In August 2012, the Center began its partnership with the Winston-
Salem/Forsyth County Schools District to serve as an educational 
outreach resource in providing real world application of financial 
education following standards set out by North Carolina. Beginning as 
early as 4th and 5th grade, the Center educates students in order to 
understand scarcity and choice in a market economy, as well as the 
importance of developing a personal budget for spending and saving. 
When students reach the junior high level, they learn the economic 
activities of modern societies and regions, and later, the economic 
activities of North Carolina and the United States. After these 
students have acquired this vital information in their earlier years, 
they are then challenged to analyze the concepts and factors that 
enable individuals to make informed financial decisions for effective 
resource planning.
    More recently, the Center has engaged in various initiatives aimed 
at enhancing financial literacy among all age groups. The Center 
conducted a workshop for 30 young people ages 16-21 from the Northwest 
Piedmont Workforce Investment Act Elink Youth Program titled ``It's 
Your Money,'' to learn about the importance of saving money and how to 
get and keep good credit. The Center has presented to students on the 
basics of banking transactions and has led financial education field 
trips in order to learn the differences between credit unions and 
banks. In addition, the Center has assisted in the organization of the 
Youth Financial Planners Council with 12 teens who are creating a class 
for other teens to cover the topics of budgeting, saving, spending and 
credit. The Center has partnered with an after school club for girls in 
grades 3-5 for students to learn how ``money doesn't grow on trees.'' 
The Center has even held family events for parents and children ages 5-
7 to learn about spending, saving, and sharing.
    As you can see, our efforts extend to all age ranges, in order to 
ensure our youth have the resources necessary to succeed when they 
reach adulthood. These examples are only a promising start to what 
Allegacy views as a long lasting relationship between existing and 
future members of the credit union movement.
    In closing, I would note that while we are very proud of the 
efforts we are making in our community to encourage financial literacy, 
credit unions across the country are engaging in similar efforts. The 
National Credit Union Foundation supports and helps coordinate the 
financial literacy efforts of the credit union system, cementing these 
efforts as a key part of the credit union philosophy of ``people 
helping people.''
    Chairwoman Hagan, Ranking Member Enzi, and members of the 
subcommittee, I would like to again thank you for inviting me here 
today for the opportunity to testify on the importance of financial 
literacy education. I appreciate your consideration on these matters 
and for recognizing that financial literacy is best applied early on in 
a young person's life. I look forward to progress being made on this 
very important component of our next generation's financial well-being. 
I am happy to answer any questions you may have.

    Senator Hagan. Thank you very much, Ms. Pace.
    And our final witness today is Cy Richardson, vice 
president of Housing and Community Development at the National 
Urban League.
    Mr. Richardson.

    STATEMENT OF CY RICHARDSON, VICE PRESIDENT, HOUSING AND 
   COMMUNITY DEVELOPMENT, NATIONAL URBAN LEAGUE, NEW YORK, NY

    Mr. Richardson. Good afternoon, Chairwoman Hagan, Ranking 
Member Enzi, and members of the Subcommittee on Children and 
Families. My name is Cy Richardson, and I am the vice president 
for Housing and Community Development, as you said.
    I appreciate the opportunity to share the National Urban 
League's views on financial education as a key driver in 
developing sound decisionmaking among youth. We understand that 
improved decisionmaking is an important and under-appreciated 
component in narrowing the racial wealth gap in America.
    Heightened awareness and measuring changes in financial 
decisionmaking and other forms of behavior modification has 
produced a diverse array of education programs and targeted 
strategies. And while some see the most accessible group as 
high school students, undeniably, K through 12 school-based 
programs can provide a vehicle for delivering relevant 
financial education and life skills training to a broad captive 
audience. And, further, learning financial responsibilities and 
concepts early in life can certainly help our youth before they 
get into financial trouble.
    If not during the school day or via a well-structured 
after-school program, where, we ask, are children living in 
poverty, children of color, and children living in rural 
localities supposed to learn such things? Particularly, survey 
data, as was previously referenced, also suggest that their 
parents and peers are unlikely to have all the answers.
    One solution is outlined in the Project Ready STEM Act, 
H.R. 1343, introduced in the House by Representative Marcia 
Fudge. It is designed to authorize a funding stream to support 
an evidence-based model designed by the National Urban League. 
Project Ready STEM is an Urban League Signature Program 
developed to support students' successful completion of STEM-
related course work and expose them to STEM-related career 
options.
    This year, we are seeking to develop a financial literacy 
and asset building component to the program. Asset building 
programs enable participants to develop savings behavior and 
build assets to reach lifelong goals, while financial education 
programs impart financial skills and knowledge among 
participants. Although asset building programs are critical to 
youth's economic success, many of our affiliates have found 
that these programs are most effective when coupled with 
financial education and one-on-one financial counseling and 
coaching.
    Beyond the common sense push to embed and scale fundamental 
financial literacy principles and techniques in primary and 
secondary school-based platforms, we believe additional 
tactical methods must be employed to improve financial 
literacy, financial capability, and financial education in the 
United States. For example, the nonprofit sector must be more 
deeply engaged in partnership across a number of integrated 
service delivery dimensions.
    These organizations, such as the Urban League, are regarded 
with trust in the community and can serve to moderate and 
quantify the client experience. In this regard, we would 
support an initiative targeting partnerships with nonprofit 
consumer advocacy and community-based organizations to create 
free materials, outreach, and training similar in scope and 
field to the successful Bank On and America Saves campaigns.
    Moreover, as the government's role is to catalyze 
innovation and identify the key architects of change within a 
given policy sphere, community partners must be supported with 
ongoing financial support to allow us to fully participate in 
the national financial literacy dialog and discourse. This 
involves bringing together stakeholders to further develop and 
coordinate existing financial education programs and materials 
and increasing awareness of success stories, best practices, 
and key incentives for teaching financial literacy.
    The racial wealth gap, fed, fueled, and exacerbated by deep 
information deficits in low income and communities of color, 
must be addressed, must be addressed. The National Urban League 
will continue to focus on and confront this inequality as a 
civil rights issue in terms of its social effects and 
historical causes.
    Additionally, a commensurate level of national focus and 
resources must be targeted toward solutions in order to break 
this vicious cycle. Given the increasingly complex world of 
modern personal finance, a new push must be made now to ensure 
youth are ready for the challenge.
    Thanks very much for the opportunity to share our views.
    [The prepared statement of Mr. Richardson follows:]
                  Prepared Statement of Cy Richardson
    Good afternoon Chairwoman Hagan, Ranking Member Enzi and members of 
the Subcommittee on Children and Families. My name is Cy Richardson and 
I am the vice president for Housing and Community Development at the 
National Urban League. I appreciate the opportunity to share the 
National Urban League's views on financial education as a key driver in 
developing sound decisionmaking among our youth. We understand that 
improved decisionmaking is an important and underappreciated component 
in narrowing the racial wealth gap in America.
    Implicit in the title of this hearing and embedded at the heart of 
the matter is an acute understanding that in today's demanding 
financial environment, consumers confront complicated financial 
decisions at a young age. Therefore, any financial mistakes made early 
in their consumer life can prove to be extremely costly and have 
lasting deleterious effects. Understanding the factors that contribute 
to or detract from the acquisition of financial knowledge can help 
policymakers design effective interventions targeted at this Nation's 
youth. Young people often find themselves carrying large amounts of 
student loans or credit card debt, and such early entanglements can 
hinder their ability to ultimately establish credit worthiness, 
accumulate wealth, and gain economic empowerment. For the National 
Urban League, the financial literacy imperative is deeply rooted in a 
broader dialog concerning this country's rapidly expanding racial 
wealth gap.
    The National Urban League Equality Index of Black America shows 
that the median net worth of African-American families was $4,955--22 
times less than the $110,729 median net worth of white American 
families.\1\ This disparity has been referred to as the racial wealth 
gap, and it has been growing exponentially since the 1980s. More 
granular data analysis looking specifically at the status of African-
Americans indicates that the need for financial literacy is alarming. 
Anecdotal evidence culled from the collective experience and 
familiarity of Urban League affiliates across the country suggests that 
many African-Americans continue to struggle developing a working 
knowledge of personal money management concepts and practices. Deeply 
exacerbated by the Great Recession, African-Americans generally 
experience the following:
---------------------------------------------------------------------------
    \1\ 2013 Equality Index of Black America, 2013 State of Black 
America, Redeem the Dream, Jobs Rebuild America, National Urban League 
(2013), p. 34.

     Higher debt delinquencies than any other ethnic group.
     Comparatively lower savings.
     A lower home ownership rate than any other ethnic group.
     A greater incidence of home foreclosure than any other 
ethnic group.
     A greater incidence of predatory lending practices.
     A greater incidence of higher cost auto/consumer loans.

    Compounding this matrix of disproportionality are surveys which 
indicate that many African-Americans do not have a working knowledge of 
how to accumulate wealth to establish a financial legacy. This 
vulnerability is particularly striking considering that nearly one-
third of older African-Americans rely on Social Security for 90 percent 
of their family income. Moreover, the Joint Center for Political and 
Economic Studies' 1998 and 2009 polls indicate that 35 percent of 
African-Americans expect to receive a major portion of their retirement 
income from Social Security, and 29.2 percent receive it from employer-
sponsored pension plans. Additionally, 
as shown in our 2013 Equality Index of Black America, 27.8 percent of 
African-Americans compared to 36.9 percent of Whites invest in a 401(k) 
plan, and 10.1 percent of African-Americans compared to 25.6 percent of 
Whites invest in an IRA.\2\ Despite these dire data points we believe 
that wealth disparities can be narrowed through financial literacy--
particularly when embedded or integrated within existing societal 
structures and trusted institutions.
---------------------------------------------------------------------------
    \2\ 2013 Equality Index of Black America, 2013 State of Black 
America, Redeem the Dream, Jobs Rebuild America, National Urban League 
(2013), p. 34.
---------------------------------------------------------------------------
    The African-American community reflects a wide range of socio-
economic backgrounds, yet common linking variables exist which reveal 
deep insecurities around personal money management habits and a lack of 
familiarity with and exposure to the systems and mechanisms typically 
employed to build and sustain wealth in this country. Nevertheless, the 
acquisition of financial knowledge--heightened financial acumen and the 
confidence that it engenders--does not eliminate the invisible barriers 
or discrimination that exist in the marketplace. Such knowledge, 
however, can serve as a moderator in which persons are equipped to 
become aware of the function of financial transactions and personal 
money management concepts so that they will not be taken advantage of 
and know how to efficiently and effectively utilize their financial 
resources. Notwithstanding these points, the racial wealth gap is a 
profound and significant problem that impacts people of color on a 
daily basis and limits opportunities for long-term wealth building. The 
National Urban League's contribution at today's hearing is therefore 
geared toward recognizing the structural impediments or barriers to 
financial empowerment in communities of color, while emphasizing and 
identifying public policies that can help narrow the wealth gap.
    As members of the subcommittee are aware, the lack of sustainable 
employment and income in communities of color makes it extremely 
difficult for households to consider saving and/or investing in 
themselves. In addition, the foreclosure crisis has devastated minority 
households' primary source of wealth, home ownership, and has 
destabilized household balance sheets and greatly set back the decades 
of progress communities of color had made to improve individual and 
collective economic mobility. Most troubling is that young people of 
color from low-income and low-wealth families face difficult decisions 
for their college education, which often equates to high levels of debt 
or no college at all. In our judgment, this must be a major touchstone 
for this hearing on ``The Economic Importance of Financial Literacy 
Education for Students.''
    As our understanding of these seemingly intractable challenges 
evolves, the National Urban League and its network of 96 affiliates 
remain committed to experimenting and prototyping programmatic and 
policy solutions. A key strategy that deserves greater public and 
private sector scrutiny and investment is the tethering of asset-
building and financial education programs, which can contribute 
significantly to young people's economic success and financial well-
being. Indeed, this is a solution that we have proposed as part of our 
initial research for the Reimagining Aid Design and Delivery (RADD) 
project for the Bill and Melinda Gates Foundation.\3\ The RADD project 
provided us with a unique opportunity to build upon our direct services 
work to directly assess the attitudes, experiences and ideas of those 
we serve in order to understand how we can continue to best promote the 
attainment of a meaningful degree or certification that will allow 
black post-secondary students to gain economic empowerment. This is 
important due to the high usage of student loans by African-American 
students.
---------------------------------------------------------------------------
    \3\ Education Transforms Lives: Post-Secondary Affordability Survey 
& Focus Groups, National Urban League Policy Institute, 2013, see at: 
http://www.iamempowered.com/article/2013/04/02/nul-radd-project.
---------------------------------------------------------------------------
    Another solution is outlined in the Project Ready STEM Act (H.R. 
1343), introduced in the House by Representative Marcia Fudge, and 
designed to authorize a funding stream to support an evidence-based 
model designed by the National Urban League. Project Ready STEM is an 
NUL ``Signature Program'' \4\ developed to support students' successful 
completion of STEM-related coursework and expose them to STEM-related 
career options. This year we are seeking to develop a financial 
literacy component to this program. Asset-building programs enable 
participants to develop savings behavior and build assets to reach 
life-long goals while financial education programs impart financial 
skills and knowledge among participants. Although asset-building 
programs are critical to youth's economic success, many of our 
affiliates have found that these programs are most effective when 
coupled with financial education and one-on-one financial coaching.
---------------------------------------------------------------------------
    \4\ The National Urban League Signature Programs are those models 
that are based on best practices gleaned from experimentation across 
affiliates, data analysis and research. Our Signature Programs are the 
models which we attempt to scale across the movement via subgranting 
and additional supports to affiliates.
---------------------------------------------------------------------------
    Financial education, especially for economically vulnerable 
families, is an important part of an asset-building agenda for the 
Urban League. Increasingly, our affiliates are linking financial 
education programs to tax refunds, buying a home, required registration 
for pensions, participation in welfare programs, and other key 
teachable moments. Yet, while financial education programs have 
proliferated in recent years, targeted research is necessary to learn 
about the actual benefits of such programs and to insure that they are 
well structured. Generally, we expect that educated consumers are more 
capable of making sound financial decisions to increase their families' 
economic security and, in turn, contribute to community economic 
development. The idea is to teach individuals and families not only to 
accumulate savings, but also to manage their assets.
    Increasing interest in financial literacy has produced a diverse 
array of education programs and targeted strategies. Some see the most 
accessible group as high school students. Undeniably, school-based 
programs can provide a vehicle for delivering relevant education to a 
broad, captive audience. Further, learning financial responsibilities 
early in life can help our youth before they get into financial 
trouble.
    Some researchers and educators believe the United States should 
have a more comprehensive approach to the delivery of financial 
education and training. Others argue that differences in the needs of 
various target groups might make standardizing the curricula 
counterproductive. Our organization has observed that program 
objectives and key topics are often similar across programs. The 
standards developed for school-based financial education programs show 
that students are expected to learn about income sources, money 
management, spending and credit, and saving and investing. Achieving 
the standards requires students to know how to budget, to understand 
the role of insurance, to see the value of savings, to recognize the 
high potential costs of credit card debt, and to appreciate the risk-
return tradeoffs that arise when investing in various financial and 
nonfinancial assets. If not during the school day, or via a well-
structured afterschool program, where are the children living in 
poverty, children of color, and children living in rural localities 
supposed to learn such things--particularly as survey data also 
suggests that their parents are unlikely to have all the answers?
    Beyond the common-sense push to embed and scale fundamental 
financial literacy principles and techniques in primary and secondary 
school-based platforms, we believe additional tactical methods must be 
employed to improve financial literacy and financial education in the 
United States. For example, the non-profit sector must be more deeply 
engaged in partnership across a number of integrated service delivery 
dimensions. These organizations are regarded with trust in the 
community and can serve to moderate and quantify the ``client 
experience.'' In this regard we would support an initiative targeting 
partnerships with nonprofit consumer advocacy and community-based 
organizations to create free materials, outreach and training. 
Moreover, as the government's role is to catalyze innovation and 
identify the key architects of change within a given policy sphere, 
community partners must be supported with ongoing financial support to 
allow us to fully participate in the national financial literacy 
agenda. This involves bringing together stakeholders to further develop 
and coordinate existing financial literacy programs, and increasing 
awareness of success stories, best practices and key incentives for 
teaching financial literacy.
    According to the Corporation for Enterprise Development (CFED), 
over 1.3 million American children born each year--and more than half 
of minority children--are born into families with negligible savings to 
invest in their futures. Working with CFED and other non-profits in a 
national collaborative known as the Asset Building Policy Network has 
afforded us, here at the National Urban League, the critical 
understanding that family ownership of even a few thousand dollars in 
assets can give children not only a measure of economic security, but 
also a transformative sense of possibility and hope for the future. We 
believe platforms that ally assets and knowledge building such as child 
savings accounts offer an attractive cross-sectorial strategy to 
eradicate poverty and narrow the racial wealth gap.
    The widened wealth chasm has major ramifications for the country 
going forward. Having less wealth and diminished home equity means it 
will be more difficult for African-Americans to send their children to 
college or to another post-secondary educational institution that are 
key to gaining economic empowerment. The National Urban League will 
continue to focus on and confront this inequality as a civil rights 
issue in terms of its social affects and its historical causes. 
Additionally, a commensurate level of national focus and resources must 
be targeted toward solutions in order to break this vicious cycle. 
Given the increasingly complex world of modern personal finance, a new 
push must be made now to ensure youth are ready for the challenge.
    Thank you for the opportunity to present our views.

    Senator Hagan. I want to thank all of our witnesses today 
for your opening comments. And Senator Enzi said he was 
incredibly impressed that everybody stayed on time. So kudos to 
all of you. We now want to move to some questions.
    Ms. Pace, again, thank you for coming today. I want to ask 
you about one of the topics you talked about in your opening 
statement, and that is the student-run credit unions, which I 
think is a unique model for teaching students about effective 
money management.
    I've had the pleasure of visiting two of the student-run 
credit unions, one in Mount Tabor High School--I was there in 
2010--and another one in Glenn High School in 2009. And it was 
an exciting day. The ribbon was cut. The students were 
involved, and they were opening up their own credit union space 
in their school.
    I understand, as you said, I believe, in your testimony, 
that you now have--is it seven or nine?
    Ms. Pace. Seven.
    Senator Hagan. Seven different high schools. If you could 
go over a few things with me, how many of the students are 
involved, and how many have gone through the program since it 
began? And I think you had one comment of 1,354.
    Ms. Pace. We have a total number of members involved in the 
student-run credit union--this is the ones who have actually 
joined--of 1,354. The total number of students who have 
participated in the overall program since 2008 is 300 students. 
We currently have 82 students in this school year participating 
in seven of the schools and 41 in this semester alone.
    Senator Hagan. What are the typical transactions that a 
student employee might handle?
    Ms. Pace. They can do a withdrawal. They can make a 
deposit, transfers. They can open a checking account and a 
savings account.
    Senator Hagan. Do you have to be affiliated with the school 
in some way, either as a teacher, student, or parent of the 
student, in order to do your banking through the student-run 
credit branch? Or can any of your other members of the credit 
union do their banking at a student-run credit union branch?
    Ms. Pace. Yes. The staff, the students, and their parents 
can participate in the student-run credit union.
    Senator Hagan. But not other customers of Allegacy.
    Ms. Pace. If we had a visiting person there, and they were 
there during the lunchtime hour, which is when the student-run 
credit union is open, and they wanted to perform a transaction, 
they could.
    Senator Hagan. Have you heard from the teachers at the 
school that this kind of learning, where students are actually 
getting the hands-on experience, has improved their personal 
finance skills beyond what's taught in the classroom?
    Ms. Pace. Yes. They have an overwhelming response to the 
number of students who would like to participate in this. It is 
also designated by the teacher who can participate. As I 
mentioned, they have to go through a 3-day training process.
    And I'd like to leave you with this thought on how 
important this is to the students. In 2011, during August, is 
when we have our 3-day training program. We had a young man, 
age 16, who was a high school student who participated in this 
and had just been elected to work as a student-run 
representative. It was time for the training at our Allegacy 
site.
    When he got to the credit union headquarters, he walked in. 
It was an August day. The temperature was 90-plus degrees. This 
young gentleman walks in, and he's completely wet with 
perspiration, but he's also carrying a change of clothes.
    When he got there, he told us that his ride did not show up 
to bring him to the training. This was very important to him 
because he knew he could not participate in running one of the 
student-run credit unions if he did not get the training. But 
he also knew that because it was such a hot day, he brought a 
change of clothes so that he would be presentable. And he 
walked four and a half miles to do this.
    That's telling us how important it is for our young adults 
to have financial literacy, to be able to participate in a 
program like this that's going to help them in their future.
    Senator Hagan. And it's a 3-day training program?
    Ms. Pace. A 3-day intense training from our professionals.
    Senator Hagan. Is that an 8-hour day?
    Ms. Pace. Yes, ma'am.
    Senator Hagan. That's great. One thing I hesitated to say 
was the length of time, and I want to say 5 or 6 minutes for 
our questions.
    Ms. Lipp, thank you, too, for coming today, and we also 
welcome your husband. From your statement today, it sounds like 
your budget project has had a real impact on student lives, 
their ability to properly budget, their spending and saving. 
How long have you been running the budget project? How many 
students have completed it?
    And I understand that this project has become quite well 
known around the high school and in the community. Do people 
outside the school now expect your students to come and 
interview them? I think you said in your opening testimony that 
they have the pictures taken, and they have them in their file. 
Has the project had a greater effect than just on your 
students?
    Ms. Lipp. Yes to all. I started in 2005, and I teach 
approximately 90--depending on the type of schedule--90 to 150 
kids a year, something like that. All of my students who took 
civics and economics--I tell them they're forced to do it, but 
they were told that they had to do it. What was interesting is 
that I can probably count on one hand the number of students 
who have been assigned the project who didn't do it. So almost 
every time, I got every project back from them, which is 
amazing.
    In the community, it started becoming known when my 
students would go out to the banks. The kids would tell me when 
they came back, ``Oh, you know, the banker knew who I was. 
You're from Ms. Lipp's class. Sit down and we'll talk.'' And so 
they got to know me indirectly.
    This year, I got a grant for $20,000 for my school to get 
iPads in the classroom, and it was hosted by Discover Card. It 
was a financial literacy grant. And we started implementing the 
stock market game.
    In the school that I work at now, because it is a title I 
school and mobility tends to be an issue for some of my 
students, the budget project is a little bit more difficult to 
put in, because a lot of times my students have to work after 
school. And if I can't fit it into the actual day-to-day, the 
parts of the project, they're probably not going to do it at 
home.
    So we've kind of had to shift away from the budget project 
a little bit right now, which is why the iPads were such an 
integral part of this grant so that they're now going to have 
access to start doing it in the classroom, and we're waiting 
for WiFi to get put up out in my trailer park that I'm in. So, 
right now, they don't entirely work, but they work inside this 
campus.
    We started working with the stock market game for the first 
time and worked with the North Carolina Council on Economics 
Education. Now the kids participate in the stock market game. 
And if you're not aware of how it works--are you aware of the--
OK. It functions with real-time stocks, and it's amazing for 
the kids. They can buy and sell whatever they want to buy. And 
it's been proven to increase math scores.
    When we first started playing last semester, they wanted to 
buy Apple, and they couldn't afford it because it was $800 a 
share at that time. And they were saying, ``Why can't I buy 
this? Why can't I buy this?'' Then they decided they wanted to 
go the other way and start trying to buy penny stocks and 
dollar stocks in hopes that it would get better. But the stock 
had to be a minimum of $5 in order for them to buy it.
    They had to do the research and go onto Google Finance. 
And, suddenly, the kids that I work with at my school, 
Garinger, who are predominantly low income and are on free or 
reduced lunch rates, are suddenly starting to talk about what 
the value of Target is and the value of all of these other 
companies.
    And they're starting to do the math, and they're sort of 
fighting with each other, saying, ``No, we can't buy that,'' 
because they were on teams of three to five. And they're 
arguing with each other----
    Senator Hagan. Ms. Lipp, I am running out of time.
    Ms. Lipp. Sorry.
    Senator Hagan. We have some other questions, so just wrap 
it up in about----
    Ms. Lipp. OK. But all of this has been used to implement 
it, and the kids are excited. At this point there's probably 
been 500 kids who have been affected by it.
    Senator Hagan. Thank you.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you, Madam Chair, and thank you for 
your leadership on this issue. Financial literacy is so 
important in so many ways, and I really believe it needs to be 
taught in school. I know that we're seeing the OECD countries 
doing it. I don't how anyone cannot look at our economy as a 
whole and not consider that the financial literacy of the 
people in the country is important to our economy. And school 
is a place to start it, at least.
    Dr. Lusardi, in your testimony, you talked about the 
importance of students understanding how to make wise financial 
decisions as they consider whether and how to invest in higher 
education. One thing they need is good information. Currently, 
the financial aid award letters that students and parents get 
from colleges can be very confusing.
    I've looked into this, and, very often, letters don't even 
list loans as loans. They come under awards, an awards letter, 
and you have something that's listed with some code, and you 
don't know what it is. I put forward a bill called 
Understanding the True Cost of Education, which would require 
schools to have a uniform award letter so that every school 
uses the same terms and uses the same designations for the same 
scholarships or loans.
    Can you speak to the importance of this kind of thing to 
students today?
    Ms. Lusardi. Thank you very much for your initiative. I 
think it's critically important, of course, to simplify, to 
provide information in a way that is easily accessible, 
particularly in a moment in which we are putting the young 
people in charge, not just of choosing their college or whether 
to go to a college, but also how to finance that college 
education. And I think given the amount of that that the young 
people have to take up, this is incredibly important.
    I think initiatives like simplification are incredibly 
important. But I really do want to urge as well to think of, 
indeed, empowering the young people to make decisions and to be 
able to make choices and wise choices throughout their 
lifetime. So the college is probably one of the most important 
decisions they are going to make at that age, but there are 
others as well. Equipping those individuals to make those 
decisions is very, very important.
    We certainly have to operate in many directions, from 
having equipped students to have the skills to make those 
decisions to also providing information that can be easily 
accessible, that can be compared. And I think in this era of 
technology, as well, we have certainly a lot of ways in which 
the student can be helped in these very important decisions.
    Senator Franken. Thank you. It's obvious that what we're 
talking about are life skills. When I was in junior high and 
high school, we used to have Home Economics for the girls and 
Shop for the boys. And in Shop, I remember making a spice rack, 
and in Home Ec, I remember the girls baking cakes. Thank God 
those days are gone.
    There's nothing wrong with a cake or a spice rack. But it 
seems to me that when you're talking about financial literacy, 
it is an important skill to be taught. And this is thrown open 
to all of you. There are certain life skills that need to be 
taught, and part of our question here is how to work this into 
the curriculum.
    It seems to me there are certain life skills that could 
either be part of the same curriculum or not. For example, look 
at health. My daughter runs the after-school programs at three 
DC elementary schools. Cooking is part of the after-school 
program, because nutrition is so important to your health, and 
cooking is so important to nutrition.
    And there are now generations of families that haven't 
cooked. They haven't cooked for generations. For dinner, they 
literally will go to a Super America and get a hot dog and a 
soda, a pop, because they haven't cooked.
    What configurations of curricula do you see? How do we 
teach these things, physical exercise, physical fitness, all of 
these basic life skills that would bring down our healthcare 
costs, that would help our economy, on and on? How do you see 
them fitting into a curriculum for K through 12?
    Ms. Lusardi. I'm going to take this question quickly, but 
we have an educator, so I'm happy also to hear what she thinks. 
But I just want to say I think I'm happy that the word, Home 
Economics, is dropped, because I think we really need to 
associate the words of financial literacy with every girl's 
subjects. Perhaps part of its ineffectiveness is due to the 
fact that often what we teach in school are kind of simple 
rules, how to balance a checkbook, and I think we need to move 
away from that.
    We need to empower people to make decisions. The world is 
going to change very fast. In my view, one of the reasons why 
there has been so much resistance in adding it in the high 
school, is because they were thinking it's like woodwork, that 
people can learn with practice, or they can learn by others.
    There are actually a lot of scientific concepts behind 
financial literacy. We can add it to all the courses in the 
school from math to science to history to English. So if the 
curricula are crowded, we can find a place for that. It really 
does belong, because I think it really is based on very 
important scientific concepts, and you need to consider that 
and not just some skill that really belongs to an after school.
    Senator Franken. I think it's easy to see how financial 
literacy could be worked into a math curriculum. And I know I'm 
over my time, but Ms. Lipp seems to want to answer.
    Ms. Lipp. I'll be very short. Being an educator, we are 
held to so many standards, and we have tests, and we have 
Common Core. In civics and economics in North Carolina, we have 
a personal financial literacy piece, and it's great. This is 
the first year that it's being tested. This is the first year 
you're seeing a panic. How are we going to teach it? How are we 
going to get there?
    I've been working with the North Carolina Council to get 
that training in teachers' hands. Truthfully, the ideal way 
would be to start implementing it in kindergarten, first grade, 
second grade, third grade, and it aligns perfectly with the new 
Common Core standards that are coming about, because it's all 
application.
    So you can take kindergarten math and have them apply what 
they're learning with financial literacy. That's how I would 
see it. I also completely agree with what you're saying about 
the nutrition and health. A life skills class in high school--
to go back to that, we have a garden at my high school, and our 
kids grow their own produce, and they sell it at the farmer's 
market. And what about integrating more gardening--I mean, it 
goes together. Financial literacy can go anywhere, ideally, K 
through 12. If not, a high school life skills class would be a 
great idea as well.
    Senator Franken. Thank you, Madam Chair.
    Senator Hagan. Thank you.
    Senator Murray.

                      Statement of Senator Murray

    Senator Murray. Thank you very much, Senator Hagan, for 
holding this really important hearing. I think that financial 
literacy is a crucial issue, one that I've worked on for a very 
long time, and a hearing is really overdue on this subject.
    One of the most troubling things that we learned from the 
foreclosure crisis that we lived through was how many 
homeowners simply lacked the basic skills they needed to make 
good financial decisions. And, as a result, a lot of homeowners 
signed mortgages that they didn't understand, and too many were 
taken advantage of by predatory lenders, and we know what that 
did to our entire country's economy.
    I really am a believer that we need to do a lot more 
education for people in financial literacy, both in K through 
12 and for adult learners who haven't gotten those skills yet, 
either. I'm surprised at how many of our K-12 schools don't 
have any kind of basic financial literacy program even today.
    I think it's really crucial as a country. Since 2008, when 
we were in the middle of the crisis, I started introducing 
legislation every year called the Financial and Economic 
Literacy Improvement Act to invest some resources into personal 
financial education programs in K through 12 and addressing the 
problems adults were facing. I really do appreciate you having 
this hearing and look forward to the members of this committee 
taking this on.
    I remember distinctly sitting in front of a group of 
teachers at the time, 4 or 5 years ago, and talking about how 
some kids don't even know how to balance their checkbook. And I 
kind of saw this crestfallen look among the teachers, and I 
said, ``How many of you balance your checkbooks?'' It was about 
two. So we need adults to also get this education.
    I wanted to ask all of you--I've seen some statistics 
showing that most educators who teach financial literacy 
courses don't even have any formal training or professional 
development. If we were talking about science or math, that 
would be unacceptable. So can one of you talk about the 
importance of training and the kinds of training that is most 
effective for teachers?
    Mr. Biggs, we could start with you.
    Mr. Biggs. Thank you, Senator Murray. As I mentioned in my 
testimony, Jump$tart collaboration is the key element to why 
we're successful. We find all those instructors and all those 
parties interested in financial literacy, supporting financial 
literacy.
    The annual Jump$tart Teacher Training Conference is put on 
in collaboration with NEFI, the National Endowment for 
Financial Education. This conference put on every year here in 
DC as well in the fall is dedicated to putting out the 
resources and the training for all the instructors across the 
country, along with any of the resources available, whether 
it's through vendorships, similar to what we have here on 
Capitol Hill on Friday, where all the different resources 
available are coming together.
    We see the value in the instructor beyond even the 
curriculum. You can have a great curriculum with an instructor 
that may not be trained well enough, and you won't see the 
effectiveness that you will with an instructor that has gone 
through the training.
    I think those are some of the key elements--that national 
alliance as well, that we have for the instructors. State-to-
state--for example, Wyoming--we, each year, whether it's online 
or face-to-face, via preconference training for career and tech 
ed, have training programs available for family consumer 
science instructors and business instructors.
    Senator Murray. Does anybody else want to respond to how we 
educate the educators?
    Ms. Lusardi. Just very briefly, I think the statistics are 
alarming, and in many ways, this is the most important method 
and way in which financial literacy can be transmitted in the 
school. The fact that often financial literacy was mandated but 
no resources were dedicated to training the teacher makes, in a 
sense, the mandate not able to be effective.
    What I think is critically important--and this very morning 
at the Jump$tart Coalition, we saw some really important 
presentations of the effectiveness that that training really 
does. First of all, the teachers are very open and themselves 
benefiting, as you had mentioned, of that financial education. 
In my view, that makes this a really ideal group to target for 
financial education.
    They are the instrument to deliver that education. But 
because they benefit themselves, everything is really aligned, 
and they can be a lot more effective teachers. As we think of 
financial education, an integral part of that financial 
education improvement, in particular, in the schools has to be 
also training the teachers.
    Senator Murray. I've noticed that only four States require 
a course in personal finance. The majority of States obviously 
don't. Is there any research that shows the difference between 
students in States where financial literacy is required versus 
those that are not?
    Ms. Lusardi. What you ask--and I'm going to try to be very 
brief. What you ask is very important. But, unfortunately, the 
research that has to be done to assess this is a lot harder 
than just looking at the survey that we have done and, for 
example, looking at whether the students in those States do 
better.
    The problem is, you have to control for the quality of the 
teacher. Often we don't have information about that. We have to 
control for when the course was offered, what the material was, 
and so often I think we have very little information. We need 
to do assessment in a more rigorous way, as, for example, it's 
done in the medical literature.
    And I think we are now drawing conclusions from studies 
that have not really been able to find this type of causality. 
Your question is so important. We need to know what works and 
what doesn't, and what can have an effect. I think we need a 
lot more work in this area rather than relying on some of the 
simple statistics we see.
    Senator Murray. I know my time is out. But I do want to 
thank you. This is something I think is just so important in 
our country today, and anything I can do to be supportive, I 
want to do it. I really appreciate all of our panelists who are 
here today helping us work on this. Thank you very much.
    Senator Hagan. Thank you, Senator Murray.
    And for the panel, she is now the chairman of the Budget 
Committee.
    Senator Murphy.

                      Statement of Senator Murphy

    Senator Murphy. Thank you very much, Madam Chair.
    And thank you so much to the panel for being here. I'm 
sorry I didn't get to catch your testimony in person, but I've 
read through much of it. I wanted to talk to you about a 
concept that may be new to you, and so you might not have 
immediate thoughts.
    It is a concept that was employed in Great Britain for a 
period of time and was introduced in the U.S. Senate through a 
proposal by Senator Santorum and others. It goes by different 
names, but it's commonly referred to as baby bonds or 
citizenship bonds.
    The idea is that as a matter of birthright, every child 
would get, essentially, a bond that would accrue on an annual 
basis of perhaps $250 or $500 per year, and then when they got 
to college age, it would be available to them to go to school 
or use for job training or to be used to get different job 
skills. And the idea is that it's a means toward, obviously, 
allowing kids to realize their dream.
    We already make a commitment to kids of certain income that 
we're going to help you with a Pell grant or with a subsidized 
loan. Instead of just essentially handing them that at age 18, 
why not hand that to them at age zero and allow them to watch 
the money develop over time.
    It also speaks to the issue of financial literacy. Even 
though it's not money that you saved, you're watching 
throughout your childhood and your teen years money accrue in a 
bank account that is going to be available to you to use to 
better yourself.
    In some iterations, it actually hasn't been reserved simply 
for higher education. It's just a grant that you get once you 
become of a certain age to use to make a down payment on a 
house or to go to school.
    I've been attracted to this idea in part because it speaks 
to what we're talking about today. It's another means to 
achieve financial literacy. So I want to pose the question to 
the panel.
    I'm going to start with you, Mr. Richardson, because you 
are nodding your head the most earnestly as I was saying it, 
and you talked about asset building in your testimony. So I'll 
pose the question to you as to your thoughts on that idea and 
open it up to other panel members who may have thoughts as 
well.
    Mr. Richardson. First, Senator, absolutely, the concept has 
merit. The controversy and criticism has always been that 
they've been prohibitively expensive. But I think as a societal 
commitment, I think it's something we need to pursue and double 
down on, to your point.
    I also would mention that the comment was made before about 
financial illiteracy, kind of holding youth back from 
participation in society. I would frame that by saying it's 
only holding full participation back. But I think a lot of the 
youth we're seeing are not participating efficiently and 
effectively, which is why the teachable moment through a K 
through 12 structure is very important, but also supplemental 
programs offered by the nonprofit sector as well, and I'll tell 
you why.
    I understand the unit of analysis here are the youth, and 
rightly so. But I think what we're onto here is the youth as a 
portal for stabilizing the household and, by extension, 
stabilizing communities. I really think intergenerational 
learning and the social capital that churns in low-income 
communities can really focus on the real-time application of 
the skills that we're teaching in schools and teaching in these 
programs.
    I also think allied with child savings accounts, which 
we're piloting in this country, as you know, can really provide 
this kind of match savings practical application that follows 
kids through their maturation and allows them to succeed and 
fail in terms of how they would identify the assets they're 
looking to build.
    The last thing I'd say is children--often, youth live lives 
without consequence. I think the decisionmaking is incredibly 
important here, and the focus of the hearing is important. But 
also, expanding the scope of what we're talking about, I think 
of children, youth, as portals to also teaching their parents, 
their parents' parents, in a real-time way.
    I'm concerned about the standards in school. Do they stay 
current? Do they evolve and change with a dynamic and complex 
world? For example, you talk about balancing a checkbook. Right 
now, the financial services space are proffering other 
promising services that would replace those--prepaid cards, for 
example, which are much easier to use, much easier to market, 
and much easier to get in trouble with. So understanding the 
proclivities of youth today, keeping up with the Joneses, as it 
were, I think is very important in school-based context and out 
of school.
    Senator Murphy. Let me ask if there are any other thoughts 
from the panel on the issue of baby bonds.
    Ms. Lusardi. I think this is actually a very clever idea 
that really uses the interest compounding in favor of the 
youth. It has the additional component, as you have mentioned, 
of learning. So, in a sense, we are really investing in these 
youth from the beginning and giving them an opportunity to 
really see the importance of starting to save early and putting 
money aside, for example, to achieve an objective.
    I think this has a lot of value. And I want to come back to 
that fact that, often, we don't have the capacity to say, ``Is 
this a good idea or not?'' because we have not done enough 
research. And that initiative, by the way, which was started in 
the U.K. was eventually withdrawn, but with very little 
evaluation. It's so important that, I think, more evaluation 
was much needed.
    Senator Murphy. I appreciate it, and I'm beyond my time. 
But I guess the point is that we do make a commitment to these 
kids to help them pay for education. So the question is: Can 
you do that in a way that adds to financial literacy? Can you 
make that commitment earlier?
    I'll finish by saying that one of the things I would have 
loved to explore with you is, in addition to making sure that 
financial literacy involves counseling kids about how to go 
through the financial aid process, there's still a lot of kids 
who don't consider college because they don't even know about 
the options that are available to them. I met with a group of 
kids from Danbury, CT, most of them African-American and 
Hispanic, who all went straight into the workforce, many of 
them because they just didn't understand how to start the 
college application process.
    So when we talk about financial literacy with respect to 
higher education financing, it's not just enough to make sure 
that they can negotiate the FAFSA process. You have to start a 
lot earlier to let them know that it's there in the first 
place. I won't ask for a comment because I'm way over time.
    Thank you very much, Madam Chair.
    Senator Hagan. Thank you, Senator Murphy.
    I wanted to pick up with you, Mr. Richardson, when you were 
talking about the racial wealth gap. In your opening comments, 
you talked about that. You noted that the median net worth for 
African-American families was 22 times less than the net worth 
of white American families. And that disparity, your written 
testimony referred to as the racial wealth gap.
    Numbers of factors contribute to this. Can you share how 
the Urban League came to identify financial literacy as one of 
the barriers to reducing it? And then what models are you all 
looking at to help pursue this in underserved communities?
    Mr. Richardson. Yes, as you say, the racial wealth gap is 
something that is underappreciated and misunderstood, quite 
frankly, in terms of the prospects of African-Americans and 
white Americans that are shooting away from each other at light 
speed. And financial literacy is something that we can control. 
We can contain it.
    We can talk about the standards and the application of 
skills learned. But I think it's something that has to be 
understood and has to be co-owned by communities of color in 
terms of the decisionmaking imperative, as we're talking about, 
that can lead to making more efficient and effective consumers.
    Again, we're talking about constituencies that are 
bombarded with mixed messages, Senator. You're supposed to be a 
good American, and you're supposed to be part of the 
communitarian ideal by spending and circulating dollars. But 
you're also supposed to save, and you're supposed to put things 
away for a rainy day.
    Now, communities and individuals who live on the margins 
find that a very difficult and tension-filled decision. And so 
the decision in terms of when to save, how to save, which 
vehicles can be understood and taught--and then also it allows 
organizations like ours to be able to talk to the private 
sector, the financial services entities, to demand the products 
that our communities need to be able to reach a kind of parity 
from an economic empowerment standpoint.
    So I think what we're trying to do is--and I mentioned it 
earlier--is the school-based solution is very real and needed, 
and we would endorse that. I think out of school, supplemental 
opportunities are very important as well, and that kind of 
connectivity can be rebuilt.
    We talked about the halcyon days of Home Ec and civics. I 
think we can recreate that in a modern context, where we can 
open up opportunities for out-of-school, real-time, practical 
applications of what you're learning. Compound interest is 
important. I think folks are kind of disillusioned with what 
that means in their daily life, for example.
    I think the nonprofit sector speaks the language, engenders 
the trust that allows for learning. And as I mentioned earlier, 
using children as portals to broadly envision what learning can 
mean at the household level is important, particularly when you 
have a proclivity of female-headed households that, for 
generations, particularly in minority communities, have not 
really handled the finances in a male dominated world. So in 
female-headed households of multiple generations, how the 
children can be portals to helping the older as well, I think, 
is a very important opportunity for us here.
    Senator Hagan. One quick question. Can you tell me more 
about the Melinda and Bill Gates program to test asset building 
and financial education? I believe it's called Reimagining Aid 
Design and Delivery.
    Or Dr. Lusardi.
    Mr. Richardson. I would just say the template for us is to 
not just suspect the kind of boosts and blocks for African-
American wealth building and asset preservation. It's to fully 
know, and so we are focus grouping, we're testing, we're 
evaluating, we're prototyping different models that allow us to 
create the design that, again, touches each element of African-
American life and, by extension, each element of American life.
    Senator Hagan. And then how will it be delivered?
    Mr. Richardson. Well, it will create a program design that 
we will test and evaluate and, hopefully, report our methods 
for future expansion beyond the Urban League movement.
    Senator Hagan. Dr. Lusardi, do you have any comment on 
that?
    Ms. Lusardi. I don't have any specific comment about the 
Gates Foundation initiative. But I just want to reiterate that 
it's critically important, and I think we need to pay a lot of 
attention to some of the groups and really have programs that, 
even after having added financial literacy in the school, 
really do an important job in helping the communities behind 
that.
    And I think we have to remember that by having financial 
literacy in the school, not only do we empower those 
individuals, but we might also empower the parents of their 
community. I just want to reiterate very much your point that, 
for some students, this is the only opportunity to really have 
experience in financial matters. They wouldn't have it among 
their parents or their peers. So this is, I think, a real way 
in which you can empower those individuals and potentially, via 
them, also their own community.
    Senator Hagan. Thank you.
    Senator Murphy, second round.
    Senator Murphy. Just one additional question, and I'll pose 
it to Ms. Lipp. It's a followup on your answer to Senator 
Franken's question about the fact that you've had this 
requirement in your State for a while, and you just began 
teaching it. And it speaks to the worry that if we don't test 
it, we're not going to teach it.
    So how big a barrier is that to teaching financial 
literacy? If it's not part of the standardized tests, and there 
continues to be such a mad rush on behalf of the administrators 
and teachers and board of education members to get good test 
scores, then how on earth do we ever fit in financial literacy, 
never mind all the other things that Senator Franken wants to 
teach in schools, which I don't disagree with. I just worry 
that in this environment, we've got to realize the reality of 
the pressures, I think, overdone on these test scores.
    Ms. Lipp. Yes. I recently went to a conference, and what 
they told us was that teachers in America are teaching more 
content now than ever in the history of education. To put that 
in perspective, my course is a 90-day course, and I have 1,500 
vocabulary words to teach in 90 days. Personal financial 
literacy, I think, is a course all in itself. Somehow, I have 
to figure out how we're going to do it every day, bit by bit by 
bit by bit.
    As far as the training of educators in all of this, if you 
bring the word, testing, out, you're going to scare a whole 
bunch of people and they're not going to want to do it, 
obviously. However, at the same time, if it's not tested, 
teachers will shy away from it.
    With financial literacy, you have two things working 
against you. First is that it wasn't tested up until recently, 
and what I think and what my experience is--financial literacy 
isn't a class thing, meaning just because you're middle class 
or just because you're upper class doesn't mean you have 
financial literacy skills. And I think that's a common 
misconception.
    So you have a lot of teachers--it was kind of brought up 
earlier with Senator Murray--who don't know how to do this 
themselves. How can they teach it? So what needs to happen is 
there has to be a way to seamlessly integrate it into all the 
different grade levels, starting with kindergarten.
    How could you start teaching a kindergartener financial 
literacy, and how does that integrate into math with the new 
Common Core standards so it doesn't add more onto a teacher's 
plate, because, immediately, what they're going to do is shy 
away, because we have so much to do right now. And in my 
course, in particular, I'm trying to find the time to do it.
    Senator Murphy. I know it isn't easy, and I appreciate all 
your efforts. Thank you very much.
    Senator Hagan. Thank you, Senator Murphy.
    Let me ask about the role of parents, and a lot of you have 
commented on that a little bit already. The research has shown 
that parents, with good reason, are the No. 1 influence on a 
young person's financial literacy. But because financial 
literacy across the whole is so low, even across age groups, 
parents may not have the financial knowledge, time, or skills 
to be solely responsible for teaching their children how to 
effectively manage their money.
    Ms. Lipp, not everybody has your mother, who counseled you. 
And just so that you know, when my children were young, they 
each had a ledger book, and at the end of the week or the 
month, if they couldn't account for how they spent that money, 
they didn't get that money. If they were a dollar off, then 
they got a dollar less. So it was a great way to make them 
realize where their money was going.
    It's interesting, I think, that in separate surveys 
conducted by VISA and the College Savings Foundation, 85 
percent and 90 percent of parents thought that financial 
literacy should be taught in the schools and in the curriculum.
    Ms. Lipp, as a teacher--and you've been working with 
students on the skills for several years--have you seen an 
increased interest among the students' parents in the budget 
project, in the stock market game, or other financial education 
lessons? And have they sparked conversations that have led 
families to taking better control of their finances?
    The other issue I wanted to ask you about is the 1,500 
words that you have to include--what words?
    Ms. Lipp. What do they include?
    Senator Hagan. Yes.
    Ms. Lipp. How much time do you have?
    [Laughter.]
    Senator Hagan. Three minutes for my round.
    Ms. Lipp. Good. They include everything from civics and 
economics. So you're talking about government terms, so 
everything from gerrymandering, filibustering--that's a big 
one.
    Senator Hagan. Got it. OK. Move on to financial literacy.
    Ms. Lipp. With the financial literacy piece, what I've 
noticed is that parents--and I've heard this before. Parents 
are not comfortable talking to their children about finances. I 
recently read--and correct me if I'm wrong--but I've heard that 
parents are more comfortable talking about sex with their 
children than finances, which--that's just crazy.
    As part of the project that I instituted, my kids had to go 
home and ask their parents, ``Are you paying for college?'' in 
their sophomore year of high school. And the kids came back, 
and some of them were like, ``My parents aren't paying for 
college.'' You just found out at 16, which is crazy.
    What I have started to see, and because I stayed at that 
school for 5 years, it was funny, because the parents started 
contacting me, asking me for a copy of the project for other 
parents that they knew, that they needed it for their children, 
because, you know, Ms. Lipp can handle this. And it was like 
they were still coming--parents I didn't know--coming to me, 
because it was easier for them to have me give their child a 
budget project than it was for them to sit down and talk with 
them about it.
    So I have seen that. I've also had parents who have told 
their children when I've got their siblings, ``Oh, Ms. Lipp is 
going to make you do this project, and you're going to have to 
have this conversation,'' and things of that nature. And so, 
yes, now there's more of a conversation that occurs with them 
and their parents, and the parents are definitely interested. 
But it's almost like they were relieved that somebody else was 
doing it and not themselves.
    Senator Hagan. Can you not adapt your budget project to the 
new area that you're in, as far as not having the trips to the 
bank, et cetera?
    Ms. Lipp. Right, which is what I was hoping for the iPads 
to be able to do. I've taken the project and broken it down by 
sections. Now it's getting into the computer labs, and that's 
where the iPads came into play, so that we can do it section by 
section.
    Senator Hagan. Ms. Pace, on the same issue of parents, have 
you seen an increase in the parents' involvement with the 
students at the high schools that are involved in the credit 
union?
    Ms. Pace. Yes. And the way I'd like to respond to that is 
that children mirror their parents in a lot of habits, whether 
they're good or bad. As the financial industry services go, 
there's probably less than 30 percent of the adult population 
that has any type of financial plan, because they're scared to 
know how bad it could possibly look.
    As it relates to our Student Run Credit Union Program, we 
try to get the parents involved in as much of the initiative as 
we possibly can, particularly at the end of the year. We reward 
these students who have participated and bring their parents 
in, and they can share the stories of what they've learned.
    Senator Hagan. And do the parents come in?
    Ms. Pace. Yes, they do, and they're so proud. They're so 
proud of their children. One of the stories that we had most 
recently was a young boy who told us the reason he wanted to 
participate in the student-run credit union and be an active 
participant was that he had a part-time job, and when he would 
receive his money and he'd take it home to his mother, she 
would take it and she'd just spend it for whatever.
    This allowed him to open up his own savings account, 
because he could see what was happening at home. And he was 
able to keep his money and to use the tools and the skills that 
he had learned as a participant in the student-run credit 
union.
    Also, as it relates to the Center for Smart Financial 
Choices that we just opened about a year ago, one of our 
objectives with that center is to get, as I mentioned, adults 
of all ages to broaden their knowledge of financial literacy. 
And I'll go back to, I think, what Senator Franken mentioned 
and simply say this. If you have a poor financial outlook, that 
usually equals some type of poor health, because financial 
difficulties bring on stress and other issues to everyone's 
life. So if we can improve financial literacy from K through 
12, we might even help our own health population in the future.
    Senator Hagan. Thank you. In North Carolina, we have many, 
many areas in our rural communities.
    Mr. Biggs, I understand, obviously, that Wyoming would also 
be in that same situation. Can you share some of the unique 
challenges in teaching financial literacy in the rural areas 
and any successful ways you've identified to overcome those 
challenges?
    Mr. Biggs. Thank you, Madam Chairman. Yes, as you noted, we 
are quite rural across the State. One way that the Jump$tart 
Coalition has directly pursued the youth in the most rural 
areas is working with the school districts for the financial 
literacy conference that I mentioned in my statement.
    We travel around the State each year. Very often, we have 
centralized conferences for youth, adults, everyone, typically 
in the center of the State or the capital, Cheyenne. But when 
it comes down to getting these students out of the classrooms 
to travel 2 to 5-plus hours away, that doesn't work.
    So we moved each year to different parts of the State, and 
we've had success, depending on the population of the region. 
We are happy with 70 to 90 youth at one conference and 450 at 
the next, based just on the population range from region to 
region in the State. That's certainly one way.
    Then the other would be the online access that we provided 
through our trained instructors. We've done that for several 
years now, and the numbers increase now, especially at the 
State level, with legislative interest in increasing post-
secondary options for students.
    We have gotten better fiber optic capabilities with remote 
locations, such as Kaycee, WY. They're always very anxious to 
make sure that their youth are served, and financial literacy 
is one of those aspects that we include.
    Senator Hagan. I really think that, as Senator Murray said, 
this has been a very informative hearing. I have been 
interested in financial literacy for many, many, many years, 
and it really is a passion, because I've seen the consequences 
of how it has had detrimental effects on so many young people, 
on so many adults.
    I give a lot of talks, a lot of speeches, and I always 
mention the need to teach financial literacy. And at the end of 
those speeches, I'm always amazed at the number of people who 
come up to me and say, ``I wish I'd had that course when I was 
in school.'' And I will say the preponderance of those people 
who come up and tell me that are women. So it is really very 
strong and, to me, shows the need.
    I know we have a lot of great programs that are going on, 
many of these from a volunteer perspective. But it's only 
reaching a fraction of the students. That's why I think a 
requirement or incentive is so important to our public schools. 
Teacher training, we know, is of utmost importance. Otherwise, 
I don't think you're going to have nearly as good an outcome 
without good teacher training.
    But we have to make this available, because to get by in 
the United States today, you have to understand debt, you have 
to understand credit. We need it to increase investment, to 
increase net worth, but it has to be used in the right way.
    And, obviously, when our students graduate, and they look 
at student loans, they look at car loans, and they look at that 
insurance payment that's coming due, they have to have, Dr. 
Lusardi, as you said, the ability to make decisions and 
understand the consequences.
    I appreciate your time. Thank you for coming to the hearing 
today, and we certainly did get some very, very useful 
information.
    The hearing will remain open for 10 more business days for 
any other Senators who wish to submit statements or questions 
for the record. So you might be hearing some more.
    Once again, I do appreciate your time and your testimony.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                   The Financial Services Roundtable
              the roundtable supports financial education
    Financial literacy, sometimes referred to as ``financial 
education'' or ``financial capability,'' is one of the highest 
priorities for the Roundtable and its member companies. The Roundtable 
and its members are committed to improving the financial literacy of 
consumers of all ages. Over the years, the Roundtable and its member 
companies, working with non-profit partners, have provided financial 
literacy resources and support to educate consumers in their local 
communities. For example, in 2012 the Roundtable and its members 
completed over 42,000 (see Roundtable 2012 Community Impact Report at: 
www.fsround.org) financial literacy projects throughout the country.
    We support an expansion of financial literacy for all segments of 
society. The Roundtable firmly believes every segment of the 
population, from school-aged children to military personnel to senior 
citizens, can benefit from additional and more readily available 
financial education. Enhanced early education about retirement savings 
and investment products and services can help consumers make sound 
decisions and allow them to maximize their retirement savings. 
Accordingly, the Roundtable will be supporting `` The Financial 
Literacy for Students Act of 2013,'' sponsored by U.S. Senator Kay R. 
Hagan, when it is formally introduced later this week.
    Expanding financial literacy is an issue that most, if not all, 
Americans believe is a worthwhile goal. Even after the pain of the most 
recent financial crisis, few Americans are making wise financial 
decisions. According to a 2012 Jump$tart survey two in five adults gave 
themselves a C, D, or F on their knowledge of personal finance. Last 
year, more than 77 million Americans, one-third of U.S. adults, did not 
pay their bills on time. More than half of adults admitted that they do 
not create a budget for their expenses. Research shows that financial 
curriculum can have a positive impact on how consumers manage their 
finances. Financial education is likely to increase savings, use of 
banking and insurance services, home purchases and improvements in 
overall financial health. Although the public and private sector have 
made great strides in raising awareness for the need for financial 
literacy, there is still more work to be done to reach more people.
                               conclusion
    The Roundtable believes that the Federal Government, State 
governments, consumers, and the financial services industry must 
coalesce to make financial literacy a national priority. We must do so 
as soon as possible if our economy is to reach its full potential and 
provide everyone the opportunity to attain the American dream of 
financial independence. A fully functional 21st century economy must 
have a fully engaged and financial savvy (re: literate) public that 
understands the full variety of money management techniques, as well as 
banking, saving services and investments offered in the marketplace in 
order to make sound personal financial decisions and to perform 
successful financial planning for their futures, and their children's 
futures. The Roundtable stands ready to work with policymakers and 
other stakeholders to preserve, promote and expand financial education 
for all Americans. Additional information regarding financial literacy 
resources and programs provided by Roundtable members can be found at: 
http://www.fsround.org/fsr/financial_literacy/financial_literacy.asp.
                                 ______
                                 
     National Association of Federal Credit Unions 
                                           (NAFCU),
                                  Arlington, VA 22201-2149,
                                                    April 23, 2013.
Hon. Kay Hagan, Chairwoman,
Subcommittee on Children and Families,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.

Hon. Michael Enzi, Ranking Member,
Subcommittee on Children and Families,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.

    Dear Chairwoman Hagan and Ranking Member Enzi: On behalf of the 
National Association of Federal Credit Unions (NAFCU), the only trade 
association exclusively representing the interests of our Nation's 
Federal credit unions, I am writing to you regarding Wednesday's 
hearing entitled ``The Economic Importance of Financial Literacy 
Education for Students.''
    As you know, April is Financial Literacy Month, and financial 
education has long been a hallmark of the credit union community. 
Credit unions offer financial literacy programs to people of all ages 
from all walks of life--from students to retirees. Various programs and 
products are designed to fit all circumstances and levels. While 
administering such programs in schools, for example, elementary student 
programs will focus on the importance of savings, while high school and 
college students may need a more comprehensive approach that teaches 
them budgeting and other financial management skills.
    While credit unions provide financial education to members of their 
communities regardless of age, they believe that financial education 
should begin as early as possible to help students learn behaviors that 
will assist them in managing their finances and maintaining a 
successful and stable financial life. To that end, some credit unions 
have set up branches inside high schools, middle schools and even 
elementary schools to help teach young students the importance of 
saving and managing their finances. Furthermore, in many instances the 
students operate the credit unions themselves under the direction of 
school faculty and credit union personnel. These opportunities offer 
the students even more insight into financial management and give them, 
to the extent possible, some ownership of their financial well-being.
    NAFCU and our member credit unions are proud to be involved in 
promoting financial literacy and personal savings, and currently 
partner with the Consumer Federation of America in both their America 
Saves and Military Saves programs. These programs focus on encouraging 
increased savings for the general population and, specifically, 
military personnel and their families in the case of Military Saves. 
Credit unions work with their communities to raise awareness of the 
need for savings, and they also work with members of their community to 
address their overall financial situation.
    NAFCU member credit unions understand the importance of financial 
literacy. With an ever-widening array of financial services, it is 
important that at a young age consumers are armed with an understanding 
of the basics of personal finance. Financially literate individuals are 
more likely to spend prudently and put money in savings, retirement 
funds, and other wealth building accounts. Likewise, the same 
individuals are less likely to rack up large, burdensome--and sometimes 
unaffordable--debt, and are less likely to be victims of predatory 
practices.
    We thank you for holding this important hearing and we would 
welcome the opportunity to work with the subcommittee to develop 
innovative and effective financial education initiatives. Should you 
have any questions, please do not hesitate to contact myself or NAFCU' 
s Associate Director of Legislative Affairs, Quincy Enoch, at 703-842-
2261.
            Sincerely,
                                               Brad Thaler,
                             Vice President of Legislative Affairs.

          Credit Union National Association (CUNA),
           National Credit Union Foundation (NCUF),
                                            April 24, 2013.

Hon. Kay Hagan, Chairman,
Subcommittee on Children and Families,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.

Hon. Mike Enzi, Ranking Member,
Subcommittee on Children and Families,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.

    Dear Chairman Hagan and Ranking Member Enzi: On behalf of the 
Credit Union National Association (CUNA) and the National Credit Union 
Foundation (NCUF), we are writing regarding your hearing on the 
``Economic Importance of Financial Literacy Education for Students.'' 
CUNA is the largest credit union advocacy organization in the United 
States, representing nearly 90 percent of America's 7,000 State and 
federally chartered credit unions and their 96 million members. NCUF is 
the philanthropic and social responsibility leader of America's credit 
union movement, raising funds, making grants, managing programs, and 
providing education empowering consumers to achieve financial freedom 
through credit unions.
    Credit unions change lives each day through the ``People Helping 
People'' philosophy that drives the credit union movement. Each year, 
credit unions invest millions of dollars to provide financial education 
and counseling programs to consumers. Against a fragmented landscape 
where each credit provider is seeking maximum gain, not-for-profit 
credit unions continue to be true to their mission of serving as 
trusted advisors to their members and communities.
    As the charitable arm of America's credit union movement, the 
NCUF's programs and grants provide widespread financial education, 
create greater access to affordable financial services, and empower 
credit union members to build assets. One of the main pillars of the 
NCUF is to provide funding and promotion of financial literacy tools 
and education through credit unions across the Nation. This mission is 
embedded in the fifth cooperative principle--education, training and 
information. Indeed, it is in the interest of the credit union to have 
members that are financially literate and understand the importance of 
thrift and the responsibility of credit.
    In an effort to catalog credit union efforts around financial 
capability building, NCUF conducted a comprehensive research study to 
provide an inventory of credit union financial education/counseling 
programs nationally. Almost 600 credit unions shared their strategies 
and progress toward helping members and consumers make better financial 
choices. In 2010, the NCUF concluded its study and released a detailed 
report titled ``Credit Unions: Focused on Financial Capability across 
the Nation.''
    Some highlights from the report show: coordinated efforts with NCUF 
have assisted in credit unions' ability to provide financial counseling 
to more than 1.5 million consumers a year and nearly 25,000 annual 
educational presentations to more than 600,000 students; 111,500 
student members had $34 million on deposit at 1,400 in-school credit 
union branches that encourage savings and connect financial education 
with financial access; nearly 5,000 student workers received on-the-job 
training experiences at in-school credit union branches; and 85,000 
teens and young adults participated in 1,200 experiential learning 
events organized or provided by credit unions. Experiential learning 
provides participants with a taste of the real financial world in a 
safe and controlled environment. The report also found that in 2010 
credit unions invested more than $140 million toward improving the 
financial capability of members and consumers in general.
    Furthermore, the report showcases the resounding success of the 
financial literacy initiative Biz Kid$. A coalition of more than 200 
credit unions and affiliates from across the country have helped 
exclusively fund Biz Kid$, which launched nationally in January 2008 
and teaches kids about money and business. The initiative includes a TV 
series, free classroom curriculum, outreach activities, a Web site and 
a monthly on-line newsletter targeting children 9-16 years old. It is 
the first national public television series promoting financial 
education for elementary and middle school students. Created by the 
producers of Bill Nye the Science Guy, Biz Kid$ teaches students how to 
use credit wisely and reinforces the importance of budgeting, saving, 
and giving back to the community.
    Since its inception, Biz Kid$ has received significant 
entertainment industry recognition including a Daytime Emmy. More than 
1.5 million students and teachers have been exposed to the curriculum, 
which has been implemented in classrooms and afterschool programs 
nationwide. The show has received the status of ``recommended 
educational resource'' by the State Boards of Education in seven 
States. In addition, Biz Kid$ has been adopted by the Internal Revenue 
Service to use in their educational outreach program in schools across 
the United States. The show has also been adopted by Ernst & Young to 
use in their education outreach programs for middle school and high 
school students. To extend the impact of the series, public TV stations 
nationwide have established partnerships with credit unions and 
community groups--sponsoring teacher seminars, kids' contents and 
family events.
    NCUF believes that access to financial products and services should 
always be accompanied by educational opportunities. This link between 
education and impending opportunities to make financial decisions 
enables members to take action based on newly gained knowledge, 
resulting in more financially capable and secure members. As the credit 
union movement continues to grow, so too will the importance of 
ensuring our members have the tools they need for a successful 
financial future.
    America's credit unions are committed to continuing to work to 
ensure that consumers of all ages understand how to responsibly manage 
their finances, and recognize that financial education needs to begin 
at a very early age. On behalf of America's credit unions and their 96 
million members, we appreciate the attention you are giving to the 
importance of financial education.
            Best regards,
                                               Bill Cheney,
                                                   President & CEO,
                                 Credit Union National Association.

                                         Wendell Sebastian,
                                                Executive Director,
                                  National Credit Union Foundation.

    [Whereupon, at 3:59 p.m., the hearing was adjourned.]

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