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					2007 NCHELP DEBT MANAGEMENT CONFERENCE




  Do Financial Literacy Programs
 Work? And What’s Available That
              Does?

    John Parfrey, Amy Kerwin, and
          Jason Alderman
2007 NCHELP DEBT MANAGEMENT CONFERENCE


    Do Financial Literacy
     Programs Work?

           John Parfrey, Director
  NEFE High School Financial Planning Program®
   National Endowment for Financial Education®
             Greenwood Village, CO
2007 NCHELP DEBT MANAGEMENT CONFERENCE

         What is the End Point?

 Demonstrated Financial Skills
     Live within means
     Have a financial plan with life goals
     Have a savings plan
     Manage debt responsibly
     Manage risk
     Link financial and career goals
2007 NCHELP DEBT MANAGEMENT CONFERENCE

How We Try to Get People There

  •   Books
  •   Seminars / Workshops
  •   Software
  •   Web sites
  •   Games / Simulations
  •   Counseling
2007 NCHELP DEBT MANAGEMENT CONFERENCE

Does it all Work? We don’t know!

• Little in the way of solid long-term
  research
• Some short-term studies suggest
  successes (i.e. NEFE Evaluation)
• Statistics tell us we are in deeper debt
  than ever and saving less than ever.
 2007 NCHELP DEBT MANAGEMENT CONFERENCE

Does Terminology Tell Us Something

             Financial
             Literacy
             Financial
            Education
 2007 NCHELP DEBT MANAGEMENT CONFERENCE

Does Terminology Tell Us Something

 • Financial Literacy: The condition or
   quality of being knowledgeable in a
   particular subject or field
 • Financial Education: the act or process
   of imparting or acquiring general
   knowledge
 2007 NCHELP DEBT MANAGEMENT CONFERENCE




              Psychologicial
             Dots-Connecting
“I get it”       Cultural      “I’m doing it”
               Confidence
2007 NCHELP DEBT MANAGEMENT CONFERENCE

  From Knowledge to Behavior
       Bridging the Gap


    Eduaction
    Education
                        Financial
2007 NCHELP DEBT MANAGEMENT CONFERENCE
                        Education for
                        a
                        New
                        Generation
 2007 NCHELP DEBT MANAGEMENT CONFERENCE
MENTOR                        INSPIRE


             APPLY INQUIRE


Four Phases of Learning
       STUDENT
         PROCESS GATHER

COACH                          INFORM

           TEACHER
2007 NCHELP DEBT MANAGEMENT CONFERENCE

   Performance-Based Learning

• Endpoint are financial skills
  demonstrated by the student
• Four-phase learning process
• Guided by instructor
• Parental Involvement
• Financial Professionals
2007 NCHELP DEBT MANAGEMENT CONFERENCE

              What Works
• Competency-Based Life Cycle Financial
  Education
  – Grade School
  – Middle School
  – High School
  – College
  – Workforce
2007 NCHELP DEBT MANAGEMENT CONFERENCE




  Measuring the Impact of Financial
Education: Results of a 3-credit College
               Course

             Amy Kerwin
        Chief Guaranty Officer
2007 NCHELP DEBT MANAGEMENT CONFERENCE

         Where’s the Data?
• No background or expertise in
  evaluation
• No plan to evaluate at program outset
• No definition of how success or
  outcomes should be measured
2007 NCHELP DEBT MANAGEMENT CONFERENCE

            Project Overview

• UW-Madison developed curriculum
• Great Lakes provided funding
• Portable and flexible
  – Taught at multiple schools
  – Available for 1 credit or 3 credits
2007 NCHELP DEBT MANAGEMENT CONFERENCE

          Project Objectives

• Evaluation component
  – Assess attitudes, personal
    psychology, behavior, background
• Post- and post-post studies
  – End of spring 2006 semester
  – Same students, one year later
2007 NCHELP DEBT MANAGEMENT CONFERENCE

            Learning Objectives
•   Basic cash management
•   Semester-based budgeting
•   Credit, credit scores, and credit reports
•   Impact of interest rates
•   Employee benefits and career paths
•   Managing risk/choosing insurance
2007 NCHELP DEBT MANAGEMENT CONFERENCE

           Course Activities
• Basic cash management
  – Track spending for one month
  – Build a personal finance statement
• Credit
  – Obtain personal credit report
  – Identify areas that could be improved
2007 NCHELP DEBT MANAGEMENT CONFERENCE

        More Course Activities
• Employee benefits
  – Compare and contrast job offers
  – Assign a dollar value to benefits
• Managing risk
  – Obtain a quote for renter’s insurance
2007 NCHELP DEBT MANAGEMENT CONFERENCE




   Preliminary Evaluation Results

       Published October 2006
2007 NCHELP DEBT MANAGEMENT CONFERENCE

         Spring 2006 Pilot Group
•   2 sections; 2 instructors
•   Almost 300 students in both sections
•   179 completed pre- and post-tests
•   37% took class purely as an elective
•   Additional 24% would have taken class
    even if not required
 2007 NCHELP DEBT MANAGEMENT CONFERENCE

                 Demographics
Class Rank           %    •   95% 19-23 years old
Freshman           15.1   •   67% female
Sophomore          35.2   •   89% Caucasian
Junior             26.8   •   88% dependents
Senior             20.7
                          •   48% had fin. aid
Other/Graduate      2.2
Total             100.0
2007 NCHELP DEBT MANAGEMENT CONFERENCE

       Spending Diary Behavior
                              Pre- Post-
                              Test  Test
 Currently keeping a diary   12.6% 12.6%

 Planning to start           14.4% 31.0%

 Not sure/No plan to start   73.0% 56.3%
2007 NCHELP DEBT MANAGEMENT CONFERENCE

          Budgeting Behavior
                             Pre- Post-
                             Test Test
Currently using a budget    36.8% 42.0%

Planning to start           17.2% 25.9%

Not sure/No plan to start   46.0% 32.2%
2007 NCHELP DEBT MANAGEMENT CONFERENCE

     Renter’s Insurance Behavior
                           Pre- Post-
                           Test  Test
Currently has insurance   20.7% 29.3%

Planning to get           16.1% 25.9%

Not sure/No plan to get   63.2% 44.8%
2007 NCHELP DEBT MANAGEMENT CONFERENCE

               Next Steps
• Post-post evaluation
  – Results available fall 2007
  – Include students who did not take course
• 1-credit course evaluation
• Social marketing considerations
2007 NCHELP DEBT MANAGEMENT CONFERENCE




   Effective Financial Literacy for
          College Students
              Jason Alderman
        Director, Financial Education
                  Visa USA
    jalderma@visa.com 415-932-2110
2007 NCHELP DEBT MANAGEMENT CONFERENCE

 Visa’s Financial Literacy Commitment
• Practical Money Skills for Life
  – Over a decade old; $10+ million
    investment; K-12 and consumers
  – Innovative, free, interactive tools, quizzes,
    lessons
• What’s My Score?
  – College students; compelling, relevant
  – Relaunched week of March 26
2007 NCHELP DEBT MANAGEMENT CONFERENCE

     Early Intervention Education
• Wells Fargo study goals
  – Increase students’ financial responsibility
  – Measure the effect of web-based, scalable
    personal finance tutorial
• Targeted new to credit college students
  who applied for Wells card
• Visa’s PMSFL curriculum used; 15
  minute course
2007 NCHELP DEBT MANAGEMENT CONFERENCE

     Early Intervention Education
• Over 5,000 students participated
• Late fees down 42.6%
• Over-limit fees down 42%
• Revolving balances down 26.5%
  despite 32.7% more spending
• Less likely to be past due by 55.9%
• All from two lessons, two quizzes
2007 NCHELP DEBT MANAGEMENT CONFERENCE

     Conclusions and Next Steps
• Fifteen minutes led to a smarter, more
  responsible group of first-time college
  cardholders
• The right financial education generates
  the right behavior
• Available to all students, at no cost,
  through whatsmyscore.org the week of
  March 26
2007 NCHELP DEBT MANAGEMENT CONFERENCE



             THANK YOU!
Please be sure to complete your conference
   evaluation forms after the conference!


    John Parfrey, Amy Kerwin, and
          Jason Alderman