Consumer Agency Seeks to Break the Logjam in Financial Education

In a report, the Consumer Financial Protection Bureau calls for rigorous data collection to prove what works in financial education

  • Share
  • Read Later
Ed Jones / AFP / Getty Images

The fight for financial education at work or in school has reached a troubling impasse: There is little conclusive evidence that personal finance instruction changes behavior, and without such evidence doubts about these programs linger and the larger effort loses steam.

The Consumer Financial Protection Bureau is trying to break this logjam. In a report, the watchdog agency sets forth guidelines for gathering scientifically rigorous data that it believes will help squash the doubts. This would allow us to move forward as a nation along with dozens of other countries that have made raising the financial I.Q. of their citizens a priority. The report summarizes the impasse this way:

There exists something of a chicken-and-egg problem: Programs need funding to set up data collection systems, but have trouble fundraising without data-driven evidence of their program’s impact.

The CFPB is calling upon “service providers, financial institutions, policy makers, and funders” in the area of financial education to build “a growing body of rigorous evidence of what works.” The agency’s office of financial education will then use the data to broadly proscribe programs and strategies with a proven track record. The immediate goals are to:

  • Determine how to measure financial well-being.
  • Identify the skills and habits of money smart consumers.
  • Evaluate existing programs and determine how to improve them.

The report is important for anyone in the field and hoping to help shape the financial education movement. It offers thoughts on how to design and conduct a study that will interest researchers at the CFPB. If you’re not in the field, the report won’t mean much to you—except, maybe, that we’re beginning to tackle the core impediments to broadening the financial education movement, and looking in earnest for a way to answer the movement’s critics so that we can move forward.

3 comments
truthinlending
truthinlending

With 50% or more of Americans now living paycheck to paycheck, people are desperate.  When people are desperate for money "right now" they are willing to pay whatever they have to for it.  Payday lending companies are fully aware of this and therefore charge the absolute highest rates they can under state law.  We should educate consumers about how these companies "trap" consumers in a cycle of debt.  And illustrate to the consumer what an average loan really costs when the average consumer has to roll it over 8 or 9 times.  If every consumer came in and borrowed money and paid it off and was done after two weeks these unscrupulous payday lenders would not even be able to exist.  They absolutely count on and rely on their customers staying in the cycle of debt.


A campaign similar to the aggressive anti-smoking campaigns might make people more aware, but when people are desperate they will do anything.  This is what payday lenders prey on.

Onepatriot
Onepatriot

It would be good if they would help the Postal Service get an inhouse limited banking facility set up.  Many people don't trust banks, or have enough money to be able to maintain an account under all their rules.  I think a lot of people would use it.  A simple interest bearing savings account for young people would be a good start.

abigailu
abigailu

@Onepatriot The Postal Service can barely afford their existing operations. Why would it be a good idea for them to set up more services to run that aren't even their specialty? Especially when there's already affordable banking facilities that are set up as an alternative to banks - they're called credit unions. Most credit unions have low fees, lower loan interest rates and better savings dividends than the banks, and their not-for-profit structure means their members' financial needs are top priority. Membership eligibility has become more accessible, so that anyone can find a credit union (or several) that they are eligible to join. The problem is that a lot of people don't know about credit unions and the great financial services they offer. That's because credit unions don't have millions of dollars to spend on expensive advertising like banks do, so they rely on limited advertising and word of mouth to spread the message. This is yet another reason why people need effective financial education, so they know that there are BETTER low-cost financial services available to them, and where to find them.