Financial Economist Shares Insights on Financial Literacy Education
February 15, 2013:
By Neil Gonzales
February 6, 2013
Financial literacy education may not necessarily raise a student’s financial literacy right away, but there are different strategies that colleges and universities can still take to help students become financially competent.
Lewis Mandell, a financial economist and professor emeritus at State University of New York at Buffalo, gave those and many other insights during his session at the Financial Literacy and College Persistence Conference at Menlo College on Jan. 18.
Perhaps surprisingly, research has shown that high-school students who had taken a financial education class "really knew no more than those who had not taken such a course," Mandell said.
Maybe such a course was not taught well or taught largely by unqualified teachers, Mandell said.
Other studies found that personal finance courses similarly didn’t work in college, he said.
However, financial education can still have a latent effect.
"Somewhere in [the students’] brain is stored some information, which only comes into play when as adults they have the opportunity to actually act upon what they may have learned," Mandell said.
Mandell also noted that college retention is related to financial literacy.
"In other words, the more years of college that you have, the more financially literate you are," he said.
Another interesting finding is that the most financially literate students are not the ones who study finances or related subjects, he said.
"They tend to be students who study science and engineering," he said. The reason is those students possess strong quantitative abilities.
Based on his findings, Mandell recommended several strategies that higher education institutions can take to bolster their students’ financial knowledge.
"Colleges should be focusing their increasingly scarce resources on students with weaker quantitative skills," he said. "It’s really the arts and humanities majors, who really are most lacking in quantitative skills and inclinations."
"Colleges should also offer emergency loans with financial counseling to students who would otherwise drop out of school, he said." In addition, Mandell suggested that colleges team up with banks to offer restricted credit cards, which students can only use for approved purposes.
"In other words, it will not allow you to use it at a bar," he said, "but it will enable you to use it to buy books [or] to pay tuition."
Conference participants, many of them leaders from various educational organizations, felt Mandell’s session provided valuable information that they can bring back to their programs.
For David Ling, the session reinforced what is already being done at his organization, KIPP, a San Francisco-based national network of college preparatory public charter schools.
"We do financial literacy right now," said Ling, a director of the KIPP Through College program. But he acknowledged that his organization "needs to be more consistent in our delivery of financial literacy to both students and parents."
In that regard, Ling said he was pleased to hear from Mandell about "better ways to engage students in the financial literacy process and to get them to feel more comfortable about it."