National access to financial education has increased slightly since 2018, when just five states required personal finance courses for all high-schoolers and 16.4% of high school graduates took such a course, according to a new report published by nonprofit Next Gen Personal Finance.
In 2022, eight states had implemented standalone personal finance courses and 22.7% of high school graduates had taken one. Four additional states — Florida, Ohio, Rhode Island and Nebraska — are currently implementing financial course requirements statewide, which will bump the states requiring some finance material to 12 and the percentage of students taking those courses to 32.5%.
At 48.2%, more students had access in 2022 to optional personal finance courses rather than required courses. On the other hand, 4.8% of high school students had no access to financial education in 2022, the report found.
“Our 2022 report shows tremendous momentum across the country as more states recognize the importance of guaranteeing this course for high school students," said Tim Ranzetta, co-founder of Next Gen Personal Finance, which provides free financial education curricula, in a news release.
Despite the momentum, significant gaps still remain, Ranzetta said.
The study of nearly 12,000 public high schools serving 12,135,504 high-schoolers shows access to be inequitable, especially for Black, Hispanic and low-income students.
In schools with more than 75% of students eligible for free or reduced-priced lunch or more than three-quarters Black and brown student populations, only 1 in 20 students have ensured access to financial education courses, a review of course catalogs found.
"So potentially those students who have the most demand for the access and could see the highest benefits from personal finance education are getting the least of it," said study leader Carly Urban, associate professor of economics from Montana State University.
Given that situation, combined with research showing those same communities have limited access to low-cost financial institutions, "we're setting them up for failure," Urban said in a virtual presentation on her findings hosted by Next Gen Personal Finance Tuesday. "Are we continuing to fail the same people that we've failed for years and years that have the same systemic barriers, and is that something that financial education can help, or is that [racial wealth gap] something that's widening because there is no access in certain areas?" Urban asked.
Additionally, in the 42 states that currently don’t require it, fewer than one in 10 students are guaranteed a personal finance course.
District or other local education leaders, among others, who are looking to pitch a financial education requirement to policymakers should stress that financial literacy is a universal need regardless of career path. It would also help students contribute and thrive in the market, said Florida State Rep. Demi Busatta Cabrera, who sponsored a bill signed into law last month requiring personal finance education in the state.
Pitches should also include reasonable implementation timelines and flexibility for when high-schoolers must take the required course.
If pitches receive pushback that personal finance requirements pose barriers to high school graduation, Urban said early evidence from her research shows otherwise. Requiring standalone personal finance courses does not impact overall graduation rates or graduation rates for racial subgroups who are most likely to be impacted by barriers.
Finance course requirements also don't impact the dropout rates for high-schoolers, as some opposed to financial literacy requirements might worry, said Urban. In fact, financial literacy could increase the likelihood of those students staying on track to graduate, she added.
"If anything, it helps students stay a little bit more attached" to school, Urban said.