Financial literacy education has lasting impact

The effects of financial literacy education in high school continue to influence attitudes and behaviors toward money management for students well after graduation, according to newly released study.

The study of 65,000 college students was given exclusively to USA TODAY by EverFi and Higher One, organizations that help implement financial literacy programs.

First-year college students required to take a financial literacy course in high school are significantly more likely than their peers who didn't take class to be financially responsible, the study found. Just 17 states require a course.

Students who took a class did better on the survey's financial knowledge questions, were found to be more averse to debt, more likely to pay credit card bills on time, and less likely to go over their credit limit.

The study, which is in its second year, is the first comprehensive analysis of the impact of high school financial literacy education on not only knowledge but attitudes and behaviors.

"This at least shows some evidence for the first time that high school preparation does make a difference," says Mary Johnson, director of financial literacy for Higher One.

The majority of students surveyed were college freshmen. After just a semester at college, students were more likely to have at least one credit card and have paid the bill late, the study found.

EverFi and Higher One hope the results of the study, which will be presented at a panel discussion on Capitol Hill today, help convince policymakers and educators of the importance of building financial literacy programs into high school and college curriculum.

As student loan debt continues to rise and finances remain the number one reason students drop out of school, making sure students know how to budget and handle debt is seen as critical.

"We're hoping colleges and universities will make financial literacy part of their mission," Johnson says. "They have a captive audience."

Some already have, but engaging students from the beginning of their college career is difficult.

Several schools have implemented peer counseling programs, so students can learn skills from fellow students, usually upperclassmen. Others are building financial literacy sessions into freshman orientation, to help educate both students and parents about how to read financial aid offers and set up payment plans.

Samantha McKinley is a peer counselor at Sam Houston State University's Student Money Management Center in Huntsville, Texas. The 21-year-old banking and finance major imparts her budgeting skills and answers other personal finance questions in one-on-one sessions with other students.

Still, she says, "so many students I talk to say they don't need to budget because they don't have any money. It's hard right now to get our students interested initially."

Financial literacy education needs a holistic approach from a young age to influence behavior over time, says Dan Zapp, associate director of research at EverFi. He hopes the scope of the survey shows school administrators that financial literacy is worth investing resources into.

"We're certainly hoping that this opens (their) eyes to some of the longterm effects we can see to mandating high school financial literacy education for students. It supports lasting differences in their...level of conscientiousness in personal finance behaviors."