Is Mandated High School Financial Education Effective?

-A Literature Review-

Abstract

This article provides a comprehensive review of the existing literature concerning the impacts of mandated high school financial education on financial literacy and financial behaviors. Within the United States, there is a growing trend among high schools to implement mandatory financial education programs for their students prior to graduation. As of August 2023, legislative and regulatory measures enforcing such courses have been enacted in 30 states, marking a notable increase from 17 states in 2016. Among these states, 16 mandate a standalone personal finance course, while 4 have no specific requirements for financial education. A burgeoning body of scholarly work utilizes the naturally occurring variance in mandated high school financial education policies across states and time periods within the United States to examine the impact of exposure to financial education on various financial outcomes. Overall, the literature tends to highlight positive effects, albeit with some nuanced findings. While the mandated financial education at the high school level does not typically lead to increases in retirement savings, it is associated with improvements in credit scores, reductions in delinquency rates, diminished reliance on alternative financial services such as payday lending, greater utilization of low-interest methods for financing college education, enhanced student loan repayment rates among first-generation college students and those from low-income backgrounds, as well as an enhancement in subjective financial wellbeing. Moreover, there is no evidence suggesting that mandated financial education adversely affects high school graduation rates. However, due to methodological disparities across studies―including variations in the definition of mandates, temporal scope, age composition of the samples, and analytical techniques―generalizing findings from this literature poses considerable challenges.