In Maryland, there is no statewide financial literacy graduation requirement, but the state has required since 2011 that school systems introduce some method of financial literacy instruction to third- to 12th-graders — whether it is embedded in a math class or other course, or as a highschool elective. At least eight of the state’s 24 public school districts do require a financial literacy component to graduate.
An increasing number of states have chosen to mandate a financial literacy course before graduation. Last week, Minnesota Gov. Tim Walz (D) signed a bill that would require a personal finance course for graduation. At least 19 other states — including Kansas, Virginia and Georgia — have similarly passed laws that would require a personal finance course to graduate, according to Next Gen Personal Finance, an organization that tracks such state legislation.
Researchers say this education is sorely needed. Overall, both young people and those close to retirement in the United States exhibit low levels of financial literacy, said Annamaria Lusardi, university professor of economics and accountancy at George Washington University.
“In other words, people are making important and consequential financial decisions without having the knowledge we expect to have if you are investing in the stock market, if you are making decisions about mortgages and credit cards and so on,” Lusardi said.
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People with low levels of financial literacy do worse in almost every financial decision, Lusardi continued, since they are less likely to save and less likely to plan for retirement. She added that, “in finance, ignorance is not bliss,” and schools and colleges providing financial literacy courses can help address the problem.
“To me, today’s financial literacy is like reading and writing. If you don’t have that basic knowledge, you’re not going to be able to participate in society,” Lusardi said.
Prince George’s County was the most recent school district in the state to add a graduation requirement after a school board vote in 2020. The school system offers a one-semester course called “Financial Literacy for Teens” that high-schoolers can take at the beginning of their sophomore year, said Susan Bistransin, the school district’s financial literacy coordinator. Next year’s graduating class is the first cohort that will be required to have the course on its transcript.
In the class, students learn about checking accounts, how to file taxes, how to use a credit card and other information about the financial decisions they will have to make throughout their lives.
“We have so many students who go home to their parents and explain to their parents about bank accounts and how things work,” Bistransin said. “So it’s very, very useful topics – not just for the students – but also for their families.”
Montgomery school officials say the requirement has benefits, but are concerned whether it would make graduation tougher for students who are already at a disadvantage, particularly students whose first language isn’t English.
School system staff told board members they were worried about the impact a requirement would have on students who are learning English, based on some challenges to on-time graduation experienced by this student group in Prince George’s.
Bistransin, Prince George’s financial literacy coordinator, said he has worked to try to get the students to take the class when they understand more English, and there are also materials available in Spanish.
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“For me, there are still some unanswered questions about accessibility,” Grace Rivera-Oven, a Montgomery school board member who represents District 1, said during a board meeting on the issue last week. “I’m all for monetary literacy, but again, I want us to be cautious. I don’t think there needs to be a rush to make it a graduation requirement.”
Instead of a graduation requirement, the staff system recommended the district to move forward with expanding existing courses that provide financial knowledge to students and incentivize the course by providing recognition at graduation for students who complete a course. Next year, the school system will offer an online course students can take that is a “non-credit-bearing” option that would allow students to still take other electives for credit.
The board is also considering making the requirements part of the already mandated student service learning hours so students can take the non-credit online option rather than having to take a course during the school day. The proposal would mandate that students earn a specific amount of service hours through a financial literacy component.
School board members asked for additional data about how the online course will work next year and the demographics of students enrolling in the course before making a decision.
Further discussion on the issue is expected June 6.