Will Trump’s Budget Ax Spare Funding for Financial Literacy Programs?
By Dan Kadlec
March 17, 2017
The U.S. government directly spends about $130 million a year on financial literacy programs. Most of that appears to have survived President Donald Trump’s first budget, which eliminates dozens of agencies and programs, and slashes outlays for most departments other than defense.
This level is a trifle in the nation’s $3.7 trillion spending plans. So it would be easy for Trump’s cost cutters to have missed it. But that isn’t what happened.
Much of the spending on financial education has been consolidated under the Consumer Financial Protection Bureau, which is independently funded through the Federal Reserve. A good chunk is also managed by the Treasury Department, which was largely spared in Trump’s budget proposal.
Before the CFPB, federal spending on financial literacy was spread among 20 or so departments with 50-plus separate programs. In the last seven years there has been a push to streamline the effort to avoid duplication.
In the U.S., by far the largest portion of financial education spending comes from nonprofits, which spend about $472 million on their programs, according to a CFPB report. Financial institutions spend about $31 million. The CFPB determined that about three-quarters of financial education spending comes from private sources while one-quarter comes from public sources.
That doesn’t mean there will be zero fallout for financial literacy programs. The education department budget would be slashed by $9 billion, or 13%. This will whack a variety of programs, including after-school programs and teacher training. These are two areas that tend to benefit financial literacy programs. Student aid programs also would be cut, making that topic even more important among high school students.
Among education department programs that would be eliminated, according to a published report:
Supporting Effective Instruction State Grants program ($2.4 billion): The White House says the program is “poorly targeted and spread thinly across thousands of districts with scant evidence of impact.”
21st Century Community Learning Centers program ($1.2 billion): The formula grants to states support before- and after-school and summer programs. “The programs lacks strong evidence of meeting its objectives, such as improving student achievement,” the budget says.
Federal Supplemental Educational Opportunity Grant program ($732 million): This financial aid program, known as SEOG, help give up to $4,000 a year to college students based on financial need. The Trump administration says it’s a “less well-targeted” program than Pell Grants.
Striving Readers Comprehensive Literacy Program ($190 million): The grants are targeted toward students with disabilities or limited English proficiency.
Teacher Quality Partnership ($43 million): A teacher training and recruitment grant program.
Impact Aid Support Payments for Federal Property ($67 million): Obama also proposed the elimination of this program, which reimburses schools for lost tax revenue from tax-exempt federal properties in their districts.
International Education programs ($7 million): This line item funds a variety of exchange programs, migrant schools and special education services abroad.