As people in New Hampshire cast their votes today, it is important to know where presidential candidates stand in terms of financial literacy policies. To that aim, together with the Networks Financial Institute we have sent the following letter to all presidential candidates:
Dear Presidential Candidate:
In recent days, the state of the economy has surpassed the war in the Iraq as the number-one concern of American voters. Networks Financial Institute at Indiana State University, in collaboration with Dartmouth College professor Annamaria Lusardi, is writing to ask how you, as President, would take steps to help more Americans make sound financial decisions.
The need to improve our citizens' financial literacy has gained recognition as Americans save less, spend the majority of their disposable income, and incur rising levels of debt. Data at both the national and state levels indicate that consumer financial knowledge is at an all-time low, which suggests our nation is now facing a financial literacy crisis. Consider the following:
i) the U.S. savings rate has been extremely low for several years;
ii) home foreclosures nationwide are rising very rapidly and are expected to continue to do so for the next year;
iii) the average American with at least one credit card owes nearly $9,000.
Aggravating the situation are a host of business and social factors including vigorous growth in the sub-prime lending industry, a proliferation of “pay day lending” companies and even an increasing array of credit products marketed to the “tween” demographic market. Our educational system has assumed that students will learn the necessary financial skills from their parents, while statistics show that the majority of our nation's adults lack sound financial skills themselves. Given these circumstances we would like to pose the following questions for your response.
First, the economic well-being of Americans increasingly depends upon making good decisions about complex subjects such as student loans, retirement saving, home ownership, and many others. Do you believe that the federal government has a role in improving the financial literacy of our citizens?
Second, educational research has shown that the foundation for learning core subjects like reading and math occurs during the early grades. Our research revealed that only 38% of elementary school teachers and only 52% of teachers in all grades across the nation address financial literacy in their classrooms, citing a lack of time and educational standards as their main obstacles. Do you support the development of national financial literacy standards to help educators prepare the next generation of consumers?
Thank you for addressing these questions.
Networks Financial Institute
I will post the replies as soon as we receive them.