The Effects of K-12 Financial Education Mandates on Student Postsecondary Education Outcomes

As student loan reform continues to dominate national discourse, a NEFE-funded study shows that financial education in states with state-mandated personal finance graduation requirements causes students to make better decisions about how to pay for college. It increases applications for aid, federal aid taken, and grants — all while decreasing credit card balances. Put simply, financial education makes better borrowers.

For most college-bound high school students, financing postsecondary education is their first large financial decision. However, many students don’t have the necessary knowledge to appropriately address their options. Less than one-third know how to compare loans, over half do not calculate future payments, and over half wish they could change their college financing decisions.

It’s clear there’s an opportunity to better equip students to shape the course of their early financial lives. Many feel that financial education can play a significant role.

This study examines positive effects of state-mandated financial education graduation requirements. As of 2017, 25 states have implemented mandates for personal finance education prior to graduation.

The good news is that mandated requirements do help. Exposure to financial education in these states shift students from all backgrounds from high-cost to low-cost financing, thus changing student behavior and driving better outcomes when it comes to paying for college.

Executive Summary: Better Borrowing: How State-Mandated Financial Education Drives College Financing Behavior

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