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Highlights

The federal government has numerous programs designed to improve Americans' financial literacy, some of which are targeted at helping consumers determine whether and when to purchase a home, how to manage a mortgage, and how to deal with setbacks that could limit their ability to make timely mortgage payments. However, as we have reported, little is known about the effectiveness of specific strategies for improving financial literacy. In the Housing and Economic Recovery Act of 2008 (HERA), Congress created a pilot program to provide grants to providers of financial education and counseling services to prospective homebuyers. Pursuant to HERA, the goals of this education and counseling include increasing the knowledge and decision-making capabilities of prospective homebuyers, identifying successful methods resulting in positive behavioral change for financial empowerment, and educating prospective homebuyers about options for building savings. HERA also mandated that we submit a report to Congress evaluating this grant program, which was later named the Financial Education and Counseling (FEC) Pilot Program. Accordingly, the objectives of this report are to describe (1) the characteristics of the organizations providing services under the FEC program and how they were selected, and (2) what is known about the program's impact in improving the financial situation and behavior of homeowners and prospective homebuyers who participate in the program.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Treasury To help ensure that FEC program grantees' impact measures are useful and the results of these measures are accurately recorded, the Secretary of the Treasury should instruct the directors of the Treasury's Community Development Financial Institutions (CDFI) Fund and the department's Office of Financial Education and Financial Access (OFEFA) to provide additional guidance or technical assistance to the grantees on how to accurately and meaningfully calculate the results of the impact measures. This guidance or technical assistance could take the form of recommendations on how best to measure and calculate changes in savings, debt, and credit scores.
Closed - Implemented
In our July 2011 report about the Financial Education and Counseling (FEC) Pilot Program (GAO-11-737R), we stated that providing additional guidance and technical assistance to program grantees would help the Treasury Department avoid inaccurate calculations and ensure the most accurate assessment of the FEC program's impact. We recommended that Treasury provide guidance or technical assistance to grantees so they may accurately calculate the results of the program's impact. We stated that such guidance or technical assistance could take the form of recommendations on how best to measure and calculate changes in participants' savings, debt, and credit scores. Treasury has addressed this recommendation. In December 2011, the department issued "Additional Guidance for FY 2009 and FY 2010, Financial Education and Counseling Pilot Program Award Performance Goals, Assistance Agreement, Schedule 5-B," a five-page document that provided grantees with additional guidance in, among other areas, calculating the average percent change in prospective homebuyer savings, the average percent change in outstanding household debt, and the average point change in credit scores. By providing grantees with this additional guidance, Treasury can help ensure a more accurate assessment of the FEC's program impact in improving the financial situation and behavior of program participants.

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