Credit Union Trade Associations Advise Commission on National Strategy for Financial Literacy

WASHINGTON – CUNA and NAFCU each wrote the Financial Literacy and Education Commission in response to their request for public comment on a national strategy for financial education as required under the Fair and Accurate Credit Transactions Act. The three most important elements to a national strategy, according to NAFCU, include promoting financial education in public schools and low-income areas, educating consumers about the importance of budgeting, saving, and planning for retirement, and teaching consumers about responsible use of credit and the effects of bankruptcy. Though the commission only requested three top elements, CUNA felt the need to include five. Financial education is not a long-term goal, but a permanent commitment, CUNA Associate General Counsel Mary Dunn and Senior Regulatory Counsel Catherine Orr wrote. Additionally, parental involvement and advocacy is crucial. Third, CUNA said, financial education efforts must reach out to those of modest means. The national strategy must also target lenders and promote “responsible lending.” Finally, Dunn and Orr wrote, the programs must cover the entire complexity of financial topics and services. The school system is one way to inculcate financial education efforts at an early age. “NAFCU encourages the Commission to seek federal legislation to include financial literacy programs into the mandatory K-12 curriculum, while also allowing individual states to mold additional standards that fit their community,” the letter signed by NAFCU President and CEO Fred Becker read. “For example, a financial literacy class, or the passing of a financial literacy test, could be made a prerequisite for one’s high school graduation.” Both groups listed a number of resources for financial education in the schools. CUNA offers a number of programs to credit unions for their younger members to use, such as Googolplex: The Credit Union Guide for Student Moneymakers. For adolescents, credit unions can link from their Web site to Guides to Independence, which include online, interactive courses for teens and young adults on budgeting and how to buy a car. Dunn and Orr also pointed out that CUNA is actively involved in the National Endowment for Financial Education (NEFE) and the Cooperative Extension System and has partnered with them to develop the High School Financial Planning Program (HSFPP). CUNA also has a representative on the board of the Jump$tart Coalition for Personal Financial Literacy and is a member of the Consumer Federation of America’s America Saves National Advisory Committee. This year, the National Credit Union Foundation and CFA teamed up to increase savings rates among lower-income households. NAFCU listed Operation HOPE (which NCUA has recently partnered with) as a potentially helpful resource in the development and follow through of a strategy, as well as local businesses and community groups like churches, community centers, libraries, YMCAs, and local boys and girls clubs to promote financial education. NAFCU also pointed out that it recently developed a program based on the Federal Deposit Insurance Corporation’s Money Smart program. The program is tailored to credit unions and targets those outside the financial mainstream regarding long-term savings and careful debt management. But financial education is not only for the young, so the groups also recommended retirement savings education and working with employers to offer financial literacy resources and programs in the workplace. According to CUNA, all this can be accomplished with existing resources. “We do not think that it is necessary or desirable to develop new financial education programs at this time. Based on the experience of CUNA and credit unions, we believe that sufficient resources are currently available to educate consumers and increase their awareness of key financial matters,” CUNA’s letter read. Dunn and Orr did say that the commission should establish a set of `best practices’ for financial education. CUNA suggested that television and mass media advertising be better utilized. It also recommended that the commission create a focus around user-friendly information, partnerships for programs and materials, distribution, rewards and incentives for program participants and educators, and standards for qualified educators. -