How many states require students to take a personal finance course before graduating from high school? Is it 6 or is it 21?
CEE recently released their Survey of the States which led to news articles which included these details:
- “Twenty-one states now require financial literacy courses to graduate” (CNBC)
- "High school students in 21 states must now take a personal finance course in order to graduate" (NY Times)
This, in turn, has led to a lot of inquiries as to why NGPF's Got Finance? research report on access to financial education finds that only 6 states require students to take a personal finance course before they graduate (our State Legislative Pocket Guide has all the details). I thought it would be useful to explain how we arrived at our numbers.
In order to be considered "Gold Standard" a state must guarantee that all students will take a one-semester Personal Finance course before they graduate from high school. I'm going to get a little wonky here to highlight why we hold states to a high standard when it comes to providing financial education.
- All students: an overwhelming majority of people, survey after survey, agree with the philosophy that all students should receive this education. We agree.
- One semester: research finds that "students learn by doing" so a Personal Finance course, rich with hands-on activities and simulations that are relevant to a students' lives, is more likely to stick. This type of course simply takes more time to teach well. In addition, the scope of a Personal Finance course that is relevant to a high schooler is quite comprehensive and should not be short-changed by anything less than a full semester.
- Personal Finance course: Given the topic's importance, comprehensiveness, and fast-changing nature, it must be its own course. Students deserve this. Personal finance cannot be covered adequately when it's embedded in another course for a week or two or when another course entirely is used to satisfy a personal finance requirement. Two recent examples of states touting their commitment to financial education only to backpedal later:
- Iowa -- went from a required personal finance course to an expanded list of courses that would meet the requirement, including consumer math, economics, introductory business, banking and finance, and actual personal finance.
- Kentucky -- changed the language at the final moment from a personal finance "course" to a "program," an incredible loophole because "program" was never defined. The reality on the ground is that it's often a race to the bottom in too many districts where they are taking the stance that a three-hour online module will satisfy this requirement.
So, how to reconcile NGPF's "6 states require personal finance" with the 21 cited in the CEE report?
It's actually quite simple once you dive into the CEE report and analyze the "Status of Personal Finance Education Across the Nation - 2020" (graph shown below). The "21 states that require high school students to take a course in personal finance" (from report) seems to include:
- 6 states where "Standalone High School Course is Required to be Taken"
- 15 states as "Required Coursework Integrated into Another Course"
So, it would appear that 15 of the 21 states counted as having a Personal Finance requirement in this report actually embed personal finance standards into another course. In reality, this means that a course that has just a week or two (or even less) of personal finance content embedded would be considered a state where a student is required to take a personal finance "course" [quotations are mine].
There tends to be a continuum at the school level as well as the state level that we have observed: The typical progression, which occurs over several years, sees schools/states moving from a situation where personal finance is embedded in other courses to offering a one-semester elective course to ultimately ensuring that all students take this course before graduating. It's great to see the CEE report highlight a number of states progressing along this continuum.
Why does it matter that reports on access to financial education use differing methodologies?
These reports are read keenly in state capitals across the country. A methodology that recognizes states for "requiring a personal finance course" when they are actually embedding a few personal finance standards in another course can lead to complacency and not push states to go for the gold -- the Gold Standard, that is.
As always, we remain committed to #Mission2030: All students by 2030 will take a one-semester Personal Finance course before they graduate from high school.
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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