Financial Literacy: A Federal Certification Process for Providers Would Pose Challenges
Released: 2011-06-28T00:00:00

Letter

Background

Financial literacy has been defined as the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. To make sound financial decisions, individuals need to be equipped not only with a basic level of financial knowledge but also with the skills to apply that knowledge to financial decision making. Thus, financial literacy encompasses both financial education—the process of improving consumers’ understanding of financial products, services, and concepts—as well as consumers’ behavior as it relates to their ability to make informed judgments. In the United States, a number of trends have emerged in recent years that underscore the importance of financial literacy. For example, investment options and credit products have grown in number and complexity. In addition, consumers are assuming greater responsibility for their own retirement savings, with traditional defined- benefit retirement plans becoming increasingly rare. Evidence suggests that many U.S. consumers could benefit from improved financial literacy. In a 2010 survey of U.S. consumers prepared for the National Foundation for Credit Counseling, a majority of consumers reported they did not have a budget, and about one-third were not saving for retirement. In a 2009 survey of U.S. consumers by the FINRA Investor Education Foundation, a majority believed themselves to be good at dealing with day-to-day financial matters, but the survey also revealed that many had engaged in financial behaviors that generated unnecessary expenses and fees and had difficulty with basic interest and other financial calculations.

A wide variety of organizations provide financial education resources, including nonprofit community-based organizations, consumer advocacy organizations, financial services companies, trade associations, employers, and local, state, and federal government entities. Some financial literacy initiatives are aimed at the general population, while others target certain audiences, such as low-income individuals, military personnel, high school students, seniors, or homeowners. Similarly, some financial literacy initiatives cover a broad array of concepts and financial topics, while others target specific topics, such as managing credit, investing, purchasing a home, saving for retirement, or avoiding fraudulent or abusive practices. Efforts to improve financial literacy can take many forms. These can include one-on-one counseling; curricula taught in a classroom setting; workshops or information sessions; print materials, such as brochures and pamphlets; and mass media campaigns that can include advertisements in magazines and newspapers or on television, radio, or billboards. Many entities use the Internet to provide financial education, which can include information and training materials, practical tools such as budget worksheets and loan and retirement calculators, and interactive financial games. Youth-focused financial education programs are generally tied to a school curriculum. In 2009, 13 states had requirements for a course in personal finance education prior to high school graduation, and 34 states required personal finance education standards to be implemented to some extent in the curriculum, according to a survey by the Council for Economic Education.

In 2009, more than 20 federal agencies had initiatives related to improving financial literacy. In some cases, federal agencies develop and provide financial education directly. For example, FDIC has developed and disseminated Money Smart, a comprehensive financial education curriculum, and the Federal Trade Commission has developed numerous brochures and Web resources on topics such as credit products, identity theft, and fraudulent schemes. In other cases, federal agencies provide grants or other support to nongovernmental organizations that provide the direct financial education. For example, in fiscal years 2009 and 2010, Treasury’s Financial Education and Counseling Pilot Program provided grants to eligible community and other organizations to provide financial education and counseling services to prospective homebuyers. The multiagency Financial Literacy and Education Commission, which was created in 2003, was charged with, among other things, developing a national strategy to promote financial literacy and education, coordinating federal efforts, and identifying areas of overlap and duplication. The commission is chaired by the Secretary of the Treasury and Treasury’s Office of Financial Education and Financial Access provides its primary staff support. In addition, the Dodd-Frank Act required the establishment of an Office of Financial Education within the Consumer Financial Protection Bureau, and the director of the bureau will serve as Vice Chair of the Financial Literacy and Education Commission.

The federal government does not generally certify or approve financial literacy providers or regulate the content of the services they provide, except in certain instances. For example, the Bankruptcy Code requires individuals to receive budget and credit counseling from an approved provider before filing a petition for bankruptcy and also requires bankruptcy petitioners to complete an instructional course on personal financial management in order to have their debts discharged. As such, the Department of Justice’s U.S. Trustee Program approves providers who meet certain criteria to provide these services. In addition, HUD approves housing counseling agencies to provide certain services and awards competitive grants to approved agencies to fund those services.

Although Definitive Evidence Is Lacking on What Is Most Effective in Improving Financial Literacy, Some Initiatives Have Yielded Positive Results

Relatively Few Evaluations Have Measured Financial Literacy Programs’ Effect on Consumer Behavior

While there is a fairly extensive literature on financial literacy, relatively few evaluations of financial literacy programs have been published that use empirical evidence and even fewer evaluations measured a program’s impact on the participants’ behavior. One reason for this may be that the field of financial literacy is relatively new and many programs have not been in place long enough to allow for a long-term study of their effectiveness; for example, many of the key federal financial literacy initiatives were created only within the past 10 years. In the view of some experts and practitioners in the field of financial literacy with whom we spoke, the approaches that are most effective in meaningfully improving consumers’ financial behavior are not fully known.

After conducting a literature search, we identified 142 papers published since 2000 that addressed the value or effectiveness of financial literacy and were authored by individuals or organizations that appeared to have significant experience or expertise in the field. We focused our review on 29 studies we identified among this group that met four additional criteria. First, they evaluated the outcomes of a specific program, approach, or policy. Second, they used empirical evidence—that is, they used data rather than anecdotal evidence. Third, they were based on original data collection rather than reviews of existing literature. Finally, they were determined to be sufficiently reliable and methodologically rigorous for inclusion in our review.

The evaluations of financial literacy programs that are most reliable, useful, and definitive include three key elements, according to some experts with whom we spoke and literature that we reviewed: they measure behavioral change, track participants over time, and use a control group. The extent to which the studies we reviewed incorporated these elements varied: Measure behavioral change: Of the 29 studies we reviewed that evaluated the effectiveness of a financial literacy program or initiative, 22 measured, among other things, its impact on the participants’ behavior. The remaining seven studies did not measure the program’s impact on behavior but instead measured outcomes such as improvements in knowledge, attitude, or anticipated behavior. In general, the ultimate goal of financial education is to favorably affect consumer behavior, such as to promote improved saving and spending habits, wise use of credit, and avoidance of fraudulent or disadvantageous financial products. A financial education program may be of limited effectiveness if, for example, it increases participants’ knowledge of retirement savings issues but does not actually affect, on average, participants’ behavior through increased retirement contributions or other measures.

Track participants over time (longitudinal): Eighteen of the 29 evaluations we reviewed were longitudinal—they involved the repeated examination of the study participants over time. Longitudinal studies of financial education programs can be important because these programs often seek to affect long-term outcomes, such as improved credit scores or increased retirement savings, that may occur several months or years after the end of the program. For example, a financial education program that seeks to increase homeownership would, ideally, track whether participants had become successful homeowners over a period of many years.

Involve a control group: Seven of the 29 evaluations we reviewed used a control group—that is, the evaluation measured participants in the financial education program against a comparison group that did not participate in the program. Use of a control group helps to isolate the impact of a financial education program from other influences, such as changes in the overall economy, and provides a baseline against which to compare the program’s effect. It also can help avoid selection bias because individuals who choose to participate in a financial education program may be those who are most interested and motivated to change or who place a greater value on their future.

Experts in financial literacy and program evaluation have cited many significant challenges to conducting rigorous and definitive evaluations of financial literacy programs that include these elements. For example, measuring a change in participant behavior is much more difficult than measuring a gain in knowledge, which can often be captured through a simple post-course test. Measuring behavior often relies on self-reported information, which can be inaccurate, or may require tracking credit scores, account balances, or other data that may be proprietary. Moreover, many organizations lack the financial resources or expertise to conduct program evaluation, particularly long-term evaluation involving a control group, which can be especially time and labor intensive. This is often the case when evaluations require tracking populations that are more transient in nature, such as college-aged individuals. In addition, because many variables can affect consumer behavior and decision making, ascribing long-term changes to a particular program is difficult. Moreover, some of the evaluation literature we reviewed noted that longitudinal studies using a control group and measuring behavioral change cannot be practically or realistically applied to all programs.

Consequently, many evaluations rely on other measures that are less complex and less resource intensive to measure, such as knowledge gains, changes in attitudes, or outputs. One academic review of financial literacy evaluations found that the majority of financial education programs it reviewed only measured program outputs, such as the number of individuals served or the volume of materials distributed. The 2008 National Research Symposium on Financial Literacy and Education noted that one challenge in developing and implementing successful program evaluation for financial education is the field’s variety of core content, delivery methods, and target populations, as well as differences in the goals and objectives of specific programs. Therefore, identifying a common set of reliable methods and measures that can be used to make broad-based comparisons across programs can be difficult. For example, the appropriate evaluation for a media campaign that seeks broadly to increase consumer awareness may be very different from the evaluation of an individualized counseling program.

Although Some Financial Education Programs Have Shown Positive Results, Generalizing Those Results Is Difficult

The 29 evaluations of financial education programs we reviewed showed that some programs are effective in changing consumer behavior or otherwise demonstrating positive outcomes. For example, certain programs using approaches as diverse as individualized one-on-one credit counseling, employer-provided retirement seminars, and education provided in a classroom setting have each been shown to have effective outcomes. However, the heterogeneity among the programs evaluated and the nature of the evaluations themselves make generalizing or drawing conclusions about exactly which methods and strategies are most effective in improving financial literacy difficult. In addition, the studies we reviewed did not always have consistent results. For example, studies examining the effectiveness of state-mandated financial education have sometimes had conflicting conclusions. As a result, it appears that no single approach, delivery mechanism, or technology necessarily constitutes the best practice for improving financial literacy.

Results of the studies we reviewed show that individual financial literacy programs have had positive results. Further, some of these programs have had a positive impact on participants’ financial behavior and not just on their knowledge. Of the 29 studies we identified as meeting our criteria, 15 evaluated classroom-based initiatives aimed at young people, 8 evaluated classroom-based initiatives aimed at adults, and 6 evaluated other delivery mechanisms, including one-on-one counseling and content offered via the Internet, newsletters, and video. In addition, two of the studies assessed financial literacy programs operated by the federal government: FDIC’s Money Smart and the U.S. Army’s Personal Financial Management Training. (Additional information on the 29 studies that we focused on is in app. II.)

Youth Classroom Education

We identified 15 studies that evaluated the effectiveness of classroom- based programs or curricula designed to improve financial literacy among elementary, high school, or college students. Generally, these studies found that classroom curricula on general financial education, which covered topics such as spending, saving, and budgeting, increased students’ knowledge of these topics. Ten of the 15 studies also assessed the impact of a program on students’ subsequent behavior and found mixed results. Examples of studies that address youth classroom education include the following: The National Endowment for Financial Education’s High School Financial Planning Program, a high school curriculum on basic financial planning concepts, was evaluated in 2003-2004 by independent academic researchers. The study found that students who participated in the program experienced significant improvement in their financial knowledge, behavior, and confidence by the end of the course. In addition, about 60 percent of participants had positively changed their spending and savings patterns 3 months after the program had ended.

In 2008, an outside research firm assessed Junior Achievement’s Finance Park, a 6-week economics education program designed for middle school students that combined classroom instruction with a daylong role-playing exercise. Using surveys conducted before and after students had participated in the program, the study found statistically significant improvement in students’ content knowledge, such as their ability to develop a personal budget. It also found that their confidence in monetary decisions and ability to be successful had increased.

A 2007 study by researchers at Ohio State University used a Web-based survey of university alumni to investigate the impact of personal finance education delivered in high school and college. The study found that participating in a high-school or college-level personal finance course did not result in improvements in savings rates among participants. Individuals who had participated in a college-level personal finance course were found to have higher levels of knowledge about investment issues, although no such effect was found for individuals who had taken a personal finance course in high school.

In addition, we identified four studies that attempted to assess the effect of legislative mandates that exist in certain states requiring school districts to include personal finance instruction in middle school or high school curricula. As noted earlier, as of 2009, 13 states required students to take a personal finance course as a high school graduation requirement. Three of the studies we reviewed reported that students in states that mandated financial education were more likely to have greater financial knowledge or better financial behaviors, such as increased rates of saving. For example, a 2001 study used a national survey to determine the long-term behavioral effects of high school financial curriculum mandates. The study found that respondents who graduated when state-mandated financial education was in effect had higher saving and wealth accumulation rates than those respondents who had graduated prior to such a mandate. In contrast, a study conducted in 2009 by researchers at Harvard Business School came to a different conclusion. Reviewing data from three U.S. Censuses, the researchers found that individuals whose curriculum included state-mandated financial education had saving rates identical to those of students in the same state who graduated prior to the state mandate. However, there are limitations to the methodologies used to assess the effect of legislative mandates. For example, some of these studies rely on proxy measures, such as when the participant likely graduated from high school, to determine whether the person participated in a mandated financial education program. Further, these studies do not typically discern the impact of the mandate from other important factors, such as changes in the overall economy, that affect financial behaviors.

Adult Classroom Education

We identified eight studies that reviewed the effectiveness of classroom- based programs or curricula designed to improve financial literacy among adults. Some of these programs provided general financial education and others focused on particular topics, such as preparing for retirement. In addition, some of the programs were aimed at a general population, while others targeted specific populations, such as service members or individuals with low incomes or substantial debt. With some exceptions, programs reviewed were found to be effective in improving financial knowledge and behaviors, particularly among participants with the least education or who faced significant financial challenges. Examples of these studies include the following: A 2007 study conducted by FDIC evaluated Money Smart, a comprehensive financial education curriculum designed to help low- and moderate-income individuals enhance their financial skills and create positive banking relationships. The study surveyed individuals prior and subsequent to their participation in the program and followed up by telephone 6 to 12 months after their final class. The study found that participants in the Money Smart training were more likely to engage in positive behaviors after completing the course, including opening deposit accounts, saving money in a mainstream financial institution, and adhering to a budget.

Researchers studied the effect of a 2-day financial education course taught to soldiers by college instructors. Soldiers who finished the course completed a follow-up survey of financial behaviors and the results were compared to those of a control group of soldiers who had not taken the course. Soldiers who had taken the financial education course were more likely to have engaged in positive behaviors, such as comparison shopping, saving, and paying bills on time. However, when the researchers controlled for other factors, only two sets of behaviors were associated with the financial education course. First, those soldiers who had the financial education course were more likely to know the difference between discretionary and non-discretionary spending. Second, contrary to what might be expected, those soldiers who had taken the course were less likely than the comparison group to report using a formal spending plan and more likely to report using an informal spending plan.

Other Delivery Mechanisms

Six of the studies we reviewed evaluated financial literacy initiatives that were not delivered in a classroom setting. These studies included assessments of credit counseling and housing counseling delivered one- on-one, counseling provided via the Internet, and content delivered through newsletters or on video. In general, these studies suggest that a variety of different delivery mechanisms can be effective in improving financial literacy. Examples include the following: A 2011 study compared outcomes for individuals who received face-to- face credit counseling with similarly situated consumers who opted for counseling via technological methods, such as telephone or Internet. Counseling outcomes were measured using data from participants’ credit reports 1 or more years following the original counseling. Delivery of credit counseling via the telephone or Internet was found to generate outcomes no worse than—and in some cases better than—face-to-face delivery of counseling services.

A study conducted by researchers from Freddie Mac in 2001 compared the loan performance over time of homebuyers who received pre-purchase homeownership counseling with participants in the loan program who did not receive such counseling. Those borrowers who received one-on-one counseling were less likely to have a 60-day delinquency on their loans during the study period than other borrowers with equivalent characteristics who had not had counseling. However, borrowers who received counseling via the telephone or through a course of home study showed no reduction in delinquency.

Increasingly, technological resources are being used to provide and evaluate financial literacy. In particular, the Internet has proved to be an important tool for disseminating information and education about financial issues to consumers, and one study found that the number of Web sites that provided financial education almost doubled between 2000 and 2005. Some organizations have used interactive video games to provide financial education, particularly for youth. For example, Junior Achievement has developed an online version of its Finance Park simulation to complement its traditional in-person interactive model. Technology can also be used to evaluate program effectiveness. A panel of experts convened by the New America Foundation in 2008 noted that online tools, such as interactive Web tools that allow students to set and measure their progress towards financial goals, can be used to collect data to assess the behavioral impact of a financial education program. These online tools provide flexibility to capture a number of measures on an ongoing basis for a large population.

The Financial Literacy and Education Commission and many federal agencies have recognized the need for a better understanding of which programs are most effective in improving financial literacy. For example, the commission’s original national strategy in 2006 noted that more research and program evaluation were needed so that organizations are able to validate or improve their efforts and measure the impact of their work. In response, in October 2008, the Department of the Treasury and the Department of Agriculture convened, on behalf of the commission, the National Research Symposium on Financial Literacy and Education, which discussed academic research priorities related to financial literacy. The commission’s new 2011 national strategy sets as one of its four goals to “identify, enhance, and share effective practices.” The new strategy sets objectives for reaching this goal, which include encouraging research on financial literacy strategies that affect consumer behavior, establishing a clearinghouse for evidence-based research and evaluation studies, developing and disseminating tools and strategies to encourage and support program evaluation, and forming a network for sharing research and best practices. At the same time, because of fiscal constraints, the overall level of future federal resources that will be devoted to financial literacy research and evaluation is unclear. For example, the Social Security Administration requested no funding in its fiscal year 2012 budget justification for its Financial Literacy Research Consortium, which provides research grants to improve financial literacy and retirement planning; the consortium had been funded at about $9.2 million in fiscal year 2010 and had estimated obligations of $10 million in fiscal year 2011.

Stakeholders Cited Certain Common Elements Desirable for Financial Literacy Programs

Despite limited empirical evidence on the effectiveness of financial literacy programs, experts and practitioners in the field of financial literacy generally have identified certain elements that they consider desirable in almost any financial literacy program. The views of these stakeholders are not necessarily based on concrete data but rather on anecdotal evidence, experience in the field, and a broader body of research on program design and behavioral economics. For example, in 2004, Treasury’s Office of Financial Education and Financial Access published a list of the elements of a successful financial education program, which was intended to guide financial education organizations in developing programs and strategies. Similarly, in 2005, the Organization for Economic Cooperation and Development issued a set of principles and good practices to help guide financial education and awareness programs. Some nongovernmental organizations have also developed recommended practices for financial literacy programs. For example, the Jump$tart Coalition for Personal Financial Literacy has developed best practices for personal finance education materials. Based on the guidelines of these organizations and our interviews with experts and practitioners, the following elements are considered desirable for successful financial literacy programs: Content that is relevant and timely. Financial literacy programs may be more effective if they are relevant to their target audience. For example, people need different kinds of financial information at different phases of their lives. College students may need to learn how to be prepared to enter the workforce, working adults may need information on managing credit and investing for retirement, and retirees may need information on managing their retirement funds. In our 2004 forum on financial literacy, experts noted that financial education is most effective when it comes at the right time—that is, at the “teachable moments” that occur when the information is applicable to events in a person’s life. Some experts have argued that financial education should be linked to specific products and programs—for example, embedded into government income support programs.

Delivery methods that are appropriate for the audience or topic. While financial education programs can be delivered in a broad variety of formats, a program may be more effective if its delivery method is adapted so that it is appropriate to its target demographic, engaging to participants, and well-suited to the objectives of the program. A 2010 panel of experts convened by the National Endowment for Financial Education highlighted the importance of tailoring the delivery method for financial education to the audience and the program, noting that individuals possess varying levels of financial knowledge and that these differences need to be taken into account in program design. For example, many experts have said that youth programs can be more effective when they include a hands-on activity, such as a simulation, which can make the information more true- to-life and relevant to the participants. Similarly, research indicates that young adults may prefer to receive financial education through the Internet.

Accessibility and cultural sensitivity. Programs should be accessible to the population they seek to serve. Many stakeholders noted the importance of offering education at times and locations that are convenient to the target audience. Further, the success of a program can depend on content that is understandable and culturally sensitive. As we have reported in the past, cultural differences can play a role in financial literacy and the conduct of financial affairs because different populations have dissimilar norms, attitudes, and experiences related to managing money. In addition, a report by the Lutheran Immigration and Refugee Service states that existing financial literacy and education materials often do not effectively serve some immigrant populations because they do not incorporate linguistic idioms and cultural values, such as gender roles and religious beliefs.

Use of partnerships. Developing partnerships among organizations involved in delivering financial education can have several benefits, including making more efficient use of scarce resources, facilitating the sharing of best practices, and effectively reaching targeted populations. For example, when Freddie Mac was developing and implementing its CreditSmart program, which initially was geared toward the African- American community, it partnered with five historically black colleges and universities. Program representatives told us that using these trusted intermediaries contributed to the program’s effectiveness. In addition, partnerships can help connect appropriate content with an effective delivery mechanism. For example, financial institutions, which have expertise in money matters, sometimes provide financial education content to schools, which can serve as an efficient means of directing that content to students.

Program evaluation: An evaluation component, ideally built into a financial literacy program, helps to determine whether programs are having a positive impact on participants’ attitudes, knowledge, or behaviors. Effective evaluation often depends on establishing specific goals and identifying performance measures that can be used to track progress toward meeting goals, according to stakeholders at Treasury and other organizations. As previously discussed, given the resources required for evaluation, the extent to which program impact can be tracked and measured may vary based on the nature and scope of the individual program.

Trained and competent providers. As we have previously reported, teacher quality is an important school-level factor influencing student learning. However, a 2009 study sponsored by the National Endowment for Financial Education found that less than 20 percent of teachers and prospective teachers reported feeling very competent to teach the personal finance concepts surveyed, including money management and saving. To help offset this lack of subject matter expertise, guidelines from the Organization for Economic Co-operation and Development recommend that specific financial education materials and tools be provided to the teachers. The Jump$tart Coalition for Personal Financial Literacy has encouraged that financial education materials provided to teachers include a number of specific elements, including student learning objectives and assessment tools, background information, lesson plans, and activities.

Sustainability. Programs should have the necessary resources for long- term sustainability and success. Treasury’s Office of Financial Education and Financial Access has noted that a successful financial literacy program should be developed for long-term success, as evidenced by characteristics such as continuing financial support, legislative backing, or integration into an established course of instruction.

Alternatives and Complements to Traditional Financial Education Have Been Shown to Improve Consumer Behavior

Financial education may not be the only approach—or necessarily always the best approach—for improving consumers’ financial behavior. As noted earlier, generally the goal of a financial literacy program is to improve a consumer’s financial behavior or produce positive outcomes, such as participation in a retirement savings plan, timely repayment of credit, or the opening of a deposit account in lieu of using a check-cashing service. One tool for achieving such outcomes is financial education. However, alternative strategies or mechanisms, sometimes in conjunction with financial education, have also been successful in improving financial behavior. Insights from behavioral economics, which blends economics with psychology, have been used to design strategies apart from education to assist consumers in reaching financial goals without compromising their ability to choose approaches or products. These strategies recognize the realities of human psychology, including procrastination and inertia, inability to stick to plans, difficulty in processing complex information, and the desire for conformity.

Literature we reviewed indicated that strategies for improving consumer financial behavior or outcomes that were alternative or complementary to traditional financial education can be effective. Examples of such strategies include the following: Changing the default option. A default is the choice people make when they do not deliberately choose an alternative. Because people are prone to inertia and procrastination, the default option often becomes the most common choice when making financial decisions. For example, in recent years, some employers have adopted automatic enrollment policies for their defined contribution plans—retirement plans under which participants accumulate retirement savings in individual accounts, such as a 401(k) plan. Under automatic enrollment, workers are enrolled into the plan automatically, or by default, unless they explicitly choose to opt out. As we have previously reported, studies have shown this mechanism to be effective for increasing participation in retirement plans. For example, one study of employees hired before and after their company adopted automatic enrollment found that the retirement plan participation rate of those hired before automatic enrollment was 37 percent at 3 to 15 months of tenure, compared with 86 percent for the group hired after.

Using commitment mechanisms. Strategies that commit people to specific actions in the future can be an effective way of influencing behavior. For example, a program called Save More Tomorrow asked employees to commit to increasing their retirement plan contribution rates well in advance of each scheduled pay increase. The program sought to use this commitment mechanism to help employees who would like to save more but lack the willpower to act on this desire. An evaluation of this program found that 78 percent of employees offered the program joined, and 80 percent of those who joined remained in the program for several pay raises, with their savings rate increasing, on average, by 10 percentage points over a period of 40 months.

Using monetary incentives. Using incentives with tangible monetary benefits can also be effective in changing behavior. For example, studies have shown that employees are more likely to contribute to a retirement plan if their employer provides matching contributions, and the amount that an employee contributes to a plan can be influenced by the formula for the matching contribution. Research shows that programs that offer monetary matches can provide concrete rewards that encourage individuals to take specific actions. In one experiment, low- and middle- income clients of a tax return preparation firm were randomly offered a match of 0, 20, or 50 percent on their tax refunds that would be contributed to an individual retirement account. Higher matches, combined with information received from tax professionals, raised the participation rate in the savings plan and the amount of the contribution. Similarly, an experiment compared a random selection of eligible lower- income people who received individual development accounts—which provide a match for savings made for certain purposes—with a control group that was not offered these accounts. Four years into the program, the individual development accounts increased homeownership rates of prior renters by 7 to 11 percentage points relative to the control group. However, the study found that there was almost no impact on other targeted uses, such as post-secondary education or retirement savings. In addition, a follow-up study conducted 10 years after the start of the program found that the homeownership rates for those who did not receive access to the individual development accounts were similar to those who did, suggesting that the benefits diminished over time.

Simplifying financial decisions. Reducing the complexity of financial information provided to consumers and simplifying the choices they need to make can motivate consumers to take action. A few studies have shown that more investment options are correlated with reduced participation in participant-directed retirement plans, possibly because of too many choices or information overload. Further, as we have noted in prior reports on Social Security information and credit card disclosures, certain practices help people understand complicated information, such as writing information in clear language, using straightforward layout and graphics, and making options easy to compare in a single document. In one experiment, newly hired staff at an orientation seminar randomly received either a standard packet of information on supplemental retirement accounts, an additional planning aid designed to simplify enrollment, or an even simpler planning brochure. Simpler planning information was associated with significantly higher participation rates in retirement accounts, with enrollments for the three groups of 7, 21, and 27 percent, respectively.

Leveraging the peer effect. People are often more comfortable making a choice when they know that others in their peer group have made the same choice. Incorporating individuals’ tendency to want to follow their peers can help motivate consumers to take action. In an experiment conducted at a large university, a random sample of employees in certain departments were promised a monetary reward for attending a benefits fair that presented information about tax-deferred account retirement plans. Employees were more likely to attend the fair—and ultimately to participate in the retirement plan—if colleagues in their department received a monetary award, even if the employees themselves received no such award. Another study found that an effective tool for increasing participation in retirement accounts was to present videos encouraging participation that included fellow employees with certain characteristics similar to the target audience.

Much of the literature and the experts we spoke with have noted that these various strategies to improve consumers’ financial behavior and subsequent outcomes should not be viewed as a substitute for financial education but rather as a complement to it. The most effective approach to improving consumers’ financial decision making and behavior may be to use a variety of these types of strategies in conjunction with financial education.

While Certifying Financial Literacy Providers Is Feasible, Doing So Would Pose Challenges

A Certification Process Could Take Many Forms Depending on Its Underlying Goals and Scope

If the federal government were to develop a process for approving or certifying financial literacy providers, a variety of approaches could be taken. At present, the federal government does not have a process for approving or certifying most organizations that provide financial education, with two notable exceptions. As previously mentioned, the U.S. Trustee Program approves credit counseling agencies and debtor education providers to meet requirements of the U.S. Bankruptcy Code. In June 2005, the Trustee Program established its Credit Counseling and Debtor Education Unit to implement new statutory provisions. Approximately 166 credit counseling agencies and 265 debtor education providers were approved by the Trustee Program as of March 2011. In addition, since 1968 HUD has had a process for approving housing counseling agencies through its Housing Counseling Program, and as of April 2011, there were 2,758 agencies participating in the program, of which HUD had approved 1,047. These agencies provide a variety of housing counseling services and are the only ones that can provide counseling to meet the mandatory counseling requirements of certain housing programs, such as the Federal Housing Administration’s Home Equity Conversion Mortgage Program. Some nongovernmental entities also have certification processes or confer designations that are related to financial literacy. For example, the Institute for Financial Literacy—a nonprofit organization that provides financial literacy information and services—has recently implemented an accreditation process for organizations that provide financial education, which will be based on standards it has developed. Some professional and trade organizations also confer designations—such as Certified Financial Educator—to individuals to indicate that certain examination, educational, or other requirements have been met. Some designations require a certification examination; an accredited degree, training, or relevant experience in the financial services industry; and continuing education.

The existence of the Trustee Program’s and HUD’s approval processes for credit counseling and debtor education and housing counseling organizations, respectively, suggests that it would be feasible for the federal government to implement an approval or certification process that would encompass financial literacy providers more broadly. However, initiating and developing such a process would require that Congress or the relevant federal agency or agencies address a number of issues, including the goals of the program, who would administer the process, what type of providers it would cover, what criteria or standards would apply to providers, and what degree of ongoing oversight would be put in place: What are the goals of the certification process? As we have reported in the past, defining a program’s mission, strategic goals, and desired outcomes is critical. The scope, structure, and design of any certification process for financial literacy providers would depend on what it set out to achieve. For example, a certification process whose primary goal was to protect consumers from low-quality or unscrupulous providers might have different characteristics and design from a process whose primary goal was to promote public awareness of financial education.

What entity would administer the certification? A federal agency could operate a certification process directly or, alternatively, it could oversee or charter a nongovernmental entity to do so. Some stakeholders in the field of financial literacy told us that if a federal entity were to take on this responsibility, the Department of the Treasury, the Financial Literacy and Education Commission, or the Consumer Financial Protection Bureau would be plausible candidates. One representative of a federal agency suggested that several federal agencies could be involved, certifying providers that cover the topics or address the target audience under each agency’s purview. Another model would be for the federal government to charter a nongovernmental intermediary that would implement the certification, with a federal agency overseeing that intermediary. This would be similar to HUD’s process of approving intermediary organizations that then oversee and provide subgrants to branches and affiliates that provide the actual counseling to consumers. For example, NeighborWorks America, a federally chartered nonprofit corporation with its own nationwide network, receives federal funds to provide grants, training, and technical assistance to agencies that provide housing counseling. As a HUD-approved intermediary organization, NeighborWorks must ensure that its affiliates meet the criteria for HUD approval and HUD does not approve each affiliate independently.

What entities would be covered? A wide range of entities provide some form of financial education, including community-based organizations, large national nonprofits, trade and professional associations, credit counseling agencies, colleges and universities, credit unions, and private companies. Further, some of these entities provide broad financial education, while others focus on very specific topics. One step in developing a federal process for certifying financial literacy providers would be to determine the scope of the entities that would be eligible. Some stakeholders with whom we spoke noted that trying to encompass all types of financial literacy providers could be unrealistic. For example, applying consistent criteria and standards among programs using very different approaches and delivery mechanisms would be difficult. One representative of a federal agency suggested that there be separate certification processes based on the topics covered. The Institute for Financial Literacy, according to its representatives, has opted for a broader scope in developing its organizational accreditation, which is open to organizations that provide financial education either exclusively or as part of a wider range of services, in which case only the relevant activities are accredited.

What criteria would be used? Criteria would need to be developed for determining the certification of financial literacy providers. These criteria could include financial soundness, governance structure, size, populations served, reputation, and nonprofit status, among others. Criteria could also address the expertise and capacity of providers, including years of experience and staff knowledge in economics and personal finance education. Some stakeholders told us that for-profit companies that market or sell financial products should be ineligible, presumably because they may not provide unbiased information or may be more likely to use financial education to help sell products. Along these lines, only nonprofit organizations and units of government are eligible to become HUD- approved housing counseling agencies. By contrast, the Bankruptcy Code does not require entities approved to fulfill the debtor education requirement to be nonprofits, although it does require approved credit counseling agencies to be nonprofits. Some bank representatives told us that, within their industry, many entities provide financial education as a legitimate community service and do not use it to market products. One federal agency noted that a code of ethics could also be included as part of the certification process to help address these issues.

Should certification include content standards? One option for certification would be to require that certified providers include in their programs certain content standards, such as specific topics that must be covered, or to require that certain core competencies be addressed. Such standards could provide consistency and quality in the program content offered by certified financial literacy providers. For example, one financial literacy advocate told us that such standards would help teachers identify high-quality content for financial education incorporated into classroom instruction or after-school programs. The Trustee Program’s interim final rule on procedures and criteria for debtor education providers specifies the topics that must be covered in the personal financial management instructional course required of bankruptcy filers prior to discharge of their debt. HUD’s Housing Counseling Program Handbook states that HUD has the option of requiring, promoting, or incentivizing the adoption and implementation of housing counseling and education standards. However, HUD does not generally specify the content its approved housing counseling agencies must cover. An alternative to specific content standards would be to certify curricula or programs in lieu of providers. The certifying entity would need to assess those curricula periodically to determine that the information offered to consumers is accurate, up-to-date, and relevant.

What level of oversight would be conducted? A federal process for certifying financial literacy providers would likely require some form of oversight to help ensure continued compliance with any statutory or program requirements. The level of oversight for certified entities could be fairly limited, such as a simple reporting requirement on activities performed. Alternatively, oversight could be more comprehensive and include such things as more detailed reporting requirements, complaint resolution, quality reviews, and administrative proceedings to remove entities when necessary. In addition, providers could be required to reapply regularly. For example, the Trustee Program requires approved credit counseling agencies and debtor education providers to reapply annually, and HUD assesses approved housing counseling agencies for reapproval at least every 3 years.

Federal Certification of Financial Literacy Providers Could Have Certain Benefits

Some representatives of federal agencies and organizations that provide or advocate for financial literacy cited potential benefits that could result from implementing a federal process for certifying financial literacy providers: Improve overall quality. A federal certification process could potentially improve the quality of organizations that chose to apply for certification and would need to meet a certain set of qualifications and standards. For example, Trustee Program officials told us that their approval process for financial education providers for the purposes of the bankruptcy process may have encouraged higher standards among those providers. In addition, a certification process could raise the quality of the financial education community overall. For example, HUD officials noted that their Housing Counseling Program has helped set a standard for the industry as a whole.

Encourage greater program evaluation among providers. A certification process could help to increase program evaluation efforts by encouraging provider organizations to assess their ability to meet certification standards and by requiring certified providers to report on outcomes. Representatives from one financial literacy organization told us that organizations that are interested in continuous improvement could benefit from such a process.

Help consumers identify competent providers. From the consumer standpoint, a federal certification of financial literacy providers could serve as a federal “stamp of approval.” Representatives from one trade association told us that certification could assist consumers and others in distinguishing among providers.

Increase public awareness. A federal certification process could help draw public attention to the issue of financial literacy. Potentially, it could give providers additional visibility, which could raise the profile of financial literacy and encourage consumers to seek out these resources.

Weed out poor quality providers. Federal certification could help to weed out poor quality or abusive financial literacy providers, according to a few stakeholders with whom we spoke, presumably because consumers might avoid providers that had not been certified.

Aid in building capacity. Federal certification possibly could aid some financial literacy providers in garnering outside funding from foundations or other sources that they rely on for support. Recognition by a federal agency could provide legitimacy to nonprofit organizations that could help them leverage other resources. In addition, two financial literacy stakeholders suggested that the federal agency overseeing certification could serve as an information clearinghouse for providers. This could allow them to more readily access information on best practices, financial education resources, and the results of research on financial literacy issues. Certification might also provide networking opportunities among certified providers, who might share information and resources among themselves.

A Certification Process Could also Pose Challenges

A federal certification process for financial literacy providers would face certain challenges and potential downsides. Most notably, developing, implementing, and operating a federal process for certifying financial literacy providers would involve financial costs and staff resources for the federal agency administering the process. While each certification or approval process is unique, the experiences of the Trustee Program and HUD may offer insights into the potential resources that a broader certification process for financial literacy providers might entail.

Experiences of the Trustee Program and HUD

The Trustee Program spent $6.1 million between fiscal years 2005 and 2007 to develop its Credit Counseling and Debtor Education Unit, which was created in 2005 to administer the approval of credit counseling agencies and debtor education providers. In fiscal year 2010, the Trustee Program spent $1.6 million in salaries and benefits for the unit, according to agency officials. The number of full-time equivalent staff assigned to the unit between fiscal years 2007 and 2010 ranged from 13 to 18, with field staff assisting on a rotational basis. For fiscal year 2011, 11 full-time equivalent staff had been assigned to the unit. These staff have been responsible for developing application forms and procedures, approving and monitoring credit counseling agencies and debtor education providers, and taking steps to help ensure that filers were meeting requirements. Because approved entities must submit an application each year, staff review hundreds of applications and reapplications annually, according to agency officials. The officials told us that based on their experience, any federal government process requiring periodic review and enforcement would require substantial resources. In addition, the rulemaking process related to approving credit counseling agencies and debtor education providers has been lengthy. For example, the Trustee Program is still using the interim final rules it proposed in July 2006. While it issued proposed rules in 2008, as of May 2011, neither final rule had been approved.

HUD has estimated that the cost of administering its Housing Counseling Program will be $18.8 million for fiscal year 2012, with the majority going toward salaries and benefits. This amount does not include the grants that HUD makes to some of those agencies. Estimates for prior years were not readily available, according to HUD, because until recently the cost of administering the housing counseling program was not segregated. Because responsibilities for the Housing Counseling Program are spread across the agency, HUD officials did not provide an exact number for full- time equivalent staff devoted to approving and overseeing housing counseling agencies. However, they estimated that approximately 200 staff members nationwide have significant responsibilities within the program. Those responsibilities include collecting and reviewing applications, processing reapprovals, monitoring approved agencies, and providing them with education and outreach. HUD staff conduct regular reviews of approved agencies—which can include conducting onsite visits—to determine if their performance meets program standards and requirements or to address risk-related issues. In December 2004, HUD first published proposed rules that set forth the eligibility requirements, performance standards, and administrative procedures required of approved housing counseling agencies. The final rule became effective in October 2007. HUD staff told us that the initial development of the approval process for housing counseling agencies was relatively resource-intensive. HUD’s handbook for the program provides guidance to its staff and to program participants, including the branches, affiliates, or sub-grantees of approved intermediaries. HUD also recently created standard operating procedures for staff to follow in conducting performance reviews. The Dodd-Frank Act established an Office of Housing Counseling within HUD, but federal budget constraints could delay its establishment and reduce the scale of HUD’s activities.

As noted earlier, some financial literacy stakeholders suggested that if a federal certification process is to be implemented, the financial education offices of either Treasury or the Consumer Financial Protection Bureau could be among the appropriate choices to implement this process. According to a Treasury official, the Office of Financial Education and Financial Access within Treasury has an allocation of six full-time equivalent staff for fiscal year 2011. The level of staff needed to operate a program for certifying financial literacy providers would clearly depend on the specific scope and nature of the program, but current staffing levels at Treasury’s financial education office would likely be insufficient to take on such a responsibility. According to staff at the Consumer Financial Protection Bureau, its Office of Financial Education was still being staffed as of May 2011.

Other Considerations

While viewpoints varied, in general, a majority of the representatives of nonprofit and private sector financial literacy organizations, academic experts, and representatives of federal agencies with whom we spoke believed that the disadvantages of implementing a federal certification process for financial literacy providers outweighed the advantages. While such a process would be feasible, many stakeholders commented that it might not be the most productive use of the scarce federal resources available for financial literacy. In addition to the federal resources that would be required, several other challenges, disadvantages, and other factors were cited: There would be administrative costs for the entities being certified.

Representatives of financial literacy organizations and others noted that applying for and maintaining federal certification would result in some administrative cost and burden for the participating organizations. Our review of public comments submitted in response to the Trustee Program’s 2008 proposed rules found that some participating organizations noted the administrative burden caused by the requirements for the credit counseling and debtor education approval process, and one organization noted that it dedicated more than 100 employee hours each year to complete its application. The resources needed for administrative requirements such as these could act as a barrier to participation in any certification process for certain financial literacy providers—particularly smaller, community-based organizations.

Financial literacy providers are highly diverse. Financial literacy is a wide-ranging field covering many different types of organizations, topics, and delivery mechanisms. For example, financial education can be provided in one-on-one counseling, in a classroom setting, via the Internet, as a set of curricula, or via broadcast or print media. A single uniform certification process covering financial literacy providers as a whole may be impractical or inappropriate. Moreover, the varying nature of providers and programs could require that certification include multiple processes.

Whether certification would improve provider quality is unclear. Several stakeholders with whom we spoke questioned whether a federal certification process for financial literacy providers would help distinguish between higher-quality and lower-quality providers. They also noted that some high-quality providers might not even apply for certification if the benefit was not clear to them or the administrative burden appeared significant. Further, one stakeholder raised concern that the criteria required for financial literacy providers to be certified would create a “floor” of basic qualifications rather than actually serve to promote high standards. As we reported in 2009, there were issues related to counseling provided by HUD-approved housing counseling agencies for HUD’s reverse mortgage program. We found that HUD’s internal controls did not provide reasonable assurance that counseling providers were complying with program counseling requirements and, as a result, some prospective borrowers may not have been receiving the information needed to make informed decisions about obtaining a reverse mortgage.

Whether consumers would recognize or use the certification is unclear. Several stakeholders were skeptical that many consumers would select a financial literacy provider based on whether or not the provider had been federally certified. For example, staff at one federal agency noted that a certification process in and of itself would not necessarily result in greater consumer confidence in the advice they receive from certified providers.

A certification process may not weed out bad actors. One potential goal of federal certification of financial literacy providers would be to help weed out unqualified or unscrupulous providers, but how certification would achieve that goal is not clear.

Financial literacy certification may not be an appropriate role for the federal government. Several stakeholders questioned whether certifying financial literacy providers is an appropriate role for the federal government. In addition, staff at two federal agencies noted that the federal government should be prudent about certifying organizations because the certification could be misrepresented as an endorsement beyond what certification actually signified—that the organization met certain prescribed criteria.

There is a lack of consensus on what is effective in improving financial literacy. As discussed earlier, the most effective ways of improving consumer financial literacy are still not fully known. Several financial literacy experts noted that there is not yet consensus or consistency within the field on specific standards or core concepts that financial literacy programs should include. As a result, certifying financial literacy providers may be premature.

Some representatives of nonprofit and private sector financial literacy organizations, academic experts, and representatives of federal agencies with whom we spoke noted that there may be alternatives to a federal certification process that could still help achieve some of the same goals. For example, federal agencies could develop voluntary national standards or continue to promote core competencies and leading practices, such as those that have been identified by the Financial Literacy and Education Commission. Another potential option would be to require financial literacy provider organizations receiving federal funds to adhere to specific guidelines, which could address such areas as the information that organizations provide to consumers. Some stakeholders also noted that in lieu of a certification process, the federal government might promote provider competency more directly, such as by offering or funding additional training or technical assistance.

Agency Comments

We provided a draft of this report for review and comment to the Consumer Financial Protection Bureau, Department of Justice, FDIC, Federal Trade Commission, HUD, Securities and Exchange Commission, and Treasury. We incorporated technical comments from these agencies as appropriate. In addition, the Consumer Financial Protection Bureau provided a written response, which is reprinted in appendix III. The bureau noted the responsibilities it was given under the Dodd-Frank Act to promote financial education, with the overarching goal of improving consumers’ ability to make informed choices in the financial services marketplace. The bureau said it believed that before any decision to create a federal financial literacy certification program could be made there would need to be additional exploration of the program’s pros and cons, goals, potential methods, and alternatives.

We are sending copies of this report to the appropriate congressional committees, Consumer Financial Protection Bureau, Department of Justice, FDIC, Federal Trade Commission, HUD, Securities and Exchange Commission, Treasury, and other interested parties. In addition, the report will be available at no charge on GAO’s Web site at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact me at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs are on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.

Appendix I: Scope and Methodology

Our objectives were to examine (1) what is known about which methods and strategies are effective for improving financial literacy, and (2) the feasibility of a process for certifying financial literacy providers and the benefits and challenges of doing so. For the purposes of this report, financial literacy providers generally refers to organizations, rather than individuals, and excludes entities that provide individualized advice for compensation, such as investment advisers or financial planners. In addition, our examination of a potential certification process focused on a process that would be operated or overseen by the federal government.

To address our first objective, we conducted a literature search to identify studies, reports, and articles related to the effectiveness of financial literacy and education efforts. We identified these documents through a search of ProQuest and ECO databases, which was augmented with a general Internet search based on key words to link financial literacy and education with effectiveness. We also asked for recommendations for papers from academic experts and from representatives of organizations that we interviewed, and we used the bibliographies of the studies we reviewed to identify additional studies. We categorized the identified studies based on their relevance to our objective and other characteristics. We limited our search to studies published since 2000 to help ensure that the material was still relevant. The focus of our search was on documents that addressed the effectiveness of financial literacy initiatives or programs and methods of evaluation; we generally excluded from our search documents that included only broader discussions of financial literacy or the extent to which consumers are financially literate. In addition, we reviewed papers that addressed the effectiveness of strategies for improving consumer behavior that are alternative to financial education and papers that addressed the application of behavioral economics to financial literacy and behavior. We limited our review to published works that were authored by academic researchers, think tanks, government agencies, or private or nonprofit organizations that we assessed to have a reasonable degree of experience or expertise in the field of financial literacy and education. We performed our searches from September 2010 to May 2011.

In total, we reviewed 142 studies that were identified through this search. We then screened these studies to identify those that met the following additional criteria: (1) represented original research (as opposed to a review of existing research); (2) used empirical evidence—that is, used data rather than anecdotal information; (3) evaluated the outcomes of a specific program, approach, or policy; and (4) were determined by a GAO methodologist to be sufficiently relevant and methodologically rigorous for inclusion in our report. While we attempted to be thorough in our search methods, the 29 studies that met these criteria may not reflect all published studies that exist and meet these criteria, and do not reflect any studies that may exist that were unpublished or were not readily accessible. Of these 29 studies, 12 were published in peer-reviewed journals. In addition to these studies, we reviewed other studies and papers that addressed strategies for improving financial literacy that are separate from financial education (such as changes in retirement default options) that we deemed sufficiently reliable for our work because they were published in peer-reviewed academic journals, written by noted experts in financial literacy, or widely cited in the field of financial literacy and education.

We also conducted interviews with—and obtained documentation as applicable from—representatives of federal agencies whose missions involve consumer education and protection, including the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System, Federal Trade Commission, Department of the Treasury, and Securities and Exchange Commission; the Financial Industry Regulatory Authority; nonprofit organizations that provide or advocate for financial literacy and education, including AARP, American Association of Family & Consumer Sciences, Consumer Federation of America, Employee Benefit Research Institute, Institute for Financial Literacy, Jump$tart Coalition for Personal Financial Literacy, Junior Achievement, National Endowment for Financial Education, National Foundation for Credit Counseling, and New America Foundation; one international organization, the Organization for Economic Co-operation and Development; and one financial services company, Freddie Mac. In addition, we held interviews with representatives of the American Bankers Association and the Credit Union National Association, and we also held group interviews with representatives of individual community banks and credit unions that are members of those entities. We also interviewed six academic researchers who focus on financial literacy.

To address our second objective, we conducted an Internet search for articles, studies, or position papers related to the feasibility of a process for certifying financial literacy providers. In addition, we solicited views on the feasibility of such a process from the representatives of federal agencies, nonprofit organizations that educate or represent consumers, financial institutions, and other organizations cited above, as well as the six academic experts with whom we spoke. Using a semi-structured interview approach, we gathered their views on the potential advantages, disadvantages, and challenges of a certification program, as well as options for how it might be structured and implemented, which federal entity might be responsible for it, and how it might be overseen. We also reviewed documentation from and interviewed representatives of two nonprofit organizations, the Institute for Financial Literacy and the American Association of Family & Consumer Sciences, both of which have developed programs for certifying individuals or organizations that provide financial education.

In addition, for illustrative purposes, we gathered information on two existing processes within the federal government for approving organizations that provide some form of financial education. These were the processes conducted by (1) the Department of Justice’s U.S. Trustee Program for approving credit counseling agencies and debtor education providers to meet certain requirements of the Bankruptcy Code, and (2) the Department of Housing and Urban Development (HUD) for approving housing counseling agencies under the Housing Counseling Program. We reviewed relevant documents related to these processes, including application forms, final and proposed rules, and program handbooks and guidance. In addition, we requested from the Trustee Program and HUD their estimated expenditures and staffing levels in fiscal years 2010 and 2011 related to the approval and oversight of providers under their respective programs, and data on the number of providers participating in their credit counseling and debtor education and housing counseling programs, respectively. We also obtained information from the Department of the Treasury and the Consumer Financial Protection Bureau on staffing levels for their financial education offices. We interviewed agency staff with program responsibility and discussed their methods for compiling the data, and we determined that these data were sufficiently reliable for our reporting purposes. For the Trustee Program, we also used information that we had collected for a prior report on the costs associated with their credit counseling and debtor education program during fiscal years 2005 through 2007. We also interviewed representatives of the Trustee Program and HUD to learn of their agencies’ experiences in developing and implementing their approval processes, and to gather their views on the benefits and challenges that might be faced if a federal entity were to undertake an approval or certification process for a broader class of financial literacy providers.

We conducted this performance audit from September 2010 to June 2011 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Literature Review of Selected Published Research Evaluating Financial Literacy Programs

This appendix includes studies of evaluations of financial literacy programs that met our criteria for inclusion in our in-depth review of selected studies. Table 1 provides an overview of the 29 studies, their authors, type of program covered, program or approach evaluated, evaluation method, and key findings.

Appendix III: Comments from the Consumer Financial Protection Bureau

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Jason Bromberg (Assistant Director), Bernice Benta, Tania Calhoun, Daniel Newman, Jennifer Schwartz, Andrew Stavisky, and Seyda Wentworth made key contributions to this report.