According to a recent report from the Center for Financial Literacy at Champlain College in Burlington, VT, only five states in the country deserve a grade of A or A+ for their financial education efforts.
The five “A” states are the only ones where high school students must take a personal finance course in order to graduate. Meanwhile, almost 25% of states received a failing grade, having almost no requirements for financial literacy in place in their high schools.
For students in those states, financial learning comes from their parents or personal experiences and research. However, some never learn at all, adding to the problems these students face when applying for loans to attend college.
Report author and director of the Center for Financial Literacy John Pelletier said he has entered many classrooms where the majority of the students believe they will be making $100,000 a year in their chosen profession.
“You can see how people, based on that flawed analysis, think that they can afford $70,000, $80,000 or $90,000 in debt,” he said. “What needs to be taught is more career exploration, more understanding about income.”
Alabama, Missouri, Tennessee and Virginia received an A on the report. These states require students to take at least one semester of personal finance education while in high school.
Meanwhile, Utah received an A+ because students there must complete at least one semester of financial education as well as complete a state-created assessment on what they were taught, writes Morgan Jacobsen for The Deseret News. In addition, those who teach the finance courses must complete special training on a number of topics including financial planning, credit and investing.
States such as California, Massachusetts, and Pennsylvania all received an F because they do not have many requirements, if any at all, with regards to personal finance courses.
The report first came out in 2013. Pelletier said that research and grading methodology has changed since that time, making it difficult to determine whether or not financial education has improved across the country over the last two years.
He added that it is obvious that some states have improved upon their finance education offerings in the last two years. While Alabama received an F in 2013, they moved up to an A this year after requiring students in the state to take a course preparing them for their future careers, which has a finance education component.
“It’s not an apples-to-apples comparison but I can certainly point to a variety of states where they have moved in the right direction,” Pelletier said.