FINANCIAL LITERACY DECLINING AMONG 12th GRADERS - Coalition Urges States to Include Personal Finance in Curriculum Standards

WASHINGTON ….. When it comes to personal finance topics such as paying taxes, using a credit card or saving toward retirement, today's high school seniors know less than their colleagues did three years ago, show survey results released today.

The nationwide survey, sponsored by the Jump$tart Coalition for Personal Financial Literacy, measured 12th graders' level of knowledge of personal finance basics and compared the results with those from a similar survey conducted in 1997 by the coalition. The researcher for both studies was Lewis Mandell, Ph.D., dean of the University at Buffalo School of Management.

On average, participants in the 2000 survey answered 51.9% of the questions correctly - a failing grade based upon the typical grade scale used by schools (90%-100%=A, 80-89%=B, etc.) The average score in the 1997 survey was 57.3%.

Dara Duguay, executive director of the Jump$tart Coalition, pointed to the continued lack of personal finance requirements in most states' curriculum standards as a likely factor in the score decline. "In the last year or two, schools everywhere have been put under intense pressure to perform well on standards examinations," she said. "As a result, teachers have created lesson plans that focus heavily on concepts and topics to be covered by the examinations - leaving little time in the classroom for anything else."

Since 1997, personal finance has been incorporated into the curriculum standards of only a handful of states, such as Idaho, Illinois and Pennsylvania. The low number is alarming, said Duguay, considering that 50% of high school graduates directly enter the workplace rather than on to college, with the percentages even higher among minority students.

"By augmenting its ongoing work with local educators, parents, business leaders and others, Jump$tart intends to increase states' awareness that personal finance, like reading or math, is a fundamental life skill needed by young people to support themselves," said Duguay.

Mandell believes the issue is not just availability of personal finance courses but how the information is taught, noting that the survey results showed some higher knowledge levels among students with interactive classroom training. One quarter (24.5%) of this year's survey respondents, he pointed out, had participated in the Stock Market Game, where students invest a hypothetical $100,000 during a ten-week simulation of Wall Street trading. In response to a question about where to invest money for long-term growth, 23.4% of the students in the latest survey correctly answered "stocks" as the most likely financial instrument to have the highest return, versus 14.7% in the 1997 survey.

In addition, students who participated in a high-school stock market game scored better on the survey (55.1% percent) than did students who completed an entire course in money management (51.4%) or an entire course in economics (51.0%).

"Knowledge of personal finance is not something students can develop by memorizing terms and phrases," said Mandell. "It's a skill that students learn when given the opportunity to apply concepts and practices as part of a thoughtfully designed curriculum."

Amy Zalud, a senior at Boylan Catholic High School in Rockford, IL echoed that sentiment during a news conference held today at the Federal Reserve in Washington. "I think the way to get students interested in personal finance is to make it real. Use simulations," she said. "Don't just lecture and read out of a book."

According to Mandell, the survey findings show that experience alone is not the best teacher of money management. For instance:

· Students who own stocks in their own name achieved the same score on the survey as students who don't own any stocks (52.6 %).

· Students who receive a regular allowance scored worse (48.9 percent) than did teens who do not receive an allowance (51.9 percent).

· Students who own a credit card scored worse (49.1 percent) than did teens who don't use a credit card (53.3 percent).

Other findings from the survey:

· The average score for Caucasian students was 54.5%, compared with 53.6% for Asian Americans, 45.3% for Hispanics, 47% for African Americans and 38.6% for Native Americans. Males averaged slightly higher scores (52.2%) than females (51.6%).

· Students demonstrated an improved appreciation for the value of college, compared to the results of the 1997 survey. Fifty-two percent (compared with 9.9% in 1997) said that they would expect to earn about 70% percent more money as college graduates than they would as high school graduates.

· Students' knowledge of taxes decreased: Just 38.3 percent of the students (compared with 49.2% in 1997) correctly answered that their federal income tax would at least double if their annual income grew from $15,000 to $30,000.

· Less than half (46%) of this year's students knew that retirement income paid by a company is called a pension, down from 63.5% in 1997. In addition, 30.3% thought such income was Social Security, up slightly from 29.2% in 1997.

· The percentage of students who do not use a credit card declined slightly (69.1% in 2000 versus 70.8% in 1997). Out of students who do use a credit card, 9.2% had their own (compared with 7.7% in 1997), 18.3% use their parents' (compared with 17.2% in 1997) and 2.8% use both their own and their parents, compared with 4% three years ago.

· Students whose parents often discuss money matters in front of them scored only slightly better on the survey (52.6 percent) than did students whose parents sometimes (52.5 percent) or rarely (52.4 percent) discuss money matters in front of them. However, students whose parents never discuss money matters in front of them achieved a score of 42.5 %.

The Jump$tart survey, conducted in February and March 2000, consisted of a written 45-minute examination administered to 723 12th graders in public schools across the U.S.

Founded in 1997 and based in Washington, DC, Jump$tart is a non-profit organization whose 90+ partners include federal agencies, universities, associations and sponsors of education programs. The coalition's goal is to ensure that students have skills to be financially competent upon graduation from high school.

Jump$tart now has local organizations supporting its efforts in 16 states, including Arkansas, Arizona, California, Georgia, Idaho, Illinois, New Jersey, New Hampshire, New York, North Carolina, North Dakota, Massachusetts, Michigan, Pennsylvania, Texas and Wisconsin.

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A copy of the questionnaire used in the Jump$tart survey is posted on the coalition's web site at www.jumpstartcoalition.org. Reporters interested in interviewing Dr. Mandell may contact John Della Contrada in the University at Buffalo's Office of Communications at (716) 645-2833.