DeVos Puts It in Writing: Financial Literacy in School a New Priority

By Dan Kadlec

October 17, 2017

DeVos: financial literacy is a priority

Education Secretary Betsy DeVos has been a polarizing figure, crusading for school choice and deriding opponents as “sycophants” and more. Now she is bringing her peculiar hellfire to the drive for school-based financial education.

In a document published in the Federal Register last week, DeVos formally declared that financial literacy is one of her department’s 11 priorities. To no one’s surprise, school choice—which some argue undermines the public-school system—is top of the list. But financial education clocks in at number four.

This appears to be the first time under any administration that the term “financial literacy” has found prominence on the Education Department’s guiding list of priorities. This is encouraging news, even if some educators and policymakers cling to the outdated view that personal finance is best learned at home.

The development comes at an auspicious moment. New research shows that young people continue down paths that are economically disadvantageous, avoiding life partners and resisting the push for modern workplace skills. (More on this below.) Financial literacy instruction can and should address these issues and help young people understand the economic impact of their lifestyle decisions.

Say what you will about DeVos, who has been a lightning rod from the start. Before her appointment, she had no experience in public education or state agencies and never went to public schools or sent her children to public schools. Like the president, she can be terse and dismissive.

Yet she may be moving forward in a way…

• • •

…that Trump so far has not. The president has been slow to commit to financial literacy. He has nodded to its importance and kept federal spending on the issue largely intact. But he has not set a clear direction or reauthorized the advisory panel on financial literacy/capability that both presidents George W. Bush and Barack Obama embraced.

Meanwhile, Richard Cordray, director of the Consumer Financial Protection Bureau, is expected to step down any day and run for governor of Ohio, though the longer he delays the less certain that seems to be. Cordray has been a strong advocate for financial literacy. His departure would leave a potential gap in the federal government’s financial literacy strategy.

So DeVos’ declaration of support is most welcome. The document she filed is wordy (imagine that): “Fostering Knowledge and Promoting the Development of Skills that Prepare Students to be Informed, Thoughtful, and Productive Individuals and Citizens.” Large umbrella, that. It includes civics, problem solving, critical thinking, and interpersonal and organizational skills.

But the section mentions “financial literacy” four times. This doesn’t just signal commitment; it sets direction for funding. The department gives away $700 million in competitive grants every year. Applicants that show allegiance to one or more of the priorities are most likely to get money.

In her document, DeVos cites some well-known findings from an OECD survey showing that U.S. teens are average, at best, when it comes to understanding financial concepts and that one in five is a low performer. She writes:

“For the United States to compete globally, schools must better prepare students to obtain…these types of skills…(which) can prepare students for later in life and prepare them for employment or entrepreneurship.”

Time will tell how committed she really is to financial literacy. The list of priorities is broad and not all of the priorities will command the same level of attention. But at the very least making the list raises awareness, and it expands potential resources to bring financial education into the school system.

The economics of Millennials finding love

A growing share of Americans live without a spouse or partner, new research shows. The trend is most visible

A partner typically helps boost financial literacy.

among young adults, who may be setting up for a lifetime of economic disappointment, according to Pew Research.

The share of adults living without a spouse or partner has climbed to 42% from 39% over the past decade. Those living together have increased in that span—but not fast enough to offset a big decline in those who marry. Some 61% of adults under age 35 live without a spouse or partner, up from 56% a decade ago.

Why do we care? Research shows that couples tend be happier and financially better off than those who are alone. Median household income, adjusted for household size, for partnered adults, is $86,000. That compares to $61,000 for “unpartnered” adults, who are twice as likely to be living in poverty.

How robots show us the workplace skills we will need, yet foolishly resist

Even as Education Secretary DeVos makes a priority of STEM classes—science, technology, engineering, and math—and financial literacy advocates highlight the importance of schools teaching modern workplace skills, Americans display remarkable resistance to workplace change.

Workers are understandably concerned about a future where automation claims more and more jobs. Some 85% of adults want to restrict further automation to work that is dangerous or unhealthy, Pew found. More than half want the government to prevent jobs from being automated and to provide guaranteed income for those displaced by a machine.

Yikes! Robot bloggers

This is like trying to hold back the tide. Technology will never stop moving the workplace towards machine labor. Some protections make sense, especially for older workers. But the way to beat this trend—and make an education pay—is by preparing for modern workplace needs.

While being considered for Labor Secretary in March, Andrew F. Puzder spoke of the virtues of  robots over humans:  “They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case.” Folks, this is where we are headed.

Coincidentally, PwC, a Right About Money sponsor, in March unveiled a $320 million pledge to widen its financial literacy commitment to include support for teachers and students seeking course work in modern workplace skills to help young people avoid becoming victims of automation and outsourcing.

By 2021, 69% of employers expect they will favor prospective hires with knowledge of data science and analytics, according to a report from PwC and the Business Higher Education Forum. Yet only 23% of college and university leaders say their graduates will have such knowledge. Some 79% of CEOs worry that a shortage of key skills could impair their companies’ growth.

Part of financial literacy is understanding the economics of careers—and using that information guide fields of study and gauge an appropriate level of student debt. Wishing automation weren’t so is not a plan.

More on Trump, DeVos and new work skills:

What Comes First: Money Know-How, or Money?

The Next Frontier of Financial Education

Trump’s Financial Capability Proclamation Signals Support, if not Direction

Will Trump’s Budget Ax Spare Funding for Financial Literacy Programs?

Gut Consumer Bureau? Financial Literacy May Get Caught in Crossfire

After the Coming Purge at CFPB Here is What Will Be Left Standing

 

Posted in Policy & Government on October, 2017