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entitled 'Highlights of a GAO Forum: The Federal Government's Role in 
Improving Financial Literacy' which was released on November 15, 2004.

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November 2004:


The Federal Government's Role In Improving Financial Literacy:


GAO Highlights:

Highlights of GAO-05-93SP.

Why GAO Convened this Forum:

Research has shown that many Americans lack the knowledge of basic 
personal economics they need to make informed financial judgments and 
manage their money effectively. Yet financial literacy is increasingly 
important in a world where consumers must choose from an array of 
complicated financial products and services and employees must take on 
more responsibility for their retirement savings. Title V of the Fair 
and Accurate Credit Transactions Act of 2003, known as the Financial 
Literacy and Education Improvement Act, created the Financial Literacy 
and Education Commission, comprised of 20 federal agencies, and charged 
it with coordinating federal efforts and developing a national strategy 
to promote financial literacy.

The act also mandated that GAO report on recommendations for improving 
financial literacy among consumers. To help in developing our work, on 
July 28, 2004, GAO hosted a forum on the role of the federal government 
in improving financial literacy. Forum participants included experts in 
financial literacy and education from federal and state agencies, the 
financial industry, nonprofit organizations, and academic institutions. 
Participants discussed the topics federal efforts should cover, 
populations that should be targeted, methods of delivering information, 
and the role of program evaluation.

What Participants Said:

Forum participants offered a number of suggestions regarding the 
federal government’s role in improving Americans’ financial literacy:

* The federal government should serve as a leader. The federal 
government should use its influence, authority, and “bully pulpit” to 
make financial literacy a national priority. However, given that a wide 
array of state, local, nonprofit and private organizations already 
provide financial education, the federal government’s role should 
largely be supportive, filling the gaps left by others and serving as 
an unbiased source of information.

* Increased public-private partnerships and interagency coordination 
are needed. Partnerships between federal agencies and other 
organizations are the best way to use scarce resources efficiently, 
facilitate the sharing of best practices, and help federal agencies 
reach targeted populations at the community level. In addition, federal 
financial literacy efforts should be integrated across agencies and 
consolidated to focus on those agencies with the most expertise and 
best track records in this area.

* Consumers need financial information on a broad range of topics. 
Among the most important topics for financial education are basic 
skills—such as budgeting, planning, and managing money—as well as 
information on saving for retirement, investing, and managing credit. 
Financial education should be delivered at “teachable moments” when the 
information is applicable to a person’s life. Participants’ views 
varied on the need to incorporate into financial education broader 
issues such as the implications to individuals of the budget deficit 
and long-term fiscal challenges facing the nation. 

* A variety of methods are needed to deliver financial education 
effectively. Participants said that the federal government should 
sponsor a major media campaign with a clear and simple message and find 
ways to ensure that existing financial education materials are more 
widely disseminated. Participants also emphasized the importance of 
personal interaction—such as one-on-one counseling—and of including 
financial education in school curriculums. To this end, they said the 
U.S. Department of Education needs to deepen its commitment to 
financial education.

* Financial literacy programs need to be evaluated. Program evaluation 
ideally should assess outcomes, such as the impact on participants’ 
personal savings. The federal government can facilitate others’ 
evaluation efforts by developing or supporting standardized evaluation 
tools, serving as a national clearinghouse for evaluation efforts, and 
disseminating best practices.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Thomas J. McCool at (202) 
512-8678 or

[End of section]



Financial Literacy: Highlights of Forum Discussion:

The Federal Government Should Serve as a Leader in Efforts to Improve 
Financial Literacy:

Increased Public-Private Partnerships and Interagency Coordination Are 

Consumers Require Financial Information on a Broad Range of Topics:

While All Consumers Need Financial Education, Certain Populations Need 
to Be Targeted:

A Variety of Methods Are Needed to Deliver Financial Education 

The Federal Government Should Conduct and Facilitate Program 


Appendix I: Forum Participants:

Appendix II: Related GAO Products:

Letter November 15, 2004:

The Honorable Richard C. Shelby: 
The Honorable Paul S. Sarbanes: 
Ranking Minority Member: 
Committee on Banking, Housing, and Urban Affairs: 
United States Senate:

The Honorable Michael G. Oxley: 
The Honorable Barney Frank: 
Ranking Minority Member: 
Committee on Financial Services: 
House of Representatives:

Subject: Highlights of a GAO Forum: The Federal Government's Role in 
Improving Financial Literacy:

Faced with growing evidence that large numbers of Americans lack 
knowledge about basic personal economics and financial planning, 
policymakers and others have begun to focus increasing attention on the 
state of financial literacy in the United States. Financial literacy 
can be defined as the ability to make informed judgments and to take 
effective actions regarding the current and future use and management 
of money. It includes the ability to understand financial choices, plan 
for the future, spend wisely, and manage the challenges that come with 
life events such as a job loss and saving for retirement or a child's 
education. A lack of financial literacy affects consumers' economic 
well-being and security in a variety of ways. Poor money management and 
financial decision making can lower a family's standard of living and 
interfere with crucial long-term goals, such as buying a home and 
financing retirement.

Financial literacy has broader public policy implications as well. The 
financial markets work best when consumers understand how financial 
services providers and products work and know how to choose among them. 
Further, informed consumers can help discipline markets by choosing 
appropriate financial investments, products, and services. In addition, 
our income tax system requires citizens to have an adequate 
understanding of the tax system and financial matters in general. 
Educated consumers are also essential to well-functioning retirement 
systems--consumers must understand, for example, that Social Security 
is not intended to be an individual's only source of retirement income. 
Finally, financial literacy is important in ensuring that Americans who 
receive public assistance successfully transition to greater self-

However, there is evidence that financial literacy in America needs to 
be improved. For example, a 2003 national survey by AARP of consumers 
aged 45 and older found that they often lacked knowledge of basic 
financial and investment terms. Only about half of respondents, for 
instance, reported knowing that diversification of investments reduces 
risk. Similarly, in a recent survey of 4,000 high school seniors 
conducted by the Jump$tart Coalition for Personal Financial Literacy, 
students correctly answered an average of only 52 percent of questions 
on basic personal finances. Yet a number of trends have emerged in 
recent years that underscore the importance of financial literacy in 
everyday life.

* Consumers are faced with a wider and increasingly complicated array 
of options for managing their personal finances and selecting 
investments and credit products.

* Technological advances have increased the capacity for targeted 
marketing to consumers, potentially increasing some consumers' 
vulnerability to predatory lenders and other unscrupulous providers of 
financial services.

* Consumers are increasingly responsible for their own retirement 
savings, with traditional defined-benefit retirement plans becoming 
increasingly rare.

* The personal saving rate has fallen dramatically, declining from 
nearly 7 percent of gross domestic product in the 1970s and 1980s to 
around 2 percent in recent years.

* Household debt as a percentage of income hovers at record high 
levels. In addition, bankruptcy rates have more than quadrupled in the 
past 20 years.

Finally, I believe that a clear understanding of the country's overall 
financial condition and future fiscal outlook is an indispensable part 
of true financial literacy. The financial futures of the American 
people are shaped not only by their own personal planning and 
individual investments but also by the fiscal choices made in 
Washington. The official U.S. gross debt now stands at more than $7 
trillion, and that does not include tens of trillions in unfunded 
Social Security and Medicare benefits, veterans' health care, and a 
range of other commitments and contingencies. Due to current 
demographic trends, rising health care costs, and other factors, we 
face the possibility of decades of mounting deficits, which left 
unchecked will threaten our economic and national security, while also 
adversely affecting the quality of life and opportunities available to 
future generations. Americans must be aware of these developments in 
planning for their own financial futures, since, for example, we can no 
longer assume that current federal entitlement programs will continue 
indefinitely in their present form.

Currently, about 20 different federal agencies operate about 30 
different programs or initiatives related to financial literacy. In 
addition, federal agencies often partner with the multitude of 
nonprofit, industry, state, and local entities that sponsor, fund, or 
operate their own financial literacy initiatives. These efforts cover a 
wide variety of topics, target a range of audiences, and include 
classroom curricula, print materials, Web sites, broadcast media, and 
individual counseling. In Title V of the Fair and Accurate Credit 
Transactions Act of 2003, known as the Financial Literacy and Education 
Improvement Act,[Footnote 1] Congress created the Financial Literacy 
and Education Commission (the Commission). The Commission is made up of 
20 federal agencies and is charged with developing a national strategy 
to promote financial literacy and education for all Americans. The 
Commission is also charged with coordinating financial education 
efforts among federal agencies and between the federal government and 
state and local governments, nonprofit organizations, and private 
enterprises. The Commission is to identify areas of overlap and 
duplication among federal financial literacy activities.

The act also mandated that GAO report on recommendations for improving 
financial literacy among consumers.[Footnote 2] On July 28, 2004, GAO 
hosted a forum to develop recommendations on the role of the federal 
government in improving financial literacy among consumers. The forum's 
participants included a select group of individuals with expertise in 
financial literacy and education. They included representatives of 
federal and state agencies, the financial industry, nonprofit 
organizations, and academic institutions. Participants were asked to 
consider the appropriate role of the federal government in financial 
literacy, particularly in relation to the role of state and local 
government agencies, nonprofit organizations, and financial services 
institutions. Participants discussed how the federal government could 
coordinate its efforts and partner with others more effectively. They 
also discussed the appropriate topics, target populations, and methods 
of delivery for federal financial education efforts and the role of 
program evaluation.

Following is a summary of the discussion among the forum participants. 
Appendix I provides a list of the participants. Appendix II lists GAO 
products on issues related to financial literacy. This report will be 
posted on our Web site at [Hyperlink,]. For 
additional information on our work related to financial literacy, 
please contact Thomas J. McCool, Managing Director, Financial Markets 
and Community Investment, on (202) 512-8678 or at 
[Hyperlink,]. Key contributors to this report include 
Allison Abrams, Jason Bromberg, Davi M. D'Agostino, Debra Johnson, 
Yvonne Jones, Mona Nichols, and Wendy Wierzbicki.

I wish to thank all of the participants of this forum for taking the 
time to share their knowledge and insights on financial education and 
on the role of the federal government in improving America's financial 
literacy. I look forward to working with them and others on this 
important issue in the future.

Signed by: 

David M. Walker: 
Comptroller General of the United States:

[End of section]

Financial Literacy: Highlights of Forum Discussion:

On July 28, 2004, GAO hosted a forum to develop recommendations on the 
role of the federal government in improving financial literacy among 
consumers. Participants discussed the federal government's overall role 
in financial literacy as well as issues of coordination and 
partnership, topics for financial education, target populations, 
methods of delivery, and the role of program evaluation. The following 
summarizes the collective discussion of the forum participants as well 
as subsequent comments received from participants based on a draft of 
this report.

The Federal Government Should Serve as a Leader in Efforts to Improve 
Financial Literacy:

Forum participants discussed the appropriate role for the federal 
government in improving financial literacy. They emphasized that the 
federal government should use its influence and authority to make 
financial literacy a national priority. In large part, its role should 
be to fill gaps left in the financial education efforts of the 
nonprofit and private sectors.

* The federal government should serve as a leader. Participants 
emphasized that for a federal financial literacy effort to be 
successful, the driving force must come from the highest levels, such 
as the President or a cabinet secretary. Efforts to make financial 
literacy a prominent national issue can not come solely from the 
grassroots level but require exercising the "bully pulpit" of federal 
leadership. Further, this leadership must have a strong enough passion 
about financial literacy to keep the nation focused on the issue. One 
participant said that an important figure or agency must take the issue 
of financial literacy as a "life purpose," noting that the success or 
failure of federal efforts could depend on the effectiveness of the 
Department of the Treasury's Office of Financial Education. Some 
participants noted that making financial literacy a sustained priority 
would be difficult, particularly given the federal government's current 
focus on terrorism and foreign issues. Participants were complimentary 
of Congress's creation of the Financial Literacy and Education 
Commission. However, one participant noted that given the large number 
of issues that Congress takes up, it can be a challenge to keep its 
attention focused on any one issue for an extended period of time.

* The federal government's role in financial education should be to 
fill the gaps left by others and serve as an unbiased source of 
information. Participants said that the federal government exists to 
serve its citizens by addressing a broad set of needs. With regard to 
improving financial literacy, the government should direct its efforts 
to the gaps in coverage--topics and populations that are not being 
addressed adequately by the financial education initiatives of the 
nonprofit and private sectors. Some participants noted that while the 
corporate world has some very good financial education initiatives, the 
private sector is ultimately driven by the bottom line and may not 
always be motivated to devote resources to broad-based, noncommercial 
consumer financial education. For this reason, it is important for the 
government to serve as an objective and unbiased source of information, 
particularly in terms of helping consumers make wise decisions about 
the selection of financial products and services. Many participants 
also said that consumer protection is a natural role for the 
government, especially in those cases where the private sector does not 
have a vested financial interest of its own at stake. One participant 
noted that the federal government should ensure that the mandated 
disclosures on many financial products, such as mutual fund 
prospectuses and mortgage forms, are useful and readable--that is, that 
they actually serve to help inform and protect consumers rather than 
simply protect companies against legal liability.

Increased Public-Private Partnerships and Interagency Coordination Are 

Federal agencies often partner with nonprofit and industry 
organizations that sponsor, fund, or operate financial literacy 
initiatives. Participants said that such partnerships are essential and 
suggested measures the federal government can take to facilitate them. 
Participants also recommended that the federal government improve 
coordination of the many financial literacy programs that exist among 
multiple federal agencies. They suggested that the federal effort be 
streamlined to avoid duplication and concentrate resources on those 
federal agencies best equipped to provide financial education.

* Public-private partnership is key. Participants said that there are 
many benefits to the development of partnerships involving the federal 
government, the states, industry groups, and nonprofit organizations in 
efforts to improve financial literacy. They noted that partnering:

* makes the most efficient use of scarce resources,

* facilitates the sharing of best practices among different 

* helps the federal government reach targeted populations via 
community-based organizations at the grassroots level, and:

* facilitates coordination of the increasing number of financial 
literacy programs that exist nationwide.

Participants felt that in general the federal government should seek to 
build on rather than duplicate the financial education efforts that 
have been undertaken at the community level. Finally, organizations 
should understand their comparative advantage. For example, one 
participant noted that while the Federal Reserve System is good at 
creating financial education materials, community groups are good at 
distributing them. With effective partnerships, each organization has a 
role and can focus on what it does best.

* The federal government can take measures to increase public-private 
partnerships. Two participants said that the federal government should 
provide stronger incentives to corporate America to support financial 
literacy programs, because the private sector will not necessarily 
provide such programs otherwise. The Community Reinvestment Act is one 
example of the federal government's efforts to encourage financial 
institutions to support financial literacy in communities they 
serve.[Footnote 3] One participant also cited the Department of 
Defense's Financial Readiness Campaign as an example of effective 
partnering, noting that the campaign brought together 26 agencies and 
organizations from the private and public sectors to help improve 
financial literacy among members of the military. Another participant 
cited Jump$tart as an effective model of partnership because it brought 
together a variety of players.[Footnote 4] One suggested that the 
federal government consider more collaboration with financial planners, 
who have direct contact with consumers and thus are well positioned to 
provide financial information. Because financial planners and other 
private parties often sell financial services and products, however, 
public agencies need to establish ground rules for such collaborations 
that address any potential conflicts of interest. One participant also 
said the federal government should facilitate more intergovernmental 
partnering. States and localities tend to look to the federal 
government for leadership, and federal agencies can do more to bring 
together state treasurers, state securities commissioners, governors, 
and others in support of efforts to improve financial literacy.

* Federal interagency and intra-agency efforts should be better 
coordinated. Participants generally believed that the federal 
government is doing good work providing financial education and 
promoting financial literacy, but some were concerned about the 
possibility of duplication among programs and the number of federal 
agencies involved in these efforts. It was felt that the federal 
financial literacy effort should be streamlined so that agencies with 
the most expertise and best track records in this area would be doing 
the work. One participant stated some federal programs were being 
managed by individuals with insufficient background in financial 
education issues. Another participant noted that the Department of the 
Treasury's Office of Financial Education, created in 2002, represented 
a good first step because it served as a central point of contact for 
federal financial literacy efforts. Participants also believed that the 
federal Financial Literacy and Education Commission would play a 
beneficial role in coordinating federal activities. The Commission, 
participants said, would raise the profile of the financial literacy 
issue among agency leadership, coordinate the work of multiple federal 
agencies, and create an overall federal strategy for improving 
financial literacy. One participant also noted that coordination of 
financial literacy efforts within federal agencies needed to be 
improved. As an example, the participant cited an incident involving 
staff who were working on a financial literacy initiative, unaware that 
a similar effort was under way elsewhere in the agency.

Consumers Require Financial Information on a Broad Range of Topics:

What topics should federal efforts to promote financial literacy 
emphasize? Forum participants said that basic money management skills 
are most essential and that individuals should be educated on meeting 
future financial obligations. Investment and retirement savings were 
also commonly cited as important topics. But participants views varied 
on the need to incorporate into financial education broader issues such 
as the budget deficit and long-term fiscal challenges facing the 

* Consumers need some basic knowledge if they are to make responsible 
and informed financial decisions. Participants agreed that federal 
financial literacy efforts should first and foremost aim to give 
consumers the basic financial knowledge and skills needed to make 
responsible financial decisions. Budgeting, saving, money management, 
and basic financial planning were frequently cited as the most 
essential topics for a financial education strategy. Participants also 
thought that consumers would benefit from more education on credit, 
including the cost of credit and how to use and manage credit 
responsibly. Two participants discussed the importance of encouraging 
consumers to do more research into products and services before making 
a purchase, noting that many consumers make imprudent decisions because 
they fail to comparison shop. Several participants also cited the 
importance of providing education on consumer protection issues, 
especially on avoiding fraud.

* The federal government should prepare consumers for future financial 
challenges. Participants said that the federal government should 
educate individuals on meeting future financial obligations such as 
paying for health care and saving for retirement. For example, 
participants said that consumers need more information on planning for 
health care expenses in an era of rising medical costs and increasing 
longevity. One participant commented that the best way to prepare 
consumers for a financially sound future is to help them find and 
retain employment. As part of this effort, youth and new immigrants 
should be educated on the nation's entrepreneurial business culture so 
that they are better prepared to enter the workforce.

* Investing and saving for retirement should be an important focus of 
financial education. In an era when employees are increasingly expected 
to take responsibility for funding their retirements, several 
participants stressed the importance of educating consumers on 
investing wisely and saving for retirement. Participants said that 
consumers need instruction on basic investment principles, such as the 
comparative risks of different types of investments and the need to 
diversify investments to reduce risk. In addition, consumers need more 
information on saving to accumulate enough retirement funds to last the 
duration of their lives. One participant encouraged the federal 
government to reach workers who are on the cusp of retirement with 
information on making the transition from saving for retirement to 
living off of investment income and Social Security. Several 
participants recommended that the federal government use the annual 
statements that the Social Security Administration sends to most 
Americans as a means of delivering some of this financial education.

* Views differed on the need to educate consumers about the budget 
deficit and long-term fiscal challenges facing the nation. Participants 
were asked whether the federal government should include, as part of 
its financial literacy effort, information on issues such as the 
federal budget deficit and the implications of the nation's long-term 
fiscal imbalance. Some participants felt the topic was too complex for 
the average consumer to understand or to factor into the financial 
decision-making process. They encouraged the federal government to keep 
the messages related to financial literacy simple in order to reach as 
many people as possible. Others noted that most consumers do not care 
about issues like the budget deficit because they do not believe that 
such issues have a direct impact on their lives. Moreover, consumers 
may suspect that any federal campaign related to the budget deficit is 
politically motivated, potentially undermining the campaign's 
credibility. But some participants supported including these 
macroeconomic issues in financial education efforts. One noted that 
whether or not consumers care about national fiscal matters, they 
should care. The federal government has a responsibility to inform 
consumers that entitlement benefits cannot realistically be sustained 
at current levels for the long term, and consumers should plan for 
their futures accordingly.

While All Consumers Need Financial Education, Certain Populations Need 
to Be Targeted:

Participants said that all consumers need to be financially literate, 
but their specific needs for financial education change over the course 
of their lives. In addition, many participants recommended that federal 
financial literacy efforts target certain populations.

* People's information needs vary over the course of their lives. 
Participants said that financial education is needed among all age 
groups and income levels but cautioned that consumers need different 
kinds of financial information at different phases of their lives. For 
instance, one participant commented that young people need to learn how 
to be prepared to enter the workforce, while working adults need 
information on managing credit and investing for retirement. Retirees, 
however, may need information on managing their retirement funds. 
Participants said that financial education should come at the right 
time--that is, at the "teachable moments" that occur when the 
information is applicable to events in a person's life.

* Many participants advocated targeting certain populations. While 
participants recommended that the federal government conduct a broad 
financial education effort, many participants said special efforts 
should be made to reach certain groups. Among these were:

* low-and moderate-income individuals and families, who typically have 
less experience with complicated financial transactions such as buying 
a home and may be more susceptible to deception or fraud;

* low-income women, who usually do not have an employer-provided 
retirement plan and often are entitled to relatively little Social 
Security income;

* immigrant populations, who may require information on operating 
within our nation's economic system, which may be unfamiliar to them; 

* young people, who need to learn how to make responsible financial 
decisions as adults.

A Variety of Methods Are Needed to Deliver Financial Education 

Participants were asked how federal financial literacy efforts could 
best reach consumers. They said the government should initiate a major 
media campaign with a clear message that underscores the importance of 
financial literacy. They also said that existing financial literacy 
materials should be more widely distributed, but not at the expense of 
interaction with individuals--a key element of successful financial 
education. Many participants also said that the U.S. Department of 
Education needs to make a greater commitment to financial literacy.

* The federal government should initiate a major media campaign on the 
importance of financial literacy. Participants said such a campaign 
should be directed at the general population and should include a 
simple, clear, direct message--for example, "Financial Security for All 
Americans"--that would motivate consumers. Television and the Internet 
were cited as two potentially effective ways to deliver such a message. 
Participants noted the success of certain federal public service 
announcements, such as Department of Agriculture's Smokey Bear 
campaign. One participant suggested a campaign encouraging consumers to 
do a periodic "financial check-up." Another suggested that members of 
the Financial Literacy and Education Commission promote a "message of 
the month." For example, the Department of Labor might sponsor a 
message on the importance of contributing to employer-sponsored 
retirement plans. These messages could be delivered through channels 
that regularly dispense financial literacy information, such as 
financial planning professionals, community organizations, church 
seminars, and radio talk shows. In contrast, however, one participant 
believed that broad-based efforts to raise awareness are overly costly 
and are far less effective than in-depth community-led education in 
changing behavior.

* The federal government should do more to distribute existing 
financial education materials. A participant noted that many federal, 
nonprofit, and financial industry organizations create high-quality 
financial education materials that reach relatively few people. These 
materials need to be marketed more effectively, using a variety of 
methods to ensure that they reach as wide an audience as possible. In 
general, participants agreed that federal agencies need to provide 
credible financial information that is easy to access. Two federal 
initiatives could meet these criteria: the central financial literacy 
Web site and telephone information hotline established by the Financial 
Literacy and Education Commission.[Footnote 5] One participant said, 
however, that more research is needed on where consumers obtain 
financial information, while another said that agencies should work 
with local newspapers and television stations to disseminate stories 
showing how financial education has helped people and potentially 
encouraging other consumers to tap into available resources.

* Delivery methods for financial information should vary according to 
the target audience, but interaction with individuals is key. Although 
participants favored using a variety of different delivery methods to 
reach different audiences, they added that personal interaction is 
often the most effective vehicle for conveying information in a way 
that actually impacts behavior. One participant noted that the 
Department of Defense incorporates person-to-person counseling in its 
financial literacy initiative. Another said that the government should 
encourage companies to make greater use of their benefits counselors to 
provide employees with financial counseling. The federal government 
could also develop a closer partnership with the Financial Planning 
Association, perhaps to encourage financial planning professionals to 
provide pro bono counseling services to individuals in need of 
financial expertise.[Footnote 6] Certified public accountants were also 
seen as a potentially effective means of reaching the general 

* Financial education should be part of school curriculums and 
additional commitment by the Department of Education is needed. 
Participants discussed the importance of including financial education 
in school curriculums at all levels. They noted that many states do not 
teach financial education, in part because of limited resources and 
because the standardized exams used to assess students and schools do 
not test for financial knowledge. Many participants believed the U.S. 
Department of Education should make financial education more of a 
priority. While states and localities control public schools, they 
noted, the department could use its influence to encourage them to 
incorporate financial education. A stronger commitment by the 
department could perhaps include funding or other incentives to schools 
and teachers to promote financial literacy.

The Federal Government Should Conduct and Facilitate Program 

While financial literacy programs have proliferated, research measuring 
the effectiveness of the programs has not kept pace. Participants were 
asked about the nature of the evaluation component that should be 
included in financial literacy programs and the role the federal 
government should take in facilitating effective evaluation efforts. 
Evaluations should generally attempt to measure changes in behavior 
rather than simply knowledge or skills, participants said. They also 
cited ways the federal government could assist in evaluation efforts, 
such as by serving as an information clearinghouse, setting some 
standardized benchmarks, and helping nonprofits build an evaluation 

* Program evaluation is essential. Participants agreed that a strategy 
was needed to learn what is and is not effective among federal 
financial literacy programs. However, relatively little program 
evaluation and cost-benefit analysis have been done to assess these 
programs and determine their effectiveness. Participants said that 
program evaluation ensured that scarce resources were being used 
efficiently and were actually improving financial literacy. Moreover, 
demonstrating that financial literacy programs have meaningful results 
is important for building political and public support for these 
programs. At the same time, two participants cautioned against 
allocating too many scarce resources to program evaluation and putting 
an undue burden on small programs with limited resources. In addition, 
anecdotal evidence rather than specific outcome measures may sometimes 
be an adequate indicator of success in the early stages of a new 

* Evaluations of financial literacy programs should try to assess 
behavioral change, if feasible. A number of different measures can be 
used to evaluate a financial literacy program, participants said. A 
program can be assessed by measuring such things as changes in the 
target audience's financial knowledge and skills or by changes in 
actual behavior. Ideally, any evaluation of a financial literacy 
program should measure the impact on behavior, such as changes in 
program participants' personal savings, credit scores, or homeownership 
rates. The Federal Deposit Insurance Corporation's Money Smart program 
was cited as an example of an effort that has resulted in behavioral 
change, as some 50,000 people have opened bank accounts after 
completing its curricula. One participant noted that the Department of 
Defense could serve as a particularly good laboratory for learning what 
is effective in financial education, as it already has standardized 
financial literacy programs and a "captive audience" that is easy to 
track over time. In general, someone noted, behavioral change can be 
measured on a micro level (the impact on individual program 
participants) or on a macro level (the impact on society or the economy 
as a whole). While participants said that evaluation efforts should 
attempt to measure behavioral change, they also acknowledged that this 
type of evaluation can be extremely difficult. It can require tracking 
actions and decisions by a program's participants over a long period of 
time--activities that may be unduly expensive, time consuming, or 
infeasible. In addition, because many variables can affect consumer' 
behavior and decision making, ascribing any long-term changes to a 
particular program is difficult. One participant emphasized that we 
must acknowledge programs with significant intangible benefits that 
nonetheless do add real value.

* Build on existing models of evaluation. Participants indicated that 
evaluation efforts should build upon, rather than duplicate, one 
another. Some standardized means for measuring program impact should be 
used to evaluate multiple programs. One participant noted that the 
National Endowment for Financial Education was currently funding the 
development of some standardized evaluation tools.[Footnote 7] Another 
noted that the Department of the Treasury had developed a list of 
elements that are common to successful financial education programs. 
One participant pointed out that the Department of Agriculture, working 
through the nationwide Cooperative Extension System to deliver the 
Financial Security in Later Life program, had an evaluation component 
built into it from the beginning and that other programs may want to 
use this program as a model. Another participant suggested borrowing 
from the Office of Management and Budget's work on cost-benefit 
analysis and using it to evaluate financial literacy programs. Two 
participants said that longitudinal studies (following consumers over 
an extended period of time) were needed to prove that programs are 
having an effect. Also needed are benchmarks--baseline standards for 
measuring or comparing the effect of a financial literacy program. A 
participant said that the federal government might want to establish 
basic benchmarks and that Jump$tart's periodic survey of high school 
students' financial literacy could be used as one of these benchmarks. 
In addition, the federal government could use the vast amount of 
economic data it collects to help benchmark and measure the 
effectiveness of financial literacy efforts on a macro level.

* A primary goal for federal evaluation efforts should be to facilitate 
the evaluation efforts of other players. Participants said the federal 
government could play a constructive role by developing an evaluation 
infrastructure that would help local organizations build their capacity 
and evaluate their programs appropriately. For example, the federal 
government could serve as a clearinghouse for evaluation results. At 
the same time, at least one participant had reservations about 
establishing federal standards for financial literacy programs, fearing 
that a top-down approach might inadvertently serve to hamper efforts at 
the community level. In fact, several participants said an assessment 
should be built into the evaluation of any federal financial literacy 
program to determine whether the federal government was indeed the best 
entity to be conducting the program. Participants noted that federal 
agencies should carefully consider whether they have sufficient 
expertise to deliver financial education effectively or whether another 
entity, such as a private or nonprofit organization, might be a more 
appropriate choice.

[End of section]


Appendix I: Forum Participants:


David M. Walker:
Comptroller General of the United States: 
U.S. Government Accountability Office:


William L. Anthes:
President and CEO: 
National Endowment for Financial Education:

Marcus Beauregard:
Financial Readiness Campaign Coordinator: 
Irving Burton Associates for the U.S. Department of Defense:

Don M. Blandin:
President and CEO: 
Investor Protection Trust:

Kelvin Boston:
Boston Media, Inc.

Stephen Brobeck:
Executive Director: 
Consumer Federation of America:

Sharon Burns:
Executive Director: 
Association for Financial Counseling and Planning Education:

Denise Voigt Crawford:
Commissioner State of Texas:

Dara Duguay:
Director, Office of Financial Education: 

Timothy J. Forde:
Vice President for Strategic Analysis: 
Investment Company Institute:

Donna Gambrell:
Deputy Director for Compliance and Consumer Protection: 
Federal Deposit Insurance Corporation:

Carl R. George:
Chief Executive Officer:
Clifton Gunderson LLP:

Sallyanne Harper:
Chief Administrative Officer and Chief Financial Officer: 
U.S. Government Accountability Office:

Jeanne Hogarth:
Program Manager, Consumer Education and Research:
Board of Governors of the Federal Reserve System:

Dan Iannicola, Jr.
Deputy Assistant Secretary for Financial Education: 
U.S. Department of the Treasury:

Elizabeth W. Jetton:
Financial Planning Association:

Laura Levine:
Executive Director:
Jump$tart Coalition for Personal Financial Literacy:

Angela C. Lyons:
Assistant Professor of Economics:
University of Illinois:

Dan Mahoney:
Senior Vice President, Public Affairs and Publishing:
American Council of Life Insurers:

Thomas J. McCool:
Managing Director, Financial Markets and Community Investment: 
U.S. Government Accountability Office:

Gary John Previts:
Professor of Accountancy:
Case Western Reserve University:

Jane Schuchardt:
National Program Leader, Cooperative State Research, Education, and 
Extension Service: 
U.S. Department of Agriculture:

Colleen Tressler:
Senior Project Manager:
Federal Trade Commission:

Susan Ferris Wyderko:
Director of Investor Education and Assistance:
U.S. Securities and Exchange Commission: 

[End of section]

Appendix II: Related GAO Products:

Consumer Protection: Federal and State Agencies Face Challenges in 
Combating Predatory Lending. 
[Hyperlink, getrpt?GAO-04-280]
Washington, D.C.: January 30, 2004.

Describes government, industry, and nonprofit efforts to provide 
consumer education on predatory home mortgage lending. Finds that 
consumer education efforts in general are useful, but that their 
ability to deter predatory lending may be limited by several factors, 
including the complexity of mortgage transactions and the difficulty 
of reaching the target audience.

Military Personnel: DOD Needs More Data to Address Financial and Health 
Care Issues Affecting Reservists. 
[Hyperlink, cgi-bin/getrpt?GAO-03-1004]
Washington, D.C.: September 10, 2003.

Describes the Department of Defense's personal financial management 
services and education provided to reservists and their families. Finds 
that the department is taking steps to improve personal financial 
management, but has not assessed the financial well-being of reserve 
families, assessed the impact of reservists' financial problems on 
mission readiness, or determined how to tailor its programs to 

Private Pensions: Participants Need Information on Risks They Face in 
Managing Pension Assets at and during Retirement. 
[Hyperlink, http:/ /]
Washington, D.C.: July 29, 2003.

Describes the information that pension plans make available to 
participants at retirement and identifies a range of actions to help 
retiring participants preserve their pension and retirement savings 
plan assets. Suggests that Congress consider requiring plan sponsors to 
provide a notice on risks that individuals face when managing their 
income and expenditures at and during retirement.

Electronic Transfers: Use by Federal Payment Recipients Has Increased 
but Obstacles to Greater Participation Remain. 
[Hyperlink, http://]
Washington, D.C.: September 12, 2002.

Discusses ways of increasing the use of electronic fund transfers for 
benefit payments made through the Social Security Administration and 
other programs. Briefly describes efforts by government, industry, and 
nonprofit organizations to publicize the use of electronic fund 
transfers, often as part of broader financial literacy programs.

Private Pensions: Participants Need Information on the Risks of 
Investing in Employer Securities and the Benefits of Diversification. 
Washington, D.C.: September 6, 2002.

Finds that employees can face significant risks when investing in 
employer securities through employer-sponsored retirement plans, and 
describes the regulatory provisions for disclosures to participants of 
such plans. Suggests that Congress consider requiring plan sponsors to 
provide an investment education notice containing basic information on 
risk management and the importance of diversification.

Retirement Saving: Opportunities to Improve DOL's SAVER Act Campaign. 
Washington, D.C.: June 26, 2001.

Reviews the Department of Labor's Retirement Savings Education 
Campaign, which seeks to educate individuals about the importance of 
saving for retirement. Finds that the department has not attempted to 
assess the extent to which its outreach efforts have increased the 
public's knowledge and understanding of retirement saving and makes 
recommendations related to such an evaluation.

Consumer Finance: College Students and Credit Cards. 
Washington, D.C.: June 20, 2001.

Describes credit card issuers' practices for marketing to college 
students and universities' policies and practices on credit card 
solicitation. Discusses the advantages and disadvantages that credit 
cards present to college students. Includes description of financial 
education efforts by some universities, particularly those responding 
to concerns about aggressive credit card solicitations.

Social Security: Capital Markets and Educational Issues Associated 
With Individual Accounts. 
[Hyperlink, getrpt?GAO/GGD-99-115]
Washington, D.C.: June 28, 1999. 

Discusses the public education efforts that would be needed should the 
Social Security program be modified to include individual investment 
accounts. Finds that a broad-based educational effort would be required 
to educate individuals on making appropriate investment decisions and 
to protect against misinformation.

[End of section]



[1] Pub. L. No. 108-159, Title V, 117 Stat. 2003 (codified at 20 U.S.C. 
§§ 9701 - 08).

[2] See 20 U.S.C. § 9706(b). This provision also mandated GAO to assess 
the extent of consumers' knowledge and awareness of credit reports, 
credit scores, and the dispute resolution process. This issue will be 
addressed in a forthcoming GAO report.

[3] The Community Reinvestment Act (CRA) holds banks and savings 
institutions accountable for meeting the credit needs of all 
communities they are chartered to serve, including low-and moderate-
income communities. Under the legislation, federal banking agencies 
periodically evaluate banks to ensure that they are attentive to 
community needs. A bank's efforts to improve financial literacy in the 
community may be taken into account in assessing CRA performance.

[4] The Jump$tart Coalition for Personal Financial Literacy is a 
Washington D.C.-based nonprofit organization whose mission is to 
improve the personal financial literacy of young adults. Jump$tart has 
more than 140 participants, including government, nonprofit, and 
corporate entities.

[5] The Financial Literacy and Education Improvement Act that created 
the Commission required it to establish (1) a Web site to serve as a 
clearinghouse and provide a coordinated point of entry for information 
about federal financial literacy and education programs, grants, and 
other information, and (2) a toll-free telephone hotline available to 
members of the public seeking information about issues pertaining to 
financial literacy and education. See 20 U.S.C. § 9703(b) and (c). The 
Web site ( and hotline (1-888-mymoney) were launched on 
October 12, 2004.

[6] The Financial Planning Association is a membership organization for 
the financial planning community. Its individual members include 
financial planners, some of whom hold the Certified Financial Planner® 
certification, as well as accountants, attorneys, insurance agents, 
money managers, investment consultants, and others involved in 
financial planning for consumers.

[7] The National Endowment for Financial Education is currently funding 
a project to develop a Web-based evaluation toolkit aimed at helping 
financial educators build their evaluation capacity. The project's 
purpose is to develop a database of evaluation questions and planned 
practice changes for a wide range of financial topics and target 
audiences. The project also includes an evaluation manual with 
instructions on how to use the database to construct evaluation 
instruments and guidelines on how to present and use the evaluation 
data to show program impact.

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