A NEFE Commissioned Research Initiative
Over the past decade, momentum has been building to embed financial literacy into the K-12 education system. Since 2021, the number of states requiring all public high school students to complete a personal finance course before graduation has almost tripled from 11 to 30 (NEFE Existing Financial Education Requirements). Despite this rapid expansion, youth and adults continue to show low levels of financial literacy (Garg & Singh, 2018; Lusardi & Messy, 2023; Mitchell & Lusardi, 2023). As personal finance courses become more common, an important question emerges: How do we know whether these courses are actually improving students’ financial knowledge?
Answering this question requires reliable ways to measure what students know. While research on financial literacy has grown, tools to measure student understanding have not kept pace. Today, there is no standardized, nationally normed assessment aligned with the most recent National Standards for Personal Financial Education, the benchmark for what students should know before graduating high school. Without such a tool, it is difficult to evaluate program effectiveness, compare student performance across states, or make informed policy and instructional decisions.
The NEFE K-12 Assessment Project is designed to fill this critical gap. By creating statistically valid, reliable and norm-referenced assessments for middle school and high school students, the project provides teachers, districts and state departments of education with a no-cost tool to measure learning, track proficiency and evaluate the impact of financial education interventions. The project has also developed an assessment for the upper elementary level; however, empirical validation efforts currently focus on middle school and high school students, where personal finance instruction is more widely implemented and course requirements are increasingly common. For researchers and practitioners, these assessments offer a way to observe trends, test strategies and ultimately improve financial literacy outcomes nationwide.
Building the Assessments
Item development began in fall 2023 at Northern Kentucky University’s (NKU) Haile College of Business. Content experts followed a rigorous process modeled on best practices from Walstad and Rebeck’s (2017) “Test of Financial Literacy (TFL),” a widely used assessment of high school financial knowledge aligned with the 2013 National Standards for Financial Literacy (CEE, 2013). Each assessment was carefully aligned with the 2021 National Standards for Personal Financial Education, covering six key topics: earning income, spending, saving, investing, managing credit and managing risk.
The high school assessment included 30 questions distributed across the six topic areas as follows:
- 7 questions on earning income
- 4 questions on spending
- 4 questions on saving
- 6 questions on investing
- 5 questions on managing credit
- 4 questions on managing risk
In terms of cognitive level, the high school assessment consisted of 57% knowledge/comprehension questions and 43% application questions requiring higher-order thinking.
The middle school assessment included 25 questions distributed across the six topic areas as follows:
- 5 questions on earning income
- 4 questions on spending
- 4 questions on saving
- 3 questions on investing
- 5 questions on managing credit
- 4 questions on managing risk
The middle school assessment consisted of 44% knowledge/comprehension items and 56% application questions requiring higher-order thinking.
NKU’s Haile College of Business also created an upper elementary assessment consisting of 20 questions. Expert reviewers provided feedback to ensure the items were accurate, clearly written and reflective of classroom realities.
National Norming and Initial Findings
In spring 2025, the middle school and high school assessments were delivered nationally through the Nebraska Council on Economic Education’s (NCEE) online platform, which has supported large-scale personal finance competitions since 2008. The makeup of the sample was as follows:
- High school sample: 10,955 students from 24 states
- Middle school sample: 1,195 students from 12 states
Analysis revealed the assessments were generally reliable and internally consistent, with Cronbach’s alpha values of .87 (high school) and .83 (middle school) indicating the assessments consistently measured student financial knowledge.
However, the data also highlighted areas for improvement:
- High school: The average score on the assessment was 19.38 out of 30 (65%). Nine questions were answered correctly by more than 75% of students, suggesting that several items may be relatively easy for this sample of students. While there is no universal cutoff for determining when an item is “too easy,” a useful benchmark is the TFL. According to the TFL examiner’s manual (Walstad & Rebeck, 2016), the assessment is a 45-item high school assessment aligned with the 2013 National Standards for Financial Literacy. In its national norming sample, only two of the 45 items were answered correctly by more than 75% of students, indicating a higher overall level of item difficulty. The average score on the TFL was 23.47 out of 45 (approximately 52%), providing an additional benchmark for interpreting the relative difficulty of the current assessment.
In addition, one question had two feasible correct answers, and another had an incorrect answer as the most commonly selected answer. Question distractors, the incorrect options, could be improved to be more plausible. Questions covered only 54% of the high school National Standard for Personal Financial Education benchmarks and weighting across standards topics could be improved.
- Middle school: The average score on the assessment was 13.10 out of 25 (52%). One question was answered correctly by more than 75% of students. One question had two feasibly correct answers. Two items may have been too difficult for the middle school level. Question distractors, the incorrect options, could be improved to be more plausible. Questions covered 85% of the middle school National Standards benchmarks, which is a good start; however, weighting across standards topics could be improved.
Item response theory (IRT) analysis, a statistical method used to evaluate how individual questions perform within an assessment, confirmed these trends. Rather than looking only at whether students answered a question correctly, IRT examines how responses relate to overall student performance on the test. In other words, it helps identify which questions effectively distinguish between students with different levels of financial knowledge and which questions may be too easy, too difficult, or not functioning well within the assessment. Using this approach, the analysis showed that many items were relatively easy and that some questions did not discriminate well across students.
The norming also revealed structural limitations. Assessments of this length—25 and 30 questions—cannot adequately address the breadth of standards, particularly complex topics like investing, credit and risk. Additional questions are necessary to achieve better coverage.
These insights directly inform the next phase of development.
What Comes Next: From Baseline to Classroom-Ready
With initial national data and clear diagnostic insight from the first phase of the project, the next stage focuses on strengthening the assessments for broader instructional and research use.
Middle & High School Focus: While these levels remain central, the elementary assessment will also be reviewed for clarity, developmental appropriateness, alignment with best practices in item-writing, and appropriate weighting of the National Standards for Personal Finance Education topic areas.
Stage 1: Assessment Refinement
The first stage focuses on strengthening the assessment based on evidence from the national norming study. Existing items will be reviewed and revised, particularly those that showed weak statistical performance or did not follow established item-writing best practices. Additional questions will be developed to expand coverage of the National Standards for Personal Financial Education across the six topic areas: earning income, spending, saving, investing, managing credit and managing risk.
Item and assessment development will also consider the relative weighting of each topic within the standards so that the distribution of questions on the assessment more closely reflects the topic weighting in the standards framework. In addition, the revised assessment will aim to maintain balance across cognitive levels, including both knowledge and comprehension questions and questions that require application of financial concepts. All items will be reviewed for clarity, grade-level appropriateness and adherence to item-writing best practices.
Stage 2: Expert and Practitioner Review
Revised assessments will undergo structured peer review by classroom teachers and nationally recognized experts in economics and financial education. Multiple perspectives ensure items are instructionally sound, conceptually accurate and reflective of real-world classrooms. Feedback from this review will guide final revisions before national deployment.
Stage 3: National Deployment and Data Collection
The finalized assessments will again be administered nationally via NCEE’s online platform. Data collection will occur in fall 2026 and spring 2027, as middle school and high school students participate in a nationwide personal finance competition. Collecting data across two administrations will support a larger and more diverse sample, strengthening the reliability of the results and supporting the development of national norms.
Stage 4: Analysis and Reporting
Re-norming and statistical analysis will provide updated evidence for the reliability and validity of the assessments and how individual items perform. The results will be documented in a comprehensive report and shared through academic conferences and peer-reviewed publications, contributing to the broader evidence base for financial education.
Why This Work Matters
The NEFE K-12 Assessment Project bridges the gap between standards, instruction and evaluation by providing a valid, reliable and nationally normed measure of student financial knowledge. With a common instrument aligned to the latest National Standards for Personal Financial Education:
- Teachers can assess and improve student learning.
- School districts can evaluate program effectiveness and guide instruction.
- Policymakers and researchers can make data-driven decisions to strengthen financial literacy initiatives.
Over time, the availability of a nationally normed assessment will make it possible to compare results across schools, programs and states using a common benchmark. This creates an "apples-to-apples" foundation for evaluation studies and allows researchers to track changes in financial knowledge over time. As evidence accumulates, educators and policymakers will be better positioned to identify which approaches to financial education are most effective and scale those practices more broadly, ultimately supporting more informed, financially capable students nationwide.
In Summary: This project is more than a test; it is a foundation for improving financial literacy in the United States. By providing a valid, reliable and nationally normed assessment of student financial knowledge, the NEFE K-12 Assessment Project will give educators, researchers and policymakers a common tool to measure learning, track progress and strengthen financial education across the country.
The finalized assessments are anticipated to be available by late fall 2027, with updates and early access opportunities shared as the national rollout begins.
References
Council for Economic Education [CEE]. (2013). National standards for financial literacy. https://www.councilforeconed.org/wp-content/uploads/2013/02/national-standards-for-financial-literacy.pdf
Garg, N., & Singh, S. (2018). Financial literacy among youth. International Journal of Social Economics, 45(1), 173–186.
Lusardi, A., & Messy, F.A. (2023). The importance of financial literacy and its impact on financial wellbeing. Journal of Financial Literacy and Wellbeing, 1(1), 1–11.
Mitchell, O. S., & Lusardi, A. (2023). Financial literacy and financial behavior at older ages. In The Routledge Handbook of the Economics of Ageing (pp. 553–565). Routledge.
Walstad, W. B., & Rebeck, K. (2016). Test of financial literacy: Examiner’s manual. Council for Economic Education PDF.
Walstad, W. B., & Rebeck, K. (2017). The test of financial literacy: Development and measurement characteristics. Journal of Economic Education, 48(2), 113-122.
