Kids often struggle with money matters. A new bill in Congress aims to change that.
U.S. Sen. Gary Peters (D-Bloomfield Twp.) alongside U.S. Cynthia Lummis (R-Wyo.) introduced a bill last week that would boost financial literacy in high school students by establishing a pilot program where students will be given an initial deposit and subsequent opportunities to have a set amount of their continued savings matched.
The bipartisan bill, the Program to Inspire Growth and Guarantee Youth Budgeting Advice and Necessary Knowledge (PIGGY BANK Act), would establish a program in which high school students would be given a $300 first payment and then have up to $25 of savings they place into the account matched each month. Students would also be mandated to take a financial literacy course to participate in the pilot program and would then be able to apply what they’ve learned.
One year after the students complete high school, they would be allowed to withdraw money from the account to pay for education, launch a business, purchase a house or pay medical bills.
The National Education Association, the National School Boards Association and the Michigan Education Association (MEA) have announced their support for the bill.
In a press release announcing the legislation, Peters said the bill will help students become better equipped to manage their personal finances as they continue to live through the COVID-19 pandemic. The press release specifically noted that the bill will target students in “low-income and underbanked areas.”
“It’s vital Americans across the country including in Michigan have access to resources that will help them manage their personal finances – especially as we continue to navigate the pandemic and rebuild our economy,” said Peters. “This bipartisan bill will provide students with an innovative experience and the tools they need to plan for the future, create stability for them and their loved ones, and lead to long-term financial security and success.”
Shreya John, 15, a sophomore at Mercy High School in Farmington Hills, said the bill would be “really helpful,” noting that she believes students are underprepared when it comes to knowing about how to deal with personal finances.
“[This bill is] something I would totally be interested in,” John said. “It seems like a really good idea that would have a lot of impact on students, especially because in school, we don’t learn a lot about finances or how to handle money.”
Michigan has a one-half credit course in high school that students are mandated to take and K-8 programs have some financial literacy standards. But according to the American Public Education Foundation, the state received a “C” grade for financial literacy on the Nation’s Report Card. Across the nation, an estimated 66% of states received a “C” or below. Only about 25 states have some type of financial literacy education incorporated into the curriculum. According to the Global Financial Literacy Excellence Center, 57% of adults in America are financially literate.
Betsey Stevenson is a professor of public policy and economics at the University of Michigan and former U.S. Department of Labor chief economist and member of the Council of Economic Advisers under President Barack Obama. She said a program like this could prove especially beneficial for students who would not otherwise receive a financial literacy education at home or at school. Stevenson added the program should be analyzed down the road to measure its impacts on youth credit payments and credit scores as well as if students were better equipped for financial planning in early adulthood.
“The idea here isn’t that the kids are going to end up with a ton of savings at the end, it’s that they’re going to learn some financial literacy,” Stevenson said. “I think there there’s definitely a lot to learn about how intervening early on by teaching financial literacy will play out in young people’s lives.”
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