May 29, 2014

Louisa M. Quittman, Director, Financial Education

Office of Consumer Policy

US Department of the Treasury

Louisa.Quittman@Treasury.gov

Financial Capability Research

Updates from the US Department of the 

Treasury
Presentation Topics & Where to Find More 

• Assessing Financial Capability Outcome Pilots

– Youth 

– Vulnerable Adults

• Read more at: www.treasury.gov – Consumer 

Policy Resource Center

2
Eau Claire, Wisconsin

• 2011-2012

• 2012-2013

Amarillo, Texas

• 2012-2013

Assessing Financial Capability Outcomes: Youth

Purpose: Better understand how to provide children 

with the financial skills to become economically 

successful
Research Questions

Financial education No financial education

Credit union or bank in school

Credit union or bank in school + Financial 

education

Credit union or bank in school + No 

financial education

No credit union or bank in school

No credit union or bank in school + 

Financial education

No credit union or bank in school + No 

financial education

• Do students gain financial knowledge and understanding by 

participating in a financial education curriculum?

• Do students gain more financial knowledge when they also attend a 

school with a credit union or bank branch? 

• Are students more likely to open a savings account and/or make 

deposits if they are participating in a financial education curriculum? 

• Do students have more positive attitudes toward savings and financial 

institutions if they have access to a school branch? 
Financial Education and In-School Accounts

Classroom Financial Education

• Five or six lessons from Financial Fitness for Life curriculum over 5-6 weeks

• 45-minute lessons taught by classroom teachers – Teachers trained for three to eight hours on curriculum and materials

• Content focused on using a savings account 

– Defining income, expenses and savings

– Wants vs. needs, incentives and goals

– Compare savings options and understanding interest

In-School Financial Institution

• Eau Claire – Royal Credit Union School $ense

• Amarillo - Happy State Bank Kids’ Banks

– Account Type: Joint ownership savings account (also opened minor only account for 

the pilot)

– Account Opening: On-line, at a branch, or at school

– Frequency: once a week during study period

– Transactions: HSB -- deposits only at school branch, RCU – deposits and small 

withdrawals

– Student Staffing: HSB - student tellers work with HSB staff, RCU – trained student 

tellers
Data

Knowledge

• Financial Quiz Score: The number of questions answered correctly

Attitudes

• Spend Money Immediately: Five-point scale how often a person finds it hard to 

avoid spending money immediately. 

• Easy to Save: Five-point scale how often a person finds it easy to save money. 

• Saving is for Adults: Five-point scale how often a person feels that saving money is 

only for adults. 

• Banks/Credit Unions Useful to You: Five-point scale on the degree to which a 

person believes that banks /credit unions offer useful services. 

Account Activity

• Account Ownership: Student reports whether or not he or she has a savings 

account in his or her own name. 

• Net Deposits: Total amount of money that is deposited into the account, net of the 

total withdrawn from the account. 

• Active Account Use: Number of distinct occasions on which money is deposited or 

withdrawn from the account.
Sample Size & Results 

Overall Results

– Large effects of education on knowledge questions

– Moderate effects of in-school banking and education on attitudes

– Education and bank access boost bank account ownership by kids

– Effects persist

7

Sample Size Eau Claire Amarillo Total

No Financial Education 320 285 605

Financial Education 380 418 798

Total 700 703 1,403
Key Findings

• Education – relatively brief– has impact on knowledge

• And it lasts at least from 4th to 5th grade

• Being banked intensifies the effect

• Banked students are likely different...but banks in schools and 

incentives facilitate account ownership 

• Attitudes about financial institutions strongly 

influenced

• By education and even just having a branch in school

• Account use proved hard to measure stably

8
Purpose: Understand the impact of financial 

counseling and financial access on the financial 

capability and well-being of low-income, unbanked 

populations transitioning off of public benefits. 

Assessing Financial Capability Outcomes: 

Vulnerable Adults
Research Design: Integrating AFCO into POP

New Hire 

Orientation

Field Orientation

=> 2 weeks

1st POP Staff 

Development 

Day

Direct Deposit 

Offer

Checking Account 

Offer

Direct Deposit 

Offer

Checking Account 

Offer

Study Enrollment

POP

AFCO

Financial 

Counseling Offer Randomly Assigned Treatment

Financial 

Access & 

Light-touch 

Education

Peer + Expert
Financial Product & Financial Counseling

Popular Community Bank (formerly Banco Popular)

• Free, “safe” checking account with direct deposit

– no minimum balance requirement

– no monthly fee, no minimum number of transactions. 

– Automatic opt-out for overdraft protection

– Free ATM card, Network of free ATMs

– Free online banking, bill pay

• Participants could open account on site and sign-up for direct deposit of their paycheck at 

the same time

NYC Financial Empowerment Centers

• Free One-on-One Financial Counseling

• Counselors work with clients to review full financial picture and identify unique needs. 

– Banking -- Savings

– Credit -- Debt

• Create a plan to strengthen financial health and put it in to action

– Negotiate with creditors

– Create a budget and savings plan

– Find affordable financial products and services

– Make strategic referrals, and more.
Account Take-Up and Barriers

• 49% applied for bank account

• 55% applied for direct deposit

– Prior to AFCO was 15%

• About 33% of participants who applied for accounts weren’t 

successful

Chex

Systems, 

46%

Other 

Reasons, 

54%

Misuse of 

Account, 27%

Fraudulent 

Activity,

19%
Typically Attended Single Counseling Session

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8 9 11 13

Number of Participants

Number of Sessions Attended
Data

Survey Data (Intake, 6 months, 12 months)

• Current banking status

• Financial situation, behaviors, and attitudes

• Demographic characteristics

Credit Reports (Baseline, 6 months, 12 months)

• Credit score

• Debt levels

• Accounts Open, Past due

Bank Account Transaction data (32% of clients, 49% had accounts)

• .

FEC administrative data on counseling attendance

Parks Dept. administrative data on post-POP employment
Results

Changes in Population over 12 Months

Baseline 6 Months 12 Months

Credit Score 558 561 570

Banked 34% 59% 54%

Uses alternative finance 74% 70% 64%

Employed full time 100% 6.9% 12.1%

Employed part time 0% 11.5% 23.1%
Key Findings

• Financial counseling—even relatively modest 

provision—can be beneficial 

– Decrease in percentage of debt that is past due at 6- and 12 months

– Increase in credit scores at 6 months, but no 

measurable effect by the 12 months (post employment)

– Increase in financial planning behaviors (reviewing a 

credit report) at 6 months (but not 12)

• Credit issues common and often serious

• Unbanked “problem” needs more analysis:

– Even “Safe Accounts” can be used sub-optimally
Insights for Policy & Practice

• Integrating Access to Financial Products and Services is Feasible at 

Scale

– Account communication, marketing, features, context, incentives, hassle 

factor/process...all these matter 

• Successful Account Use and Management is Challenging 

– Traditional account may not meet the needs of all members of this 

population, 

– Sequencing services to improve account use

• Integrating Financial Counseling Can Be Challenging

– Counseling may require repeated follow ups

• Financial Fragility Limits the Potential for Financial Capability 

Interventions

– Financial capability impacts from low-intensive programs in the context of 

unstable (or zero) income are relatively challenging to achieve