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Thursday, February 5, 2015

FINRA Foundation-Funded Study Documents Effectiveness of State Financial Education Mandates

A FINRA Investor Education Foundation-funded study released today examines the effectiveness of state mandates on financial education for high-school students, documenting notable improvements in credit outcomes for young adults who were exposed to rigorous programs.

The study selected three states that mandated financial education in high schools after the year 2000 (Georgia, Idaho and Texas) and compared the change in credit outcomes for young adults in those states with young adults in adjacent control states where no state-mandated financial education was implemented.

The study found that three years after implementing a financial education mandate, all three states saw significantly increased credit scores, and young adults in all three states had lower delinquency rates on credit accounts.
  • Credit scores improved by 11 points in Georgia, 16 points in Idaho and 32 points in Texas.
  • These gains translate into a 2 percent, 3 percent and 5 percent increase in credit scores in Georgia, Idaho and Texas, respectively.
  • Three years after the states implemented their financial education mandate, 90-day delinquency rates on credit accounts decreased in all three states.
  • Texas had the largest decrease in delinquency rate—a 6 percentage point drop, which translates to a relative decrease in delinquency rate of 33 percent.

For full details check out the study linked below.

State Financial Education Mandates: It's All in the Implementation (pdf)