[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





 FINANCIAL LITERACY EDUCATION: WHAT DO STUDENTS NEED TO KNOW TO PLAN 
                            FOR THE FUTURE?

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON EDUCATION REFORM

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                            October 28, 2003

                               __________

                           Serial No. 108-39

                               __________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California
    Chairman                         Dale E. Kildee, Michigan
Cass Ballenger, North Carolina       Major R. Owens, New York
Peter Hoekstra, Michigan             Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon,           Robert E. Andrews, New Jersey
    California                       Lynn C. Woolsey, California
Michael N. Castle, Delaware          Ruben Hinojosa, Texas
Sam Johnson, Texas                   Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania     John F. Tierney, Massachusetts
Charlie Norwood, Georgia             Ron Kind, Wisconsin
Fred Upton, Michigan                 Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan           David Wu, Oregon
Jim DeMint, South Carolina           Rush D. Holt, New Jersey
Johnny Isakson, Georgia              Susan A. Davis, California
Judy Biggert, Illinois               Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania    Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio              Ed Case, Hawaii
Ric Keller, Florida                  Raul M. Grijalva, Arizona
Tom Osborne, Nebraska                Denise L. Majette, Georgia
Joe Wilson, South Carolina           Chris Van Hollen, Maryland
Tom Cole, Oklahoma                   Tim Ryan, Ohio
Jon C. Porter, Nevada                Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia

                    Paula Nowakowski, Staff Director
                 John Lawrence, Minority Staff Director
                                 ------                                

                    SUBCOMMITTEE ON EDUCATION REFORM

                 MICHAEL N. CASTLE, Delaware, Chairman

Tom Osborne, Nebraska, Vice          Lynn C. Woolsey, California
    Chairman                         Susan A. Davis, California
James C. Greenwood, Pennsylvania     Danny K. Davis, Illinois
Fred Upton, Michigan                 Ed Case, Hawaii
Vernon J. Ehlers, Michigan           Raul M. Grijalva, Arizona
Jim DeMint, South Carolina           Ron Kind, Wisconsin
Judy Biggert, Illinois               Dennis J. Kucinich, Ohio
Todd Russell Platts, Pennsylvania    Chris Van Hollen, Maryland
Ric Keller, Florida                  Denise L. Majette, Georgia
Joe Wilson, South Carolina           George Miller, California, ex 
Marilyn N. Musgrave, Colorado            officio
John A. Boehner, Ohio, ex officio


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on October 28, 2003.................................     1

Statement of Members:
    Castle, Hon. Michael N., a Representative in Congress from 
      the State of Delaware......................................     2
        Prepared statement of....................................     2
    Woolsey, Hon Lynn C., a Representative in Congress from the 
      State of California........................................     3

Statement of Witnesses:
    Duvall, Dr. Robert, President and CEO, National Council on 
      Economic Education.........................................    22
        Prepared statement of....................................    24
        Response to a question submitted for the record..........    48
    Iannicola, Hon. Dan, Jr., Deputy Assistant Secretary for 
      Financial Education, Office of Financial Institutions, U.S. 
      Department of the Treasury.................................     4
        Prepared statement of....................................     6
    Knell, Gary, President and CEO, Sesame Workshop..............    17
        Prepared statement of....................................    19
    Lyons, Dr. Angela, Assistant Professor and Extension 
      Specialist, Department of Agriculture and Consumer 
      Economics, University of Illinois - Urbana/Champaign.......    27
        Prepared statement of....................................    30
        Additional statement submitted for the record............    49
    Strong, Robert, Executive Director, Securities Industry 
      Foundation for Economic Education..........................    32
        Prepared statement of....................................    34

Additional materials supplied:
    Bryant, John, Founder, Chairman, and Chief Executive Officer, 
      Operation HOPE, Inc., Statement submitted for the record...    50
    Caslin, Michael J., III, Chief Executive Officer, National 
      Foundation for Teaching Entrepreneurship...................    53
    Visa U.S.A., Statement submitted for the record..............    64
    Woods, David F., Chief Financial Officer, National 
      Association of Insurance and Financial Advisors and 
      President, Life and Health Insurance Foundation for 
      Education..................................................    65

 
FINANCIAL LITERACY EDUCATION: WHAT DO STUDENTS NEED TO KNOW TO PLAN FOR 
                              THE FUTURE?

                              ----------                              


                       Tuesday, October 28, 2003

                     U.S. House of Representatives

                    Subcommittee on Education Reform

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to call, at 2:30p.m., in 
room 2175, Rayburn House Office Building, Hon. Mike Castle 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Castle, Osborne, Biggert, Wilson, 
Woolsey, and Majette.
    Also Present: Representative Hinojosa.
    Staff Present: Kevin Smith, Senior Communications 
Counselor, Krisann Pearce, Deputy Director of Education and 
Human Resources Policy; Amanda Farris, Professional Staff 
Member; Kevin Frank, Professional Staff Member; Liz Wheel, 
Legislative Assistant; Deborah Samantar, Committee Clerk/Intern 
Coordinator; Ricardo Martinez, Minority Legislative Associate/
Education; Joe Novotny, Minority Legislative Associate/
Education; and Lynda Theil, Minority Legislative Associate/
Education.
    Chairman Castle. The quorum being present, the Subcommittee 
on Education Reform of the Committee on Education and the 
Workforce will come to order. We are holding this hearing today 
to hear testimony on financial literacy education, what the 
students need to know to plan for the future. Under Committee 
rule 12(b), opening statements are limited to the Chairman and 
Ranking Minority Member of the Committee.
    Therefore, if other members have statements, they will be 
included in the hearing record. With that, I would ask 
unanimous consent for the hearing record to remain open 14 days 
to allow members' statements and other extraneous material 
referenced during the hearing to be submitted in the official 
hearing record.
    Without objection, so ordered.
    Good afternoon.
    I would like to welcome our guests, witnesses, and members 
to today's education reform Subcommittee hearing entitled, 
``Financial Literacy Education: What Do Students Need to Know 
to Plan for the Future?''.
    Thank you very much for being here.

STATEMENT OF HON. MICHAEL N. CASTLE, CHAIRMAN, SUBCOMMITTEE ON 
                        EDUCATION REFORM

    Now, more than ever, we live in a world that has become 
increasingly complicated when it comes to personal financial 
matters. A generation ago, a basic knowledge of balancing a 
checkbook and maintaining a savings account was adequate.
    However, in today's complex world, many Americans are faced 
with difficult decisions, such as determining what type of loan 
they need, whether to invest in stocks or bonds, how to best 
manage credit, and how soon to start planning for family 
education needs and their retirement.
    There are, approximately, 40,000 different credit products 
available, an intimidating thought for even the most educated 
consumer. Unfortunately, large numbers of consumers never learn 
the basics of maintaining their personal finances and may 
struggle with choices leading to financial freedom. Instead, 
many live paycheck to paycheck and acquire financial debt. 
According to the Federal Reserve, outstanding non-secured 
consumer debt increased over $845 billion over an 11-year span. 
In 2002, more than a million families filed for bankruptcy.
    Today, our Nation's youth are bombarded with a multitude of 
financial options at an increasingly young age, yet many are 
ill-equipped to make informed decisions about financial 
matters. According to a 2001 Teen-age Research Unlimited 
survey, teenagers spend, rather than save, 98 percent of their 
money, a total of $172 billion in 2002. One out of every three 
teenagers has credit cards and even more have an ATM card. 
Various public and private organizations that develop programs 
to promote public knowledge of basic finances.
    Many are working with elementary and secondary students to 
provide them with strong money management techniques and how to 
integrate financial education principles into curricula; for 
example, my home State of Delaware, MBNA opened the Financial 
Advisory Service over 10 years ago, which offers professional 
advice to MBNA employees and their immediate family members. 
Under the leadership of Tom Dimmel, it has extended the service 
into the community and into the local school systems through 
the facilitation of basic credit and money management 
curriculum to all grade levels in elementary, high schools and 
colleges throughout the country. It has educated nearly 1,500 
students in Delaware and 14,000 students throughout the country 
since 1995. Their extensively educated advisors teach not only 
credit information, but especially in the case of students, 
spend a great deal of time on financial basics like balancing a 
checkbook and budgeting.
    I am looking forward to hearing the witness' testimony.
    [The prepared statement of Mr. Castle follows:]

  Statement of Chairman Michael N. Castle, Subcommittee on Education 
            Reform, Committee on Education and the Workforce

    Good Afternoon. I would like to welcome our guests, witnesses, and 
members to this afternoon's Education Reform Subcommittee hearing 
entitled, ``Financial Literacy Education: What Do Students Need to Know 
to Plan For the Future?'' Thank you very much for being here.
    Now more than ever, we live in a world that has become increasingly 
complicated when it comes to financial matters. A generation ago, a 
basic knowledge of balancing a checkbook and maintaining a savings 
account was adequate. However, in today's complex world many Americans 
are faced with difficult decisions such as determining what type of 
loan they need; whether to invest in stocks or bonds; how to best 
manage credit; and how soon to start planning for their retirement.
    Unfortunately, large numbers of consumers never learn the basics of 
maintaining their personal finances and do not have the tools necessary 
to make choices leading to financial freedom. Instead, many live 
paycheck to paycheck and acquire substantial debt. According to the 
Federal Reserve, outstanding, non-secured consumer debt increased over 
$845 billion over an eleven year span. In 2002, more than a million 
families filed for bankruptcy.
    Today, our nation's youth are bombarded with a multitude of 
financial options at an increasingly young age. Yet many are ill-
equipped to make informed decisions about financial matters. According 
to a 2001 Teenage Research Unlimited survey, teenagers spend rather 
than save 98 percent of their money, a total of $172 billion in 2002. 
One out of every three teenagers has credit cards and even more have an 
ATM card.
    Various public and private organizations have developed programs to 
promote public knowledge of basic finances. Many of these organizations 
are working with elementary and secondary students to provide them with 
a strong education in money management and provide teacher training on 
how to integrate basic financial education principles into curricula.
    I am looking forward to hearing the witness' testimony pertaining 
to the efforts these organizations are making to educate our young 
people about the basics of personal finance.
    With that, I yield to my colleague from California, Mrs. Woolsey 
for whatever opening statement she may have.
                                 ______
                                 
    Chairman Castle. With that, I yield to my colleague from 
California, Ms. Woolsey, for whatever opening statement she may 
have.

STATEMENT OF HON. LYNN C. WOOLSEY, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Ms. Woolsey. Thank you, Mr. Chairman.
    I, too, am pleased we are having this hearing on financial 
literacy because it affects all Americans each and every day. 
From a seemingly small decision like how much to spend for 
lunch, to a major life decision like obtaining a mortgage, 
financial literacy is absolutely crucial.
    Yet, it's clear that too many Americans are not financially 
literate. During the first 2 months of 2003, mortgage 
foreclosure set a record high. In the first quarter of 2003, 
household debt service payments were close to 14 percent of the 
disposable personal income. Personal bankruptcy filings 
continued to set record levels. While some of this may be due 
to current economic conditions, much of the financial trouble 
Americans face today could be lessened or even avoided if we 
talked financial literacy to school age children.
    Children are still in school when they form the financial 
habits and attitudes that will last throughout their lives, and 
financial literacy teaches them about basic but important 
transactions, such as savings, borrowing, and investing. 
Unfortunately, a recent report by the financial literacy 
organization, Jump Start, showed that high school seniors 
scored lower on a financial literacy survey in 2002 than when 
the first survey was conducted in 1997. It is not surprising 
then to find out that bankruptcy of 18- to 25-year-olds nearly 
doubled in less than 10 years.
    The real world implications of not teaching our children 
financial literacy are clear, and it is also clear that our 
children are the ones who suffer most when they do not have a 
good understanding of personal finances. I am glad to see that 
our panel includes witnesses from their organizations that 
should be and are on the front lines of improving financial 
literacy. I look forward, Mr. Chairman, to hearing their 
testimony.
    Thank you for putting this together.
    Chairman Castle. Thank you, Ms. Woolsey.
    We have two panels today. The first panel consists 
obviously of one person, and the second panel consists of more. 
We will have the panelists speak and then the members will have 
5 minutes in which to ask questions and elicit answers from the 
panelists. The first panel consists of the Honorable Dan 
Iannicola, who is a deputy assistant secretary for financial 
education for the Office of Financial Institutions at the 
United States Department of Treasury.
    Prior to his current position, he served as special counsel 
to the Assistant Secretary and director of communications in 
the Department of Education'S Office of Post-Secondary 
Education.
    Additionally, Mr. Iannicola has worked as a counsel for the 
May Department Stores Company as vice president and regulatory 
liaison for the May National Banks. Before he begins his 
testimony, I would like to remind our members that we do have a 
5-minute limitation and Mr. Iannicola, with that, you may 
proceed, sir.

    STATEMENT OF HON. DAN IANNICOLA, JR., DEPUTY ASSISTANT 
    SECRETARY FOR FINANCIAL EDUCATION, OFFICE OF FINANCIAL 
                          INSTITUTIONS

    Mr. Iannicola. Thank you.
    Good afternoon, Chairman, Counsel, Ranking Member Woolsey, 
and distinguished members of this Subcommittee.
    Thank you for the opportunity to appear before you today to 
talk about American students' critical need for financial 
education and what the Department of Treasury is doing to meet 
that need.
    Mr. Chairman, I commend you for focusing attention on this 
important topic. Let me begin by drawing together a few 
seemingly random facts that paint a troubling picture. 40 
percent of Americans say they live beyond their means. 60 
percent of American households have failed to pay their credit 
card bills each month, and in 2001, more people filed for 
bankruptcy than graduated college, but what has this got to do 
with today's hearing?
    Plenty. Rising bankruptcy, low savings rates, and frequent 
misuse of credit are adult problems that can be traced upstream 
to where some of our schools are failing to prepare their 
children for their financial futures and children need our help 
in this area more than ever.
    Back when we were kids, a child's financial portfolio 
consisted of an allowance, earnings from mowing lawns, baby-
sitting, and a piggy bank. But today, young people must be 
familiar with things like credits cards, ATM and variable 
APR's.
    For them, learning basic financial skills is no longer 
child's play. Consider the following: 28 percent of 12-year-
olds did not know that credit cards are a form of borrowing. 40 
percent of 12-year-olds did not know that banks charge interest 
on loans, and more than 20 percent of kids, aged 12 to 19, have 
their own credit cards or access to their parents' credit 
cards.
    What is the solution?
    One, we need to inform schools of what needs to be done. 
Two, we need to help equip them to do it, and three, recognize 
those schools that have succeeded. I will take them in order. 
First we need to spread the word that the best way to introduce 
financial literacy into schools is to encourage them to 
integrate financial topics into existing curriculum. This 
strategy is much more practical than asking schools to create 
stand-alone classes in financial education.
    At the local level, resources are so precious that every 
decision is ultimately a tradeoff. As the president of a local 
school board, I know what that is like. If I resurface the 
parking lot, I cannot fix the leaky roof. If I purchase the new 
computers, I cannot give the faculty the raise I want to give; 
and if I have to have a stand-alone class for financial 
education, I have to do away with something the kids might need 
to be taught.
    It is out of this appreciation for those local challenges 
that we have the manageable alternative for curriculum 
education and it is manageable; for instance, a primary 
schoolteacher who is discussing addition and subtraction can 
easily teach students how to make change for a dollar. A middle 
schoolteacher who is telling his class how to figure 
percentages can do it through a lesson on the compounding of 
interest, and a teacher showing students how to perform long 
division can teach them how to figure a monthly payment.
    With input from the Department of Education and a number of 
private groups, Treasury last year published this white paper 
on that very subject. The paper identified ways financial 
literacy could be integrated into current curricula. The 
Treasury's white paper has already been cited by Colorado, 
Montana and Texas in their State's financial literacy 
proclamation.
    The second part of this solution is equipping students with 
the materials they need. Numerous private and governmental 
organizations--excuse me, equipping schools and students with 
the materials they need. Numerous private and governmental 
organizations have created and distributed great teaching 
materials for financial education, many of which are available 
free of charge. Treasury has added to these resources with its 
own contributions; for instance, the Bureau of Public Debts 
Program called ``Money Math, Lessons for Life,'' teaches middle 
school students about savings and budgeting and has been used 
by 16,000 students nationwide.
    The IRS has a program called ``Understanding Taxes,'' which 
teaches high school and community college students about the 
American college system. And the U.S. Mint has an interactive 
Web site which educates young students about coins and their 
history.
    The final step is to recognize the ones that get it right. 
This summer, the Department of Treasury honored with a 
certificate of recognition a program that taught credit card 
management at historically black colleges and universities, and 
earlier this month, I got the chance to recognize an 
Alexandria, Virginia high school for a financial literacy 
program there. So the three steps of informing, equipping, and 
recognizing schools is how we get this important job done.
    The bottom line on financial education is that it works to 
help children live better lives as adults. Until more schools 
become aware of this reality and act upon it, our work is not 
finished.
    [The prepared statement of Mr. Iannicola follows:]

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

    Good afternoon Chairman Castle, Ranking Member Woolsey and 
distinguished members of the subcommittee. Thank you for this 
opportunity to appear before you today to talk about the critical need 
to provide financial education to school aged children as well as what 
the Department of the Treasury is doing to address this important 
issue. Mr. Chairman, I commend you for focusing a national spotlight on 
this critical topic, which is so closely linked to our economic 
futures--as individuals and as a nation.

                              The Problem

    Let me begin by drawing together a few seemingly random facts to 
paint a troubling picture. Forty percent of Americans say they live 
beyond their means. 1 In 2002 the average American household 
had $8,900 in credit card debt, up from $3,200 just 10 years earlier. 
2 Sixty percent of American households fail to pay their 
credit card bills in full each month and carry average balances of more 
than $4,000. 3 The average household pays over five hundred 
dollars a year in interest charges on credit cards alone. Finally, in 
2001, more people filed for bankruptcy than graduated from college. 
4
    What has all of this got to do with the subject of today's hearing? 
These grown up financial problems have everything to do with how we 
prepare children for economic adulthood and why we need to be talking 
about financial literacy in schools here today. The downstream, adult 
problems of rising bankruptcy rates, low saving rates and frequent 
misuse of credit, can all be traced upstream to how our schools fail to 
adequately prepare children for their financial futures.
    While financial education is very important for adults, it can have 
the greatest overall life impact on young people. Young people have not 
yet established bad spending patterns. Therefore, education can mold 
their habits more effectively than it can for adults. Finally, young 
people simply have the most years ahead of them to earn, save and 
invest.
    Consequently, young people are a great target audience for 
financial education. However, that has always been the case. Why is the 
issue of youth financial education more critical, more pressing today 
than ever before?
    When we were kids, a child's financial portfolio consisted of an 
allowance, earnings from mowing lawns and babysitting and a piggy bank. 
Times, however, have changed. Today's young people must be familiar 
with things like credit cards, ATMs and variable APRs. For America's 
youth, who spent over $172 billion in a recent year 5, 
learning basic financial skills is no longer child's play. Consider the 
following: 28 percent of 12-year-olds did not know that credit cards 
are a form of borrowing, 40 percent of 12-year-olds did not know that 
banks charge interest on loans, 28 percent of students with a credit 
card roll over debt each month and more than 20 percent of kids ages 12 
to 19 have their own credit cards or access to parents' credit cards. 
6

                               Solutions

Treasury White Paper
    Understanding the times in which our kids live and diagnosing the 
overall financial literacy problem are relatively straightforward 
exercises. Finding the best remedy however is more complex. That is why 
the Department of the Treasury last year partnered with the Department 
of Education to co-host a panel discussion with representatives from 
groups such as the Jumpstart Coalition, the Black Alliance for 
Educational Options, the National Council on Economic Education and the 
National Association of Elementary School Principals. Following the 
discussion, our office published a white paper based on the group's 
findings called ``Integrating Financial Education Into School 
Curricula.'' In the paper we explored the different means by which 
financial education can be incorporated into other subjects.
    One might ask why we advocated integrating financial education into 
established curricula instead of calling for a separate class devoted 
to financial literacy. Certainly a dedicated class would seem like the 
obvious solution. Obvious solutions, however, are not always the best 
ones. Speaking as a former school board president, I can tell you that 
a federal demand for a new stand alone class is a demand that few 
school districts could easily meet. Schools would have trouble finding 
the funds, the faculty and the time to teach such a class. Moreover, 
each school would need to calculate the opportunity cost of scaling 
back instruction on another discipline that is also likely important to 
student development.
    While some of these concerns from the state and local level may 
seem mundane in the face of a national financial literacy problem, we 
should nonetheless listen closely to these local issues. My experience 
tells me that local educators are frequently aware of critical details 
that distant policy makers sometimes overlook. At the school district 
level is where teachers know their students by name and by need. It is 
where parents become actively engaged in their children's intellectual 
development. The local level is also where students learn, where lives 
are changed and where we will ultimately succeed in solving this 
problem.
    Mindful of these challenges at the local level, we explored 
integrating financial education into established curricula like math 
and reading as a more achievable goal. This approach allows schools to 
impart valuable financial skills to students while they continue to 
learn other core subjects. When schools seamlessly integrate financial 
education into existing curriculum, students can better see how 
financial issues are integrated into their lives. Introducing a school 
to financial education in this way can lead to a plan that is less 
costly to the school, less disruptive to the curriculum and, therefore, 
more likely to actually happen.
    The question then becomes ``how do advocates of financial education 
get an integrated financial literacy curriculum into schools?'' The 
white paper I mentioned earlier identified five access points for 
integrating financial education into school curricula.
    The first access point is the state educational standards. In a 
standards-based education system, standards have a significant 
influence on what is taught in the classroom. Informing the state 
boards of education, which generally develop and adopt standards, about 
the importance of including financial education in the standards can 
help increase the chances that financial concepts are included in math, 
reading and social studies curricula.
    The second access point is through testing. A standards-based 
education system uses testing to assess whether students are meeting 
academic standards. Educators generally focus on subject matter that 
will be tested. Therefore, including financial concepts in tests allows 
teachers to prioritize financial education topics in the classroom.
    The third access point is through textbooks. Publishers of 
textbooks and other instructional materials can be informed about the 
value of integrating financial concepts into other subjects, such as 
math, reading and social studies. Before purchasing instructional 
materials, states can impose requirements that publishers demonstrate 
how their materials incorporate financial concepts into other subjects.
    The fourth access point involves the use of financial education 
materials. There are ample financial education resources available on 
the Internet and directly from public and private groups that produce 
or compile such materials. Many of these ``off-the-shelf'' materials 
are excellent, free of charge and can be incorporated into math, 
reading and social studies curricula to provide a financial education 
component to these subjects.
    Training educators is the fifth access point. Educator training and 
professional development requirements provide an opportunity to stress 
the importance of financial education to those individuals who are 
directly responsible for conveying such information to students. This 
strategy takes note of the reality that teachers themselves must first 
be comfortable with financial education topics before they can 
effectively instruct their student on such matters.
    The white paper, which is available on the Treasury website 
(www.treas.gov/financialeducation), was released a year ago this month. 
We hope that it will continue to serve as a source of guidance and that 
it will influence policymakers, educators and others to begin the long 
process of incorporating financial education into core curricula. We 
are gratified that only a year after its publication, the Treasury's 
white paper has already been cited by Colorado, Montana and Texas in 
their states' financial literacy proclamations.
Educational Resources
    Like many other private organizations and governmental agencies, 
the Treasury has contributed financial education teaching tools to 
schools and the public. I would like to highlight four such programs.
    First, through its Bureau of Public Debt, the Treasury has 
distributed, free of charge, more than 150,000 copies of the Money 
Math: Lessons for Life program. The Money Math curriculum is used to 
teach math concepts to middle school children using real-life examples 
from personal finance. Lessons include teaching children the importance 
of budgeting, that savings leads to the accumulation of wealth and the 
relationship between careers and earnings potential. The program has 
been used in more than 16,000 districts nationwide.
    Second, the Treasury's Internal Revenue Service (IRS) has developed 
an interactive, instructional tax program called ``Understanding 
Taxes'' to provide high schools, community colleges and the public with 
a technology-based financial education instructional tool. Divided into 
two areas of content - the ``How's of Taxes'' and the ``Why's of 
Taxes'' - the program offers both print and online materials to help 
students learn more about the history, theory and application of 
America's tax system and how it impacts them.
    Third, the IRS also provides tax guidance for teenagers and young 
adults through its ``TAX Interactive'' (TAXi) website. The website 
includes a collection of tax-related resources to help teachers 
integrate lessons about taxes into a variety of classroom settings.
    Finally, the Treasury's United States Mint helps to promote 
financial literacy by combining technology and education on a web site 
that uses coinage as a theme to foster education among children. The 
United States Mint H.I.P. Pocket Change web site uses games, 
informational features and animated cartoons to teach young learners 
about subjects such as social studies, language arts, mathematics and 
science through the use of coins. The site is also a resource for 
teachers by offering lesson plans and classroom activities that help 
teachers instruct about coins and the history that surrounds them.
Development of Standards, Recognizing and Coordinating
    To encourage other high quality programs around the country, the 
Treasury's Office of Financial Education develops standards for 
financial education programs. Periodically, the Office will recognize 
an effective financial education program through a visit and 
presentation of a certificate of recognition. These events not only 
honor the selected program, but they help raise awareness of the 
featured program as a model for others to emulate.
    The Department of the Treasury also coordinates activities with 
other federal agencies that have financial education programs, 
partnering with them as opportunities arise. To make all the financial 
education resources of the federal government more accessible, the 
Department has recently launched an on-line directory of major 
financial education programs, complete with contact information. 
Through the directory, visitors can locate the federal financial 
education programs most suitable to their needs.

                               Conclusion

    Since I began with the bad news, please allow me to close with the 
good news. For those young people and adults struggling with saving, 
spending and credit issues, a better life is possible, and financial 
education is the way to get there.
    The best research tells us that financial education can, and does, 
make a difference in people's daily lives. Studies show that in states 
that mandate personal financial education in schools, high school 
graduates have higher savings rates and higher net worths as a 
percentage of earnings, when compared to those from other states. 
7 The positive effects of financial education carry into 
adulthood, as borne out by the fact that individuals who have received 
financial education tend to participate in employer 401(k) plans at a 
higher rate and with larger contributions than others. 8
    The bottom line on financial education is that it works to help 
children live better lives as adults. Until more schools acknowledge 
this reality and act upon it, our work is not finished.

                                Endnotes

    1 Fort Worth Business Press 2002
    2 Patricia Wolff,--Area Lawmaker Wants Students to Learn 
More about Personal Finance,'' Oshkosh Northwestern, April 28, 2003
    3 Mary Judice, ``Money Matters; Prudent Students can 
Avoid Big Debt,'' Times Picayune, April 27, 2003
    4 Patricia Wolff,--Area Lawmaker Wants Students to Learn 
More about Personal Finance,'' Oshkosh Northwestern, April 28, 2003
    5 ``Check Out These Dollars and Sense,'' Peoria Journal 
Star, May 12, 2003
    6 Jennifer Goldblatt, ``Kids Turn to Parents to Learn to 
Manage Money,'' The News Journal, August 25, 2003
    7 B. Douglas Bernheim, Daniel M. Garrett, and Dean M. 
Maki, Education and Savings: The Long-Term Effects of High School 
Financial Curriculum Mandates (Jun. 1997)
    8 Robert Clark, Ann McDermed, Kshama Sawant, and 
Madeleine d Ambrosio, ``Financial Education and Retirement Savings,'' 
Federal Reserve Bank Paper, March 2003
                                 ______
                                 
    Chairman Castle. Thank you very much, and I will start the 
questioning by yielding myself 5 minutes.
    Tell me about--I realize you have an education background, 
as well as the work you are doing now. But tell me about the 
integrating of financial literacy into the existing curriculum. 
I tend to agree with you, and every time you talk to educators, 
they will always tell you they do not have room for anything 
else, and I respect that, and I think it is crap, but on the 
other hand, I am not sure that we have perfected the 
methodology for doing this.
    I--and let me preface all of this by saying I think the 
problem is greater than my opening. I just think it is 
unbelievable that basically you are responsible for your own 
investments, probably in terms of your retirement, maybe your 
kids' college and all kinds of other financial steps you have 
to go through and the choices are unbelievable.
    If you get into mutual funds, not even stocks, there are a 
variety of choices, so this is a very difficult issue, and I 
worry--is anyone looking at that methodology of that 
integration into the existing curriculum, I guess is my 
question?
    Mr. Iannicola. No, that is a great question, and there were 
a lot of chips on the table for everyone. Through the white 
paper, and let me talk a little bit about that that we got done 
with the Department of Education and others, we identified five 
areas that--five access points through which--those who 
advocate integrating curricula can get to the schools, through 
which they can make their case.
    The first one was State Educational Standards. If we can 
get a State to put something in their standards, regarding 
financial education, that obviously gives the school the 
guidance they need.
    Second is through testing, which usually follows on the 
heels of standards, and if something about financial education 
is in a test, obviously, it is going to more likely make it 
into a lesson plan.
    Third access point is textbooks. Textbook publishers make 
important decisions and have tremendous downstream effects, and 
if we can emphasize to them to put some examples in a math 
textbook, we are getting into the constituency we need to speak 
to. The fourth was the use of education materials. I gave a few 
of the ones the Treasury produces, but that is just a small 
part of what is out there on the way.
    Consequently, whenever I speak to teachers, it is not that 
they do not want to put things in their classroom. A lot of 
them just do not know what is there, and they are amazed when 
they find out it is there and it is free. So promoting 
financial educational materials is another way.
    And the last is training educators. We have a lot of 
educators who want to do the right thing, but maybe they need 
to brush up on their own financial education teachers, so that 
way we get to the kid much more effectively.
    Chairman Castle. Let me shift gears for a moment, and that 
is something you didn't talk about too much but is of interest 
to me, and that's the cultural aspect of this; I mean, I do not 
think a lot of kids subscribe to money magazine or watching TV 
shows about money, but in looking at the media, the culture 
that is getting to them, is there anything that we can do, 
obviously, you cannot regulate it, it is not what government 
should be doing, but is there anything we can be doing to 
encourage the different cultural outlets for children, to be 
building some of these things in just as they are in schools?
    Have you given any thought to that or is that beyond your 
purview at this point?
    Mr. Iannicola. That is beyond our purview, to give those 
types of goals for culture, but one insight I have that might 
relate to this: Frequently, the place where financial education 
can do the most good is with the people who do not know they 
have options: I have met some kids, a recent trip to Brooklyn, 
the school was 98 percent free and reduced lunches, and I met 
one student who, an eighth grader, was adamant that he never 
wanted to put his money in the bank, and I tried to make my 
case, but he would have none of it.
    I realized why he took that position. One asked me: If my 
money gets put in the bank and the bank burns down, is my money 
gone? If it gets robbed, is my money gone; so he didn't know he 
had a choice. I guess if I thought my money was going to 
disappear that quickly, I would put it in my mattress, too. So 
a lot of folks are taking their guidance from movies, but 
others just don't know there is another way.
    Chairman Castle. Let me fit in one more question: In your 
work in Treasury and your work in education, personally and 
professionally, have you--is thought being given to the low 
income circumstances of all of this money management, because 
they, obviously, they have greater credit problems there, there 
are a lot of things I think we could be fixing, even on the 
incomes that people presently have, but I think it is 
different. I think that educational process is different.
    Mr. Iannicola. I think that's right; I mean, the education 
you give to kids whose parents have brokers is different from 
the ones who have case workers, and we need to target education 
specifically for them.
    Basic savings is the main thing we need to get through to 
those kids and actually, you can make a bigger difference to 
those kids because their parents aren't giving it to them, they 
may not be in high school, that is teaching them what they need 
to know. So we do focus on those projects, we do recognize 
schools who do good work at any income level, but we certainly 
can see the difference in the lower income schools that you 
mentioned.
    Chairman Castle. Thank you.
    I appreciate your answers.
    Mr. Iannicola. Thank you.
    Chairman Castle. I will yield 5 minutes to Ms. Woolsey.
    Ms. Woolsey. Actually, I think the first lesson for high 
school and college kids who are getting credit cards in the 
mail is to pick up the scissor and cut through the credit card, 
lesson one.
    Mr. Iannicola. OK.
    Ms. Woolsey. How are we measuring best practices? Do we 
have to wait for the NAPE tests and results before we know how 
to truly measure what we are doing?
    Mr. Iannicola. Right.
    Quantitatively, it is difficult to measure these things, 
unless you have the type of tests I think you cited in your 
comments.
    What we try to do when we look at a program is we have 
eight standards. One of the qualitative standards actually 
looks into whether the program has a quantitative standard, so 
at our level, we are looking for programs that do things, for 
instance, like target to the cultural issues of their audience, 
things that have follow-up. If a program has follow-up, where, 
after the seminar, whatever, kids can go to a Web site or one 
800 number or the teacher is going to return or the seminar is 
going to return. Those are the things that we look at when we 
recognize a program.
    Ms. Woolsey. Well, then, my other question would be: How do 
we make this interesting?
    I mean, how do we get kids onto a computer?
    Now, one of the thoughts I have is, you know; I mean, I am 
an old lady, so when I went to school, we learned how to 
balance a checkbook.
    Mr. Iannicola. OK.
    Ms. Woolsey. Some would say I have never learned it, but, 
nevertheless, I don't get in trouble, so I must balance it 
eventually, but now you pay your bills on the computer, so I 
mean, in the computer class, in the math class, it doesn't have 
to be just totally about financial responsibility, but the math 
questions can, you know, assimilate all the getting to the same 
goal.
    Mr. Iannicola. Agreed, agreed.
    Ms. Woolsey. Not a whole separate program.
    Mr. Iannicola. Two answers to that.
    One, I think integration is an answer, because you and I, 
we do not think of financial issues all by themselves. They 
come naturally seamlessly throughout the day as per your lunch 
example, so we need to integrate into our curricula lessons so 
that kids do not know they are learning about financial 
education, but what do you know, they did, because they learned 
math, percentages, et cetera; and second I think it is good to 
show them the money; that is, show them what is at the end of 
the rainbow.
    If you live the type of life you want to live, you will end 
up with a nicer car, a nicer home, a brighter future, and I 
think kids need to see that there is figuratively a payoff to 
all this, not to make things too materialistic, but I think we 
need to give them a view of the future and how financial 
education is going to get them a better one.
    Ms. Woolsey. I agree with you, but I also agree that it is 
the greater society and it is the business folks and the banks. 
They have a responsibility, too, to not dangle these credit 
cards in front of our kids who cannot not use them because it 
is just too much of a challenge for them.
    Thank you.
    Mr. Iannicola. Thank you.
    Chairman Castle. Thank you, Ms. Woolsey.
    I yield 5 minutes, at this time, to Mrs. Biggert.
    Mrs. Biggert. Thank you, Mr. Chairman.
    I have just a couple questions. You said that there were a 
lot of resources that are on the Web, but teachers just aren't 
aware of it, aren't aware of what is available to them.
    Mr. Iannicola. Absolutely.
    Mrs. Biggert. Or haven't had any training?
    Do you have any recommendations on how we can get this 
information to them, how to spread the word, so that they know 
that it is available?
    Mr. Iannicola. Mm-hmm. Through the work of our office; I 
mean, we are always working to do more outreach to those 
groups, and there are many resources throughout the government 
that are taking similar steps. I think you are going to hear 
from some panelists who probably do some of the same work, and 
I think helping them to do their work, supporting them and, 
believe it or not, simply giving publicity of these issues can 
have a great effect.
    That is one of the reasons why we like to give 
certificates, not just to open for the individual program, but 
so that we create a ripple so people know it is there and 
available to them. So I think it is much more of an awareness 
issue maybe than an education issue, so I think just getting on 
the roof tops and getting the word out.
    Mrs. Biggert. OK. Earlier this year, President Bush signed 
No Child Left Behind, and one of the innovative assistance 
programs that has funds available for local school districts to 
use, and there is 27 categories, and one of those categories is 
activities to promote consumer economic and personal finance 
education.
    Do you know if those are people who are going after those 
grants or do you have any access to that?
    Mr. Iannicola. I do not. Probably that is for the 
Department of Education. I am aware of that provision as well.
    I do not believe it is on that provision. I know they did a 
grant to the Jump Start coalition. I think that was from a 
different pool of funds.
    Mrs. Biggert. Yes, I know that. Do you think that the 
consumer economic and personal finance education is broad 
enough? Are we really--you know, there are so many courses that 
are taught in the schools and in the past have been learning 
how to write the checkbook or clipping from the newspaper of--
they are going to set up a, you know, household and how much 
they are going to spend for rent, and then for food, and trying 
to balance or make a budget for, their family budgets, and that 
kind of thing, but that really doesn't get to a much more in-
depth economic vigorous course.
    Do you think that this is--these programs are enough to 
really get into pensions and--.
    Mr. Iannicola. Right.
    Mrs. Biggert. And stock market, inflation, what all that 
means?
    Mr. Iannicola. Right. Right. No. I think we are hoping, 
with some of the people we speak to, to get them to crawl 
first. I agree that is right. It would be great if we could get 
them to know the ins and outs of how the economy works and the 
bigger picture, but I guess this is a place where I guess we 
would counsel selfishness first.
    Let's get you to know about your own finances first and 
then we will hopefully--that will kindle an interest so that 
you will want to take a bigger picture of the macroeconomy, and 
our office focuses not just on students, but on a variety of 
groups, immigrants, people who are nearing retirement, who will 
be facing sophisticated financial decisions, so I think that is 
a good goal.
    Our emphasis is on the first step.
    Mrs. Biggert. Thank you.
    Thank you, Mr. Chairman.
    Chairman Castle. Thank you, Mrs. Biggert.
    I yield 5 minutes, at this time, to Mr. Hinojosa.
    Mr. Hinojosa. Thank you, Mr. Chairman.
    Mr. Iannicola, I want to commend the administration for 
issuing its white paper entitled, ``Integrating Financial 
Education'' into school curricula--.
    Mr. Iannicola. Thank you, sir.
    Mr. Hinojosa. --this last October, and for Treasury and the 
Department of Education working together on it. I especially 
want to acknowledge the role Sheila Bayer played in determining 
that white paper. She has been very helpful to me and my 
constituents, especially to the Hispanic community, as I'm sure 
you will be in your current role.
    The white paper notes that there are a tremendous amount of 
natural literacy resources on the Internet and available 
through other sources. Obviously, it is impossible for each 
school district to use all of these resources.
    My question is: Would you and Treasury support the creation 
of a national commission headed by President Bush that will 
recommend how to integrate the economic and personal finance 
education into primary secondary and post-secondary curricula?
    Mr. Iannicola. We are excited about working with anyone on 
financial education. We have been very enthusiastic about 
seeing the level of interest. There were a number of pieces of 
education about financial literacy, and we couldn't be happier 
about seeing the level of enthusiasm.
    With respect to a particular piece of legislation, we 
really haven't taken a position on that one, but we would look 
for the overarching principles of having a program that is 
effective, that is, targeted to the right students, to teach 
them the right things, and practical, something that can have 
on the ground results, so those are our general positions.
    Mr. Hinojosa. Let me add to my concerns. The commission 
envisioned a legislation sponsored by Mrs. Biggert, the CENTS 
Act, that I cosponsored that will identify and recommend best 
practices for the teaching of economics and personal finance.
    The proposed commission will also recommend how to better 
coordinate Federal, State, local and private sector efforts to 
develop financial literacy. This proposed legislation would 
seem to meet all the goals set forth in your white paper, as 
well as in your testimony given here today before this 
Subcommittee, would it not?
    Mr. Iannicola. Well, without taking a position, since we 
haven't done that as of yet, I guess I would have to say that 
we are--there is a lot of room for a lot of good ideas on this.
    What I said today I stand behind, that we are in favor of 
getting the word to kids and helping schools to integrate 
financial education topics into the curricula. But there are a 
variety of solutions, and we are eager to look at all of them 
and again commend those who are contributing to the discussion.
    Mr. Hinojosa. Well, hopefully, you let Mrs. Biggert and me 
drop down those hurdles, from saying yes, you will work--and if 
the administration will say yes, we will work with you in your 
legislation. Because I happen to have lots of young people, 
young high school graduates, many college graduates, who are 
very appreciative that somebody is paying attention to the need 
to try to coordinate the resources that are available out 
there, because they feel unprepared to be able to make a 
decision such as buying their first automobile, much less 
talking about buying a small home.
    All of this to say that that is without touching another 
segment that you mentioned in your last remarks, and that is 
the immigration unbanked, those folks who are making a big 
percentage of our work force throughout the 50 States and the 
fact that they are unbanked makes it a big concern in my 
district. So I am hoping that you will use all your persuasive 
skills to get the administration to take a look at this 
legislation that Mrs. Biggert and I are trying to get the 
administration to look at and consider, because I think that 
there is a great need, in listening to the banking community 
and those who are seeing the importance of this financial 
literacy throughout the country.
    Mr. Iannicola. OK, and I guess--I appreciate your thoughts 
on that; and two points that, right now, we can address without 
getting into the legislative issue. I am sure you are familiar 
with the First Accounts Program. That was established recently. 
There is an $8.4 million that we have awarded in grants, 
helping folks to get their first accounts, and we are looking 
forward to investigating that program and seeing exactly how 
effective that is. But the goal is a good one, as I think you 
mentioned.
    The other point about pulling all the resources together so 
people know where to go, I think it would be helpful to direct 
people to our Web site.
    The Department of Treasury, Office of Financial Education, 
we recently put together a financial education resources 
booklet which contains descriptions of about 25 programs in 
different organizations across the Federal Government. We kind 
of consider it the first place to go, a starting point, if you 
are going to look at all the resources the Federal Government 
offers. We introduced it in August, and we had about 8,000 hits 
in the first month. So anyone looking to find out more about 
them, what all parts of the Federal Government offers in the 
way of financial education, would be advised to start there.
    Mr. Hinojosa. Finally, tell me: Aren't the first accounts 
frozen, that one that you just mentioned?
    Mr. Iannicola. Well, the grants are ongoing. The grants are 
still being drawn down, and the work continues to the grantee.
    Mr. Hinojosa. So there is money available to apply for?
    Mr. Iannicola. No. There are people who receive money who 
are presently spending it on programs, let me be clear.
    Mr. Hinojosa. OK. Thank you.
    Mr. Iannicola. Sure.
    Chairman Castle. Thank you, Mr. Hinojosa.
    Ms. Majette I yield to for 5 minutes.
    Ms. Majette. Thank you, Mr. Chairman; and I thank the 
witness for being here today.
    In your written testimony, you say that the best research 
and the conclusion--you say that the best research tells us 
that financial education can and does make a difference in 
people's daily lives and studies have shown that in States that 
mandate personal financial education in schools, high school 
graduates have higher savings rates and higher net worth as a 
percentage of earnings when compared to those from other States 
and that the positive effects of the financial education 
carries into adulthood. But in--well, on page 2 of your 
testimony, regarding the Treasury white paper, it seems to me 
that what you are saying is that you are not calling or you are 
saying, instead of calling for a separate class devoted to 
financial literacy, you are looking into integrating financial 
education into established curricula. Is that inconsistent with 
the conclusion--what you say in the conclusion of what the best 
research shows or do you have any--.
    Mr. Iannicola. There is a lot of ways to get there. When we 
advocate integration, it is not that a separate class will not 
work. It is that a lot of places cannot do a separate class. I 
guess I do not have pedagogical resources to say which is 
better or worse, but if I get 5 minutes with the 
superintendent, I am going to tell them about integration, not 
a separate class, because I know one is an achievable goal and 
one from any district is a dream.
    Ms. Majette. And, at this point, what you are suggesting is 
that the information that is available online is sort of the 
best resource for or best way of getting this information out?
    Mr. Iannicola. It is a great resource; and primarily 
because, again, it is free. And coming from a public school 
that had hard choices to make, like I am sure all schools do in 
your districts, that is not an insignificant factor and not 
insignificantly a lot of the material is very good. So, yes, it 
is something that they can get easily and get into the 
classroom, so the Web is a great source.
    Ms. Majette. That would be how the instructors would get 
the information to present to the classes?
    Mr. Iannicola. That is right. There are lesson plans, 
curricula, depends on the program, but those types of things 
are available.
    Ms. Majette. All right, and do you see that there is 
sufficient--you think there would be sufficient funding for 
implementing of a program that would allow for this kind of 
education to take place nationally?
    Mr. Iannicola. Well, I guess I am going to need 
clarification, in terms of taking place nationally.
    Ms. Majette. If each State wanted to implement a program, 
do you think that there would be funding available or would it 
be your suggestion that we make funding available at the 
Federal level for the States to be able to implement those 
programs?
    Mr. Iannicola. As I said before, I think this is more of an 
awareness issue than an educational one; and I think most of 
the solutions that I mentioned are not high dollar, they are 
not high-tech, and they are not highly controversial, either. 
They are about teachers and school districts trying to fit 
these topics into their curricula and integrate them, and there 
is really not a high-dollar price tag for most of them. That is 
why this is so compelling, because this is not a distant thing 
we cannot reach. This is very achievable. And if more teachers 
know about it and more school districts become aware and 
committed, the resources are there. It shouldn't have to be a 
big budget level at the local level, the Federal level, the 
State level.
    Ms. Majette. Thank you.
    I yield back.
    Chairman Castle. Thank you, Ms. Majette.
    Let me thank you.
    Mr. Iannicola. Thank you very much.
    Chairman Castle. We are very pleased to have you here.
    Obviously, we are very interested in the subject, and we 
will continue to try to develop this over the next few months, 
so we hope to be able to stay in touch with you, but we 
appreciate you being able to be here today.
    With that, this panel is concluded; and we will take a very 
short break while we get the other panelists up to the table.
    Mr. Iannicola. Thank you, Chairman.
    [Recess.]
    Chairman Castle. We will come to order and resume.
    We appreciate the panelists and their swift move to the 
seats. We will proceed in the same way we did with the first 
panel, but we will go through some introductions, and some 
members are going to introduce a couple of the panelists who 
are here.
    The first panelist we have is Mr. Gary Knell, who is the 
President and Chief Executive Officer of Sesame Workshop. Prior 
to his current position, he served as a Managing Director of 
Manager Media International. Mr. Knell has also worked as 
counsel to the U.S. Senate Judiciary Government Affairs 
Committee and in California State legislature and in the 
Governor'S Office.
    Welcome.
    Dr. Robert Duvall is currently the President and Chief 
Executive Officer of the National Council on Economic Education 
where he served since 1995. Previously, he was the President of 
Pacific University in Oregon. Dr. Duvall has also served on the 
faculty and the administration of Pitzer College, Rollins 
College, and the University of Pennsylvania.
    I believe that Mrs. Biggert would like to introduce the 
next witness on our panel today, and I yield to the gentlewoman 
from Illinois.
    Mrs. Biggert. Thank you. Thank you, Mr. Chairman.
    I am very pleased to welcome Dr. Angela Lyons. She is 
currently an Assistant Professor and Extension Specialist for 
the Department of Agriculture and Consumer Economics at the 
University of Illinois, Urbana/Champaign. Previously she served 
as Supplemental Instruction Program Coordinator at the 
Department of Economics at the University of Texas at Austin; 
and Dr. Lyons has conducted research on numerous economic 
topics, including credit access and household repayment 
problems, liquidity constraints and household credit.
    Very happy that she is here today.
    Chairman Castle. Thank you.
    I would like to welcome the gentleman from Texas, Mr. 
Hinojosa, to the Subcommittee. He would like to introduce our 
last witness, and I recognize him for that purpose.
    Mr. Hinojosa. Thank you, Chairman Castle, and thank you 
Ranking Member Woolsey.
    I would like to thank you for holding this extremely 
important hearing, but I also want to thank you for inviting me 
to sit on this Subcommittee today and to participate in this 
hearing.
    It is my honor to introduce you to Robert Strong, Vice 
President and Executive Director of the Securities Industry 
Foundation for Economic Education, a non-profit foundation 
affiliated with the Securities Industry Association, known as 
the SIA. He is here to explain the stock market game, which 
allows students in grades 4 through 12 to learn the 
fundamentals of investing in the stock market by playing a game 
using a hypothetical but substantial sum of money.
    Mr. Strong will provide more details about the game in his 
oral remarks, but I want to take this opportunity to thank him 
for coming to testify on such a fun and important financial 
literacy tool, especially on such short notice as I gave him.
    Several schools in my district participate in this game, 
using newspapers provided by the Monitor, the largest newspaper 
in my congressional district.
    Thank you, Mr. Chairman.
    Chairman Castle. Thank you, Mr. Hinojosa, for the 
introduction of Mr. Strong. I was interested in hearing what 
you had to say about him, since I know Mr. Strong well. He is a 
good friend from Delaware. You did very well, sir. We 
congratulate and welcome him here.
    The only change from the first panel is that each of you 
will testify before we ask questions. Again, you have 5 
minutes.
    Mr. Knell, I think you have a presentation?
    We will try to work that in and give you some extra time if 
needed. You will each have 5 minutes, and then we will have 
questions and answers from the panel.
    We will start with you, Mr. Knell.

 STATEMENT OF GARY KNELL, PRESIDENT AND CEO, SESAME WORKSHOP, 
                       NEW YORK, NEW YORK

    Mr. Knell. Thank you, Mr. Chairman, Ranking Member Woolsey 
and members of the Subcommittee.
    I am here to tell you that it is never too early to start 
teaching our kids about this important issue of financial 
literacy. Elmo is in fact up in New York today. I know some of 
you are disappointed that he is not here today, but he had too 
many questions in Mr. Hooper's store, and he is extremely busy, 
trying to mail some things in the postage shop and figuring how 
much things cost to make it to the Committee here today.
    Sesame Workshop is a non-profit educational organization 
whose whole goal is to use media to help children reach their 
highest potential, and this particular issue you may be 
wondering is why in the world is Sesame Street involved with 
the whole area of financial literacy. It is never too early to 
start on this issue, because our world is changing so fast and, 
as you pointed out earlier, as it changes, grown-ups are 
realizing that they need to take more responsibility for their 
finances and plan carefully and earlier for things like their 
kids' education or purchasing a car or a house or retirement, 
other meaningful life events. Accomplishing that requires 
making smart financial decisions which, in turn, require basic 
financial skills and an understanding of earnings, spending, 
savings and investing.
    More and more Americans we are told are having trouble 
managing their money. You know the statistics. Half of all 
Americans live paycheck to paycheck. Bankruptcies are at an 
all-time high, with a 50 percent increase of people under 25. 
Credit card debt has grown, with 45 percent of college students 
already in debt. Having a senior in high school myself, I am 
getting ready for the onslaught of credit card applications as 
well.
    Too many Americans are underestimating the resources they 
will need upon retirement. A recent survey revealed that teens 
were spending 98 percent of their money, rather than saving it. 
Much of this can be attributed to a lack of financial literacy. 
While only 7 percent of parents say that their child 
understands financial matters well, nearly 9 out of 10 parents 
recently surveyed said that it was important that children 
understand the basics of money and finance.
    The question is, for us, when should these building blocks 
for financial literacy be introduced? Believe it or not, we do 
think it is never too early. Well, maybe before the age of 
three, it is a little early, but from 3 years on you can start.
    For instance, we know, in basic education, pre-school 
education, a University of Kansas longitudinal study very 
famous a few years ago showed teenagers who actually watched 
Sesame Street and other educational programs did better in high 
school. They read more books for pleasure. They had higher 
levels of motivation. These things do seem in this media age to 
stick with children. We think we can use the same model of 
success and replicate the same results with financial literacy 
and life skills.
    So at age three, we can teach things about an idea that 
objects have different values or that grown-ups actually engage 
in different jobs. At age four, we can teach the value of coins 
or money needs to be exchanged for objects. Or at age five the 
idea that people work to make money and save money can be 
introduced to the very young children in our society.
    With this in mind, we launched a program called--an 
outreach program called Talking Cents, C-E-N-T-S, funded by 
Merrill Lynch and as part of their Investing Pays Off 
initiative. The program offers age-appropriate information and 
resources to help parents and other adult caregivers reach out 
to other young children age three to five in fun and engaging 
ways. The content of the program is based on value, 
responsibility, resilience, savings, and money recognition.
    We created--and I think you have this with you--a 16-page 
outreach edition of Sesame Street magazine--this is made for 
parents--just called Talking Cents, 10 playful ways to invest 
in your child's future. It is in English and in Spanish. The 
publication is filled with tips, activities and suggestions to 
encourage children to begin to learn life skills such as 
planning, the idea of persistence and patience. Two hundred 
thousand of these have been--are being distributed, with 20,000 
posters being distributed through the National Association for 
Child Care Research and referral agencies and some Head Start 
programs.
    Merrill is also going to distribute the publication through 
their employee volunteer program, and we have created three 
educational television and video spots which reinforce the 
content messages of Sesame Street muppets, like the Count and 
Big Bird and Elmo and Telly and Cookie Monster, who I know some 
of you are fans of, I am sure.
    Online interactive stories kids can do with their parents 
at Sesame Street dot com. Children can help Elmo and Zoe create 
a lemonade stand, trying to sort out ways to make lemonade and 
counting coins. Right now, in the first month, 60,000 kids 
helped Zoe and Elmo make lemonade.
    There are also creative coloring pages and other games kids 
can explore. They are designed to transform children's everyday 
experiences into life lessons as critical as learning their 
ABCs or one, two, threes.
    I brought, Mr. Chairman, a very short video. We are going 
to show you just one of these spots to give you an idea of what 
is being distributed, and it has Cookie Monster teaching 
financial literacy.
    [video shown.]
    Mr. Knell. Sorry about the bad pun.
    The program is designed to allow parents and caregivers to 
get useful information on simple strategies which will help 
kids understand some of the basic methods in forming good 
financial habits as they grow up and become financially 
responsible adults. Simple everyday moments, such as having 
children understand the value of things, the ways people work 
to make money, guiding children to overcome challenges and 
dealing with setback, encouraging them to wait for something 
they want immediately, understanding the relationship between 
the value of money and actual money by sorting and matching are 
a few of the many areas focused on in this program.
    As our economy has expanded over the decades, our need to 
create a financially literate America is more important than 
ever. Big Bird, Cookie Monster and Elmo have taught generations 
of Americans many lessons; and we are thrilled to expand their 
muppet repertoire to help address this critical need in our 
country.
    Thank you very much.
    Chairman Castle. Thank you.
    [The prepared statement of Mr. Knell follows:]

      Statement of Gary Knell, President and CEO, Sesame Workshop

    The need for financial education is frequently in the forefront 
nowadays, often coupled with the harrowing statistics of Americans' 
lack of knowledge about basic personal economics. For example, during 
the first quarter of 2003, more Americans filed for bankruptcy than any 
other time in history (American Bankruptcy Institute, 2003). Similarly, 
credit card debt has also increased to new highs. At the same time, 1 
in 3 American teenagers carry credit cards as well as ATM cards 
(Tucker, 2003). And, in a national survey of 4,024 high school seniors, 
over 68% received failing scores on their knowledge of basic financial 
literacy facts. This is a sharp increase from results in 2000 whereby 
only 59% failed (Jump$tart Coalition for Personal Financial Literacy, 
2002).
    These are just a few of the many examples recognizing the limited 
knowledge many young or older adults have in making fiscally sound 
decisions in their lives. As a result, many initiatives are now 
addressing the need to provide Americans with better knowledge and 
skills on planning for their financial security. Research does indicate 
that individuals, younger or older, and with diversity in incomes and 
educational levels, benefit from financial education strategies, 
especially as their personal and economic circumstances change 
((National Endowment for Financial Education, 2002). There is little 
data available however, that indicates where the ``foundation'' or the 
``building blocks'' for financial literacy actually begin.
    Some interesting citations shed some light on this question. In a 
recent speech by Chairman Alan Greenspan during the annual Jump$tart 
Coalition conference (2003), he stated, ``The importance of basic 
financial skills underscores the need to begin the learning process as 
early as possible.'' Likewise, in a symposium convened by the National 
Endowment for Financial Education (2002) and resulting in the white 
paper, Financial Literacy in America: Individual Choices, National 
Consequences, one of the major recommendations was to view financial 
education within the scope of a ``lifelong process'' that must begin 
early in life through experiences that build on everyday activities or 
``teachable moments.'' Finally, in a national survey of students ages 
16 to 22, 94% identified their parents as their primary source of 
financial education (American Savings Education Council, Employee 
Benefit Research Institution, and Matthew Greenwald & Associates, 
1999).
    Remarkably, within child development there is little debate about 
the critical role parents play as their children's first and most 
important teachers. From the moment they hold their newborns in their 
arms, parents are setting the stage for their children's future growth 
and development. They guide them in their first steps, their first 
words, their first friendships, and most of all, they help promote 
children's innate curiosity for learning within safe and nurturing 
environments. Parents firmly believe that the life skills they foster 
during children's early years will help them grow and compete in the 
future (The Child Mental Health Foundations and Agencies Network, 
2001). In fact, Nuveen Investments conducted a survey with parents of 
elementary school children in Chicago and over 86% of parents indicated 
it was important that children understand the basics of money and 
finance (Nuveen Investments, 2000). Additionally, in a national study 
released by Public Agenda (2003) analyzing essential character values 
important for children's success later in life, over 70% of parents 
felt saving money and spending it carefully was ``absolutely essential.
    The above data was instrumental in Sesame Workshop's response to 
this obvious need and in keeping with its mission to help children 
learn and grow and reach their highest potential. Sesame Workshop, a 
not-for-profit educational organization, and Merrill Lynch, as part of 
the Investing Pays Off have come together to bring a financial 
education initiative, Talking Cents, that offers multiple media 
information and resources to help parents and other adult caregivers 
reach out to young children ages 3 to 5 years in fun and exciting ways. 
These educational resources are designed to transform children's 
everyday experiences into life lessons that will help them explore the 
basics of finance and business. A little time spent in the early years 
will certainly pay off down the road in helping preschoolers establish 
the ``foundation'' or ``building blocks'' that can help them succeed as 
financially literate citizens.
    The Talking Cents resources include:
      Educational Spots for Employees/volunteers (non-
broadcast) a collection of three video segments with familiar Sesame 
Street characters--The Count, Elmo, Big Bird, Telly and Cookie 
Monster--demonstrating three strategies, responsibility, patience, and 
planning, all important life skills contributing to children's growth 
and future success.
      Special Issue of Sesame Street Magazine for parents--
provides ten important concepts such as understanding the basic value 
of possessions, how money is earned, ideas on saving, and the concept 
of giving to others along with suggestions and activities that can 
provide a foundation of finance basics for preschoolers during their 
everyday routines.
      A Sesame Street online site, Sesame Savings, with 
appealing and fun activities for preschoolers that highlight simple 
finance basics, coloring pages, and information for parents and other 
caregivers. An especially interactive component is the live story The 
Lemonade Stand whereby preschoolers can help their familiar Sesame 
Street friends, Elmo and Zoe, set up a lemonade stand business.
    To date, the initiative has been rolled out in 10 major locations 
including New York, Los Angeles, San Francisco, Miami, Chicago, Boston, 
Dallas, Washington DC, Atlanta and parts of New Jersey with a 
particular focus on underserved and minority communities. Over 89,500 
Sesame Street magazines and other resources, such as posters, were 
distributed through the National Association for Child Care Resource 
and Referral Agencies, Merrill Lynch employees and events during 
September 2003.
    In the design of this initiative, great care was taken to ensure 
that the information was both developmentally and age-appropriate for 
preschool children. Furthermore, the information acknowledges the 
critical role parents and other important caregivers play in fostering 
early learning. The information and activities are meant to build on 
how young children typically learn about simple finance basics, mostly 
from merely observing adults engaging in daily activities such as using 
or saving money, paying for items, going to the bank, using an ATM, or 
making purchases.
    Adults are often surprised that these tasks are the first 
introductions to financial education for young children. The program 
includes tips for parents and other adult caregivers that gently guide 
them to use these opportunities as ``teachable moments'' for finance 
basics. For example:
      By exposing children to how and where people work and how 
money is used to take care of family, community and the world, children 
are introduced to an understanding of the value of money, prices, and 
how people earn a living. This helps children gain a stronger work 
ethic and a sense of responsibility early on in life.
      By helping children to understand that all things have 
value, not only their possessions but those belonging to others as 
well, it helps them have a better understanding of not being frivolous 
with their money or possessions as well as those of others.
      By guiding children to overcome minor setbacks or work 
along with others, it can help them develop problem-solving skills, 
practice persistence and most of all, become more resilient adults.
      By encouraging certain instances whereby children can 
learn to wait for something or put off getting what they want 
immediately, it can help them have a better understanding of setting 
goals and patiently working towards them or even saving for the future.
      By engaging in experiences whereby children can gain a 
sense of a relationship between the value of money and actual money by 
sorting, matching and learning to distinguish between different coins 
and their values, it can lead to an understanding of the value of money 
in general and a stronger economic sense as they get older.
    These activities and general information are important ways to 
establish a foundation for young children in the way they learn 
throughout their early years. Primarily this approach continues to 
support parents as their children's most important teachers within the 
framework of naturalistic learning--the opportunities that present 
themselves during everyday routines or ``teachable moments.'' The 
program builds on experiences that strengthen basic life skills linked 
to financial literacy, thereby providing a foundation for what is a 
``lifelong process.''
    Some very preliminary data is indicating the positive potential for 
such an approach. Included within each Sesame Street magazine is a 
reply card requesting the user to respond to whether or not the 
information contained in the magazine was helpful, and if the 
activities they planned to engage in was a result of that information. 
Of 73 responses to date, 87% indicated the information was helpful in 
explaining ``money matters'' to children in the areas of saving, 
spending, earning, money and value and they requested additional 
information on this subject. Approximately 65% of respondents indicated 
that they would encourage their preschooler to save his/her money to 
help pay for things he/she wants later; 63% indicated that they would 
teach young children that different objects have different values; and 
57% indicated they would teach children the value of ``delayed 
gratification'' based on these resources. Although the data is 
extremely limited it does begin to demonstrate the impact such 
resources can have in the lives of young children and families. Sesame 
Workshop believes this is only the beginning and the Workshop seeks to 
lead the way in further guiding both adults and young children on 
finance basics (used previously in the testimony) as it has in so many 
other areas of young children's education.
References

American Bankruptcy Institute (2003). Total Bankruptcy Filings and Non-
        Business Filings Break Records. Press Release/Rali Mileva.
American Education Council, Employee Benefit Research Institution and 
        Matthew Greenwald & Associates (1999). Youth and Money Survey.
Jump$tart Coalition for Personal Financial Literacy (2002). 2002 
        Personal Financial Survey of High School Seniors.
Jump$tart Coalition for Personal Financial Literacy (2003). Remarks by 
        Chairman Alan Greenspan. Jump$tart Coalition Annual Meeting, 
        April 3, 2003.
National Endowment for Financial Literacy (2002). White Paper--
        Financial Literacy in America: Individual Choices, National 
        Consequences.
Nuveen Investments (2000). Kid$ense, Financial Education in Chicago 
        Survey.
Public Agenda (2003). Mind the Gap: Parents' Perspectives.
The Child Mental Health Foundations and Agencies Network (2001). A Good 
        Beginning: Sending America's Children to School with Social and 
        Emotional Competence They Need to Succeed.
Tucker, J.A. (2003). Youth Financial Literacy Statistics. Louisiana 
        Cooperative Extension Service, Louisiana State University 
        Agricultural Center.
                                 ______
                                 
    Chairman Castle. Now, Dr. Duvall, I want to know what you 
are going to do to top the Cookie Monster film clip.
    Dr. Duvall. For those who are disappointed, I have to add 
to that disappointment. They are not going to see the real 
Robert Duvall, either.
    Chairman Castle. The ranking member's already complaining 
about that a little bit.

STATEMENT OF ROBERT DUVALL, PRESIDENT AND CEO, NATIONAL COUNCIL 
           ON ECONOMIC EDUCATION, NEW YORK, NEW YORK

    Dr. Duvall. Taking the title of one of his movies, I see 
myself as the apostle for financial literacy. So Chairman 
Castle and Ranking Member Woolsey and members of the 
Subcommittee on Education Reform, a subject dear to my heart, I 
want to thank you for inviting me to testify today on the 
timely, crucial and vital issue of improving financial literacy 
through education.
    I have submitted written testimony to the Subcommittee. Let 
me briefly summarize that statement, and I would be happy in 
due course to take some questions.
    The National Council on Economic Education, NCEE, is a 
leading non-profit, non-partisan organization directed by 
leaders from business and education that works through a unique 
network of State councils that can relate to the circumstances 
and standards of the individual States and university centers, 
230 of those across the country, where we focus on teacher 
training, that is, professional development for teachers.
    Our mission is to help young people learn to think, choose, 
and function successfully in a changing and challenging global 
economy, to develop the real-world, practical decisionmaking 
skills they will need as consumers, savers and investors, 
productive members of the workforce and responsible, ethical 
citizens.
    The National Council on Economic Education, NCEE, believes 
that the best way to make a real difference in the lives of 
young people and indeed of all Americans is to get to them 
effectively while they are in school by teaching the teachers 
how to make economics and personal finance come alive in the 
classroom and then to equip those teachers, even at their 
earliest grade levels, with excellent standards-based materials 
and resources to do that work with good and measurable effect.
    Our core program is called EconomicsAmerica for the 
Nation's schools. Last year, NCEE, through our network of 
affiliated State councils and university centers, trained over 
120,000 teachers who, in turn, get into the heads and hands and 
hearts of over 7 million of our young people in school. But 
much more needs to be done.
    NCEE also conducts EconomicsInternational, an international 
economics teacher training program, which carries our market 
principles to the world. Congress has provided funding for 
EconomicsInternational through the Cooperative Economic 
Exchange Program, CEEP, which has been included in the Labor 
HHS appropriations bill over the last several years. This 
program has been a tremendous success story in international 
education at home and abroad, serving 20 countries and reaching 
well over a million students annually, as well as enriching the 
classrooms of this country with publications and resources. So 
NCEE is grateful for the continuing support for this important 
program.
    The need to strengthen, expand, and enhance effective 
education in economics and finance in our Nation's schools has 
never been more apparent. We have already heard today a number 
of statistics and figures, starting with your introduction, Mr. 
Chairman, that show us the critical nature of the need and the 
call to action. We must prepare our students with the basics of 
economic and financial literacy so that they can succeed. This 
literacy, combined with reading and mathematics, is the key to 
home ownership, managing credit, financing higher education, 
saving for retirement.
    We know or we are finding out what happens when individuals 
leave school and begin their adult lives without economic and 
financial literacy. Savings are neglected. An estimated 30 
percent of Americans have not saved anything for retirement. 
Credit card use leads to unmanageable debt and even personal 
bankruptcy. People are maxing out their credit cards at younger 
and younger ages. Consumers get into financial trouble. 
Individuals do not make reasoned purchasing decisions because 
they do not calculate the real cost of products and services.
    For education reform, we must see that our elementary and 
secondary schools do integrate standards-based economic and 
financial education into the core curriculum. NCEE is 
committed, with a growing number of partner organizations, 
foundations and associations, to accomplishing this goal, with 
a first-ever NAEP Assessment of Economics in 2006 as a key 
benchmark.
    For example, NCEE, working with the National Council of 
Teachers of Mathematics, has just completed and rolled out a 
comprehensive curriculum for grades 3 through 12 in Econ and 
Math: Connections for Life.
    This is a teaching learning tool with great potential for 
getting financial literacy into mathematics. In turn, our 
university centers are running workshops across the country at 
the different grade levels for math teachers to be able to 
incorporate and integrate economics into the mathematics; and 
our Choices and Changes Program has proven to be the best 
teaching tool in the Nation to encourage inner city and at risk 
youth to stay in school. It develops an economic way of 
thinking.
    One of NCEE's outstanding products is Financial Fitness for 
Life, a collection of interactive print and electronic economic 
and financial literacy teaching materials. It provides 
standards-based materials for grades K to 2, 3 to 5, 6 to 8, 
and 9 to 12, and a Web site and a workbook for parents, How to 
Talk to Your Kids About Money. I wish that had been available 
when mine were growing up.
    These prizewinning, standards-based, comprehensive, fully 
integrated teaching and learning materials are also being 
translated into Spanish. Financial Fitness for Life teaches 
students how to make sound financial decisions involving 
earning and spending, saving, managing credit and investing.
    We know that we can make a difference in the lives of young 
people while they are in school. I do not want to pass up this 
opportunity, therefore, without making some suggestions 
regarding legislation to enhancing and improving financial 
literacy.
    I commend to you a bill that has been referred to the 
Education and Workforce Committee, H.R. 2990, which would 
establish a commission to educate our Nation's teachers and 
students on financial literacy. This bill, which was referred 
to earlier and introduced by Representatives Biggert and 
Hinojosa, would set up a bipartisan commission which would 
include leading educators and academics as well as 
representatives of the financial services industry, economic 
and financial services organizations and Federal and State 
government agencies.
    Establishing such a commission, I believe, would give us 
all--policymakers, advocates, service providers and educators--
a clearer picture of what is being done, what works, what 
doesn't, and what needs to be done to ensure that all of our 
students are well educated in economics and enter the real 
world financially literate.
    Dr. Duvall. I am acquainted with a number of other current 
bills addressing the financial literacy issue. They are all to 
the good. These initiatives could well become significant 
elements in a comprehensive campaign to improve financial 
literacy in the United States.
    From the perspective of the NCEE, it is vital that any 
legislation include basic principles of economics, not simply 
personal finance narrowly defined. When handling a credit card 
it is very useful, I would say essential, to understand basic 
concepts like opportunity cost, supply and demand, compound 
interest and scarcity.
    Enhancing elementary and secondary education in economics 
provides the grounding necessary for a lifetime of good 
financial decisionmaking. Basic economics taught K-12 is the 
irreplaceable foundation to such a lifelong learning process. 
Just as basic math is an essential first step in learning 
algebra and geometry, learning basic economics provides the 
essential building blocks to becoming financially literate. And 
a better educated group of individuals making better individual 
financial decisions will add up to a more prosperous future for 
this country.
    So thank you again for allowing me to testify today.
    Chairman Castle. Thank you, Dr. Duvall. We appreciate your 
testimony.
    [The prepared statement of Dr. Duvall follows:]

  Statement of Robert F. Duvall, Ph.D., President and Chief Executive 
            Officer, National Council on Economic Education

    Chairman Castle, Ranking Member Woolsey, and Members of the 
Subcommittee on Education Reform--a subject dear to my heart!--thank 
you for inviting me to testify today on the timely, critical, and vital 
issue of improving financial literacy through effective economic 
education.

Who We Are and What We Do
    The National Council on Economic Education (NCEE), is a unique 
nonprofit, nonpartisan partnership directed by leaders from education 
and business, with the purpose of helping young people learn to think, 
choose and function successfully in a changing and challenging global 
economy.
    NCEE was founded after the Second World War, by leaders in business 
and education, who saw the GI's pouring back into the workforce, and a 
growing number of high school graduates entering the workforce, and who 
realized that many of these young people did not have a clue about how 
the free market economic system that they were entering, worked.
    Something needed to be done about the issue then; and that mandate 
is before us today.
    Fortunately, we've learned some things, both about the issue and 
how to address it. One is that the best way to make a real difference 
in the lives of young people--and, indeed, of all Americans--is to 
teach the teachers how to make economics and personal financial 
decision-making skills come alive in the classroom, and to equip those 
teachers, even at the earliest grade levels, with excellent materials 
and resources to carry out that worthy work with good--and measurable--
effect.
    NCEE today is the premier source of teacher training and teaching 
materials used to instill an understanding of basic, practical and 
applied economic principles for students in kindergarten through 12th 
grade.
    Our core program is EconomicsAmerica--for the nation's schools.
    NCEE also conducts EconomicsInternational, an international 
economics teacher-training program, which carries our market principles 
to the world. Congress has provided funding for EconomicsInternational 
through the Cooperative Economic Exchange Program (CEEP), which has 
been included in the Labor, HHS Appropriations bill over the last 
several years. This program has been a tremendous success story in 
international outreach and education, serving 20 foreign countries and 
reaching well over one million students annually. NCEE is grateful for 
the continuing support for this important program.
    In the U.S., the NCEE operates through a nationwide Network of 
state Councils, which can relate to the standards, requirements, and 
circumstances of each state, and 230 university-based Centers for 
economic education. This Network, which delivers NCEE's comprehensive 
EconomicsAmerica program, makes NCEE the nation's leader in providing 
professional development and training for K-12 teachers in economic and 
financial education.
    In addition to teacher training, NCEE publishes and distributes 
books, electronic and interactive materials, teacher strategies and 
resources for classroom use. NCEE's materials are the state-of-the-art 
in the drive to improve economic and financial literacy.
    Each year, NCEE, through our Network of affiliated state Councils 
and university Centers, trains over 120,000 teachers, who in turn get 
into the heads and hands and hearts of over 7 million of our children 
in school. But more needs to be done!

Economic and Financial Literacy
    The need to strengthen, expand and enhance education in economics 
and personal finance in our nation's schools has never been more 
apparent. We must prepare our students with the basics of economic and 
financial literacy so that they can succeed in life. This literacy, 
together with reading and mathematics, is key to home ownership, 
managing credit, financing higher education, saving for retirement, and 
citizenship.
    What happens when individuals leave school and begin their adult 
lives without a basic understanding of economics?
      Savings are neglected. An estimated 30% of Americans have 
not saved anything for retirement.
      Credit card use leads to unmanageable debt and 
bankruptcy. Individuals are maxing out their credit cards at younger 
and younger ages.
      Individuals do not make reasoned purchasing decisions 
because they do not calculate the real cost of products and services.
    In conjunction with the launch of its current Campaign for Economic 
Literacy, NCEE commissioned the independent Lou Harris organization to 
conduct a poll on Americans' understanding of economics and personal 
finance. The poll surveyed a cross-section of adults and high school 
students, asking a series of questions on basic economic concepts. The 
results revealed a profound lack of understanding of these concepts:
      Nearly two-thirds of American adults and students didn't 
know that in times of inflation money loses its value.
      Half of the adults and almost two-thirds of the students 
didn't know that the stock market provides a venue for ordinary people 
to buy stock.
      One quarter confused ``budget deficit'' with ``national 
debt.''
      Only one third understood that active competition in the 
marketplace lowers prices and improves quality.
    In order to address such gaps in knowledge of economics and 
finance, our elementary and secondary schools must integrate standards-
based economic education into their curricula. NCEE, through its 
EconomicsAmerica program and network, and with other partners, is 
striving to accomplish this goal--with the first-ever NAEP Assessment 
of Economics in 2006 as a benchmark.
    By teaching the teachers, NCEE helps equip educators to effectively 
teach economics as a stand-alone subject in high school and to weave 
economic concepts into the curriculum in other subjects, K-12. Our 
network of councils and centers assists more than 3,600 school 
districts across the country in developing and delivering economic 
education. It is this ability to work directly with teachers to 
integrate economics and financial education into the curriculum that 
differentiates and distinguishes the NCEE.
    For example, NCEE, working with the National Council of Teachers of 
Mathematics, has just completed and rolled out a comprehensive 
curriculum, grades 3-12, in Econ and Math: Connections for Life.
    And our Choices and Changes has proven to be the best teaching tool 
in the nation to encourage inner-city and at-risk young people to stay 
in school. It develops an ``economic way of thinking.
    One of NCEE's outstanding products is Financial Fitness for Life, a 
collection of interactive print and electronic economic and financial 
literacy teaching materials. It provides standards-based materials for 
grades K-2, 3-5, 6-8 and 9-12, and a website, and workbooks for 
parents: ``How To Talk to Your Kids About Money!'' These prize-winning, 
comprehensive, fully integrated teaching and learning tools are also 
being translated into Spanish.
    Financial Fitness for Life teaches students how to make sound 
financial decisions involving earning and spending, saving, managing 
credit, and investing.
    Financial Fitness for Life is one of many educational products and 
programs developed and disseminated by the NCEE that make learning 
about economics and finance both practical and experiential.
    Another program for fostering education reform that builds 
financial literacy, which NCEE conducts, sponsored by the Nasdaq 
Educational Foundation, is the National Teaching Awards. These 
exceptional, highly visible awards are presented every year to teachers 
in grades 6-12 who have developed creative and effective methods of 
bringing economic education into the classroom.

What Can Congress Do?
    I do not want to pass up this opportunity without making some 
suggestions regarding legislation to enhance and improve economic and 
financial literacy education.
    I would commend to you a bill that has been referred to the 
Education and Workforce Committee, H.R. 2990, which would establish a 
``Commission to Educate our Nation's Teachers and Students on Financial 
Literacy.'' This bill, which was introduced by Representatives Biggert 
and Hinojosa, would set up a bipartisan commission, that would include 
leading educators and academics, as well as representatives of the 
financial services industry, economic and financial literacy 
organizations, and federal and state governments.
    Establishing such a commission would give us all--policymakers, 
advocates, and educators--a clear picture of what is being done, what 
works, what doesn't, and what needs to be done to ensure that all our 
students are well educated in economics and enter the ``real world'' 
financially literate.
    The commission would accomplish this by focusing on such crucial 
questions as:
      How can economics and finance education be best 
incorporated in the K-12 curriculum?
      What are the best practices in economics and finance 
education today?
      How can the varied and numerous existing federal and 
private sector initiatives be better coordinated?
      How can public-private partnerships be used to improve 
economics and finance education?
    By establishing a bipartisan entity tasked to answer these 
questions, with a tight but sufficient report deadline, H.R. 2990 
ensures that this commission will make a real difference on this vital 
issue.
    NCEE strongly supports timely committee hearings and congressional 
action on H.R. 2990.
    I am acquainted with a number of other current bills addressing the 
financial literacy issue. They are all to the good! These initiatives 
have a great deal of merit. For example, S. 1470, the ``Financial 
Literacy and Education Coordinating Act of 2003,'' introduced by 
Senator Sarbanes, would inventory and coordinate the numerous federal 
efforts to promote financial literacy. Congressman Dreier recently 
introduced a bill--H.R. 3924, ``The Financial Literacy Enhancement Act 
--to implement a multimedia campaign to promote awareness of the 
financial literacy issue. If enacted, such complementary proposals 
would be significant elements in a comprehensive campaign to improve 
financial literacy in the U.S.
    From NCEE's perspective, it is critical that Congress include in 
any financial literacy legislation the core concepts embodied in H.R. 
2990. First, such legislation should include a comprehensive review of 
government and private sector efforts to promote economic and financial 
literacy education. It is crucial to include the private sector because 
they are important partners in the economic and financial literacy 
effort.
    Second, it is vital that any legislation include basic economics, 
not simply personal finance, narrowly defined. When handling a credit 
card, it's very useful--I would say essential--to understand basic 
concepts like ``opportunity cost'' and ``supply and demand'' and 
``compound interest.
    Enhancing elementary and secondary education in economics provides 
the grounding necessary for a lifetime of learning and financial 
decision-making. Basic economics, taught in grades K-12, is the 
irreplaceable foundation to this lifelong learning process. Just as 
basic math is an essential first step in learning algebra and geometry, 
learning basic economics is the essential first step to becoming 
financially literate.

Conclusion
    I am very pleased that the Subcommittee is focusing on financial 
literacy education. Effectively teaching economics and finance is not 
only vital to an individual's success and well-being, but it is crucial 
to ensuring the success of our national economy.
    Better educated individuals making better individual financial 
decisions will add up to a more prosperous future for the entire 
country.
    Thank you again for inviting me to testify today, and I will be 
happy to answer any questions that you have.
                                 ______
                                 
    Chairman Castle. Dr. Lyons, the ball is in your court.

 STATEMENT OF ANGELA LYONS, ASSISTANT PROFESSOR AND EXTENSION 
 SPECIALIST, DEPARTMENT OF AGRICULTURE AND CONSUMER ECONOMICS, 
  UNIVERSITY OF ILLINOIS - URBANA/CHAMPAIGN, URBANA, ILLINOIS

    Dr. Lyons. Mr. Chairman and members of the Committee, I 
appreciate the opportunity to share with you today some of my 
research findings as well as my thoughts on what I believe 
students need to know to plan for their financial futures. I 
recognize that the primary focus of the Committee is to develop 
a better understanding of the financial education needs of 
students in grades K-12; however, in order to develop effective 
financial education initiatives and programs for students in K-
12, it is critical that we develop a better understanding of 
what exactly it is that we are trying to prevent.
    That has been my focus. Over the last 3 years, I have been 
working to develop a number of research-based programs that 
focus on promoting and providing financial education to high 
school and college students, their parents. I have also 
conducted a number of studies related to credit usage and 
financial education needs of college students.
    The most recent study was conducted this past spring. An 
online survey was launched to investigate the credit usage and 
financial education needs of college students in the Midwest. 
Over 150,000 students on 10 college campuses were invited to 
participate, and over 30,000 responded.
    So where are students at today? The findings from my 
research indicate that there are a growing number of students 
who are financially at risk, especially with respect to the 
misuse and mismanagement of credit. Prior research had not been 
able to clearly identify who these students are. However, my 
research shows that there are identifiable groups on college 
campuses that are more at risk than others for experiencing 
financial difficulties.
    Financially at-risk students are more likely than others to 
be financially independent from their parents, to receive need-
based financial assistance, to borrow more in general, to have 
acquired their first credit card before arriving on campus, and 
to have acquired a credit card at a campus table, retail store, 
or over the phone rather than from their parents. These 
students are also more likely to have lower grade point 
averages and to be working more hours. With respect to 
demographics they are more likely to be female, African 
American, and/or Hispanic.
    So what are some of the consequences of financial 
mismanagement? With respect to their ability to complete their 
college degree, over 33 percent of financially at-risk students 
reported having to reduce their course credit hours or drop out 
for a semester due to their financial situation. With respect 
to the impact on their health, over 50 percent of financially 
at-risk students reported experiencing some type of physical 
and/or mental discomfort as a result of their financial 
situation compared to approximately 33 percent of the overall 
sample of students.
    In this same study students were also asked about how 
important and how well they understood the topic of personal 
finance and budgeting. Approximately 87 percent of financially 
at-risk students indicated that they believed the topic of 
personal finance and budgeting was important. However, only 58 
percent reported that they felt that they had an understanding 
of the topic. These findings held true for a number of other 
financial topics including credit cards and terms, savings and 
investing, and planning for retirement.
    Interestingly, students who have taken a personal finance 
course are significantly less likely to be financially at risk 
as are those who have sought out or are willing to seek out 
financial information from their parents rather than friends or 
the media.
    So what do students need to know? Following this online 
study that I conducted in the spring, I held two advisory 
sessions to further investigate the financial education needs 
of students between the ages of 17 and 24. One of the meetings 
was held in the State of Illinois, and the other was via 
teleconference with national researchers, educators and 
financial professionals who have been identified as leading 
experts in the area of financial education for youth.
    Within my written testimony I indicate primarily five key 
areas that the experts identified that were needed to become a 
responsible financial manager. I am going to focus on a couple 
of those key points. One is that students need to understand 
the bigger picture with respect to financial management, and 
specifically the value in being financially responsible. When I 
talk to students, I can talk about this topic for hours and 
hours and hours, and it just goes right by them, but when I 
start bringing up stories about how some of your fellow 
students did not get jobs because credit checks were run on 
them and employers didn't hire them, the lights start going 
off. And so when we can start applying this to what is in it 
for them and what is the value, that is where I think the key 
is.
    Also, in discussion with both the experts and the students, 
a significant number of comments were made in regards to the 
disconnect between parents and their children when it comes to 
talking about finances. There is this belief that students will 
get information through observation or osmosis, but it doesn't 
happen. We talk to our children about sex, drugs, and rock and 
roll, but we don't talk to them about money.
    Also in regards to this I found that students are not 
provided with enough opportunities to be financially engaged. 
To obtain a driver's license a student typically has to take a 
driver's education course. They need to get some practical 
experience on the road, and then they have got to take a test. 
Yet with little instruction or guidance, students can obtain a 
credit card, a checking account or a mutual fund. Practical 
experience can be critical to setting a student on a successful 
path to financial independence.
    With this, I would like to put forth three areas where I 
feel there is an opportunity for the Committee to help support 
and further financial education for students. First, resources 
are needed to support the development of financial education 
programs that specifically target students who are financially 
at risk. These students typically come from demographic groups 
that have historically been constrained by the credit markets 
and who have had limited access to the financial markets, 
namely minority and ethnic groups, women and students from 
families with limited resources. There is evidence from my 
research that financial education reduces the likelihood of 
being financially at risk. There is further evidence that these 
financially at-risk groups have specific financial education 
needs with respect to programs and services. A one-size-fits-
all financial education program may not be effective for all 
students.
    Second, there is a need for educational outreach that 
targets both students and parents. Good financial habits last a 
lifetime. Communicating about financial responsibility is one 
of the first steps parents can take to help students develop 
long-term financial security. However, many parents are also 
struggling with a number of financial challenges. A substantial 
number are overextended with debt and struggling with how they 
are going to pay for their students' college education. Some 
also invested too aggressively in the market and now are having 
to postpone retirement due to market fluctuations. Effective 
financial education for students needs to address both the 
financial education needs of the students and the parents.
    Finally, greater effort is needed at the national level to 
bring awareness to the fact that financial education is just as 
important as reading and arithmetic. My research shows that 
only 27 percent of college students have taken a personal 
finance course. However, over 75 percent of college students 
indicate that they would register for a financial education 
course if offered, an indication that while the majority of 
students have not taken a personal finance course, they 
recognize the value and importance of financial education.
    The bottom line is we have a good understanding of what 
students need to know. The question now is how do we 
effectively incorporate financial education into the classroom. 
This is the challenge, and we have got to make it a priority or 
it is not going to happen. Thank you.
    Chairman Castle. Thank you, Dr. Lyons. We appreciate it.
    [The prepared statement of Dr. Lyons follows:]

 Statement of Dr. Angela C. Lyons, Assistant Professor, Department of 
 Agricultural and Consumer Economics, University of Illinois at Urbana-
                               Champaign

Introduction
    Good afternoon Mr. Chairman and members of the Committee. My name 
is Angela Lyons. I am an Assistant Professor of economics in the 
Department of Agricultural and Consumer Economics at the University of 
Illinois at Urbana-Champaign. I am also an Extension Specialist for 
University of Illinois Extension and the Co-Director for the University 
of Illinois Center for Economic Education.
    I appreciate the opportunity to share with you today some of my 
research findings as well as my thoughts on what I believe students 
need to know to plan for their financial futures. I recognize that the 
primary focus of the committee is to develop a better understanding of 
the financial education needs of students in grades K-12. However, in 
order to develop effective financial education initiatives and programs 
for students in K-12, it is critical that we develop a better 
understanding of what exactly it is that we are trying to prevent.
    Over the last three years, I have been working to develop a number 
of research-based programs that focus on promoting and providing 
financial education to high school and college students in the state of 
Illinois and nationally. The main objective of these programs has been 
to identify and target ``financially at-risk'' students and their 
parents and provide them with the skills and tools necessary to become 
responsible financial consumers.
    To support the development of these resources, I have conducted a 
number of studies related to the credit usage and financial education 
needs of college students. The most recent study was conducted this 
past Spring. An online survey was launched to investigate the credit 
usage and financial education needs of college students in the Midwest. 
Over 150,000 students on ten college campuses were invited to 
participate in the study and over 30,000 students responded.

Results--Where are Students At Today?
    The findings from my research indicate that while the majority of 
students are financially responsible, there are a growing number of 
students who are financially at-risk, especially with respect to the 
misuse and mismanagement of credit. Prior research has not been able to 
clearly identify who these students are. However, my research shows 
that there are identifiable groups on college campuses that are more at 
risk than others for experiencing financial difficulties. These ``at-
risk'' groups have specific needs for financial education programs. 
Addressing these needs insures that they are not at a financial 
disadvantage after graduation and are able to make informed financial 
decisions.
    The results from my research specifically indicate that financially 
at-risk students are more likely than others to be financially 
independent from their parents, to receive need-based financial 
assistance, to borrow more in general, to have acquired their first 
credit card before arriving on campus, and to have acquired a credit 
card at a campus table, retail store, or over the phone rather than 
from their parents. These students are also more likely to have lower 
grade point averages and to be working more hours. With respect to 
demographics, they are more likely to be female, black, and/or 
Hispanic.
    The findings from this research further provide insight into a few 
of the consequences of financial mismanagement. For example, with 
respect to their ability to complete their college degree, over 33% of 
financially at-risk students reported having to reduce their course 
credit hours or drop out for a semester due to their financial 
situation. With respect to the impact on their health, over 50% of 
financially at-risk students reported experiencing some type of 
physical and/or mental discomfort as a result of their financial 
situation compared to approximately 33% of the overall sample of 
students.
    In this same study, students were asked about how important and how 
well they understood the topics of ``personal finance and budgeting'' 
and ``credit cards and terms.'' Approximately 87% of financially at-
risk students indicated that they believed the topic of ``personal 
finance and budgeting'' was important; however, only 58% reported that 
they felt they had an understanding of the topic. The findings are 
similar with respect to the topic of ``credit cards and terms 74% 
believed the topic was important while only 61% felt they understood 
the topic. Students were also asked about ``saving and investing'' and 
``planning for retirement.'' For these topics there was an even greater 
disparity between the percentage gaps between the level of importance 
and level of understanding.
    The findings from this research further reveal that there are 
differences in the level of financial education of financially at-risk 
students as well as differences in their preferences for how they would 
like to receive financial education. Students who have taken a personal 
finance course are significantly less likely to be financially at-risk 
as are those who have sought out or are willing to seek out financial 
information from their parents rather than friends or the media. In 
general, at-risk students are more likely to seek out financial 
information than students who are not at risk.

What Do Students Need to Know?
    Given these general findings, what do students need to know? 
Following the online study, I held two advisory sessions to further 
investigate the financial education needs of students between the ages 
of 17 and 24. One meeting was held in Illinois and the other was held 
via teleconference with national researchers, educators, and financial 
professionals who had been identified as leading experts in the area of 
financial education for youth. Discussion focused on what students 
needed to know to use and manage their finances responsibly.
    The experts agreed that every student needed to know primarily five 
key financial areas to become a responsible financial manager.
    1.  Students need to understand the power of their choices and be 
able to set financial goals.
    2.  Students need to be able to develop a budget and know their 
spending limits especially with respect to credit.
    3.  Students need to understand the basics of credit management and 
the relationship between credit and savings.
    4.  Students need to know how to establish a good credit history, 
check their credit report and protect themselves against identify 
theft.
    5.  Students need to understand the ``bigger picture'' with respect 
to financial management and the value in being financially responsible.
    In discussions with both the experts and the students, a 
significant number of comments were made in regards to the disconnect 
between parents and their children when it comes to talking about 
finances. There is the belief that students will get information 
through observation or osmosis, but that doesn't happen. We talk to our 
children about ``sex, drugs, and rock `n roll,'' but we don't talk to 
them about money.
    I have also found that students are not provided with enough 
opportunities to be financially engaged. To obtain a driver's license, 
a student typically has to take a driver's education course, get some 
practical experience on the road, and then take a test. Yet, with 
little instruction or guidance, students can obtain a credit card, 
checking account, or mutual fund. Practical experience can be critical 
to setting a student on a successful path to financial independence.
How Do We Provide Financial Education? Recommendations
    The recent economic slowdown and the rise in the number of 
bankruptcies for those under the age of 25 have generated concern that 
students are financially ill-prepared to face today's complex financial 
marketplace. Proposed legislation to privatize Social Security has 
intensified these concerns. It is clear that students are facing a 
significant number of financial challenges. Now, more than ever, there 
is a need for financial education.
    The findings presented in this testimony have implications for 
educational outreach and policy for students nationally. I would like 
to put forth three areas where I feel there is opportunity for the 
committee to help support and further financial education for students 
at the national level.
    First, resources are needed to support the development of financial 
education programs that specifically target students who are 
financially at-risk. These students typically come from demographic 
groups that have historically been constrained by the credit markets 
and who have had limited access to the financial markets (i.e. minority 
and ethnic groups, women, and students from families with limited 
resources). There is evidence from my research that financial education 
reduces the likelihood of being financially at-risk. There is further 
evidence that these financially at-risk groups have specific financial 
education needs with respect to programs and services. Thus, a ``one 
size fits all'' financial education program may not be effective for 
all students.
    School administrators, educators, and policy makers need to 
identify which students are most likely to be at financial risk and 
which students may have specific financial education needs. This 
information can be used to provide appropriate financial interventions 
and to prevent these students from being at a financial disadvantage 
when they graduate. Also, resources can be better allocated to develop 
programs and services that specifically target those students who need 
them most. These resources can better help students to build financial 
knowledge, make informed financial decisions, use financial services 
responsibly, and development a sense of financial independence.
    Second, there is a need for educational outreach that targets both 
students and parents. Good financial habits last a lifetime. One of the 
most important and practical discussions parents can have with their 
student is about how to manage money and use credit wisely. 
Communicating with students about financial responsibility is one of 
the first steps to helping them develop long-term financial security. 
However, parents are also struggling with a number of financial 
challenges. A substantial number are overextended with debt and 
struggling with how they are going to pay for their student's college 
education. Some also invested too aggressively in the market and now 
are having to postpone retirement due to market fluctuations. Thus, 
effective financial education for students needs to address both the 
financial education needs of the students and their parents.
    Finally, greater effort is needed at the national level to bring 
awareness to the fact that financial education is just as important as 
reading and arithmetic. My research shows that only 27% of college 
students have taken a personal finance course. However, over 75% of 
college students indicate that they would register for a financial 
education course if offered an indication that while the majority of 
students have not taken a personal finance course, they recognize the 
value and importance of financial education. In the end, I believe that 
we have a good understanding of what students need to know. The 
question now is how do we effectively incorporate financial education 
in the classroom? This is the challenge.
    I thank you for the opportunity to appear today and would be happy 
to answer questions.
                                 ______
                                 
    Chairman Castle. And, Mr. Strong, you are the clean-up 
hitter today.

  STATEMENT OF ROBERT STRONG, EXECUTIVE DIRECTOR, SECURITIES 
 INDUSTRY FOUNDATION FOR ECONOMIC EDUCATION, NEW YORK, NEW YORK

    Mr. Strong. Chairman Castle, Ranking Member Woolsey and 
members of the Subcommittee, I am Robert Strong, vice president 
and executive director of the Securities Industry Foundation 
for Economic Education, and I appreciate the opportunity to 
testify on this very important topic. We support and applaud 
your efforts to improve Americans' financial literacy as well 
as the recent initiatives undertaken by the administration.
    Unprecedented education reform has swept across America 
over the past decade as parents, teachers, legislators and 
business leaders strive to improve instruction and curricula to 
help students learn. These efforts have resulted in new 
education standards, new performance indicators, and rigorous 
standardized testing that in most States will determine whether 
or not a student will be promoted or allowed to graduate. We 
fully recognize that classroom time is at a premium and that, 
above all, we must ensure that students learn, achieve and gain 
the relevant skills to succeed in life.
    America's strength lies in the cumulative knowledge of its 
citizens, and that knowledge must include a basic and thorough 
understanding of the economy and the role of the capital 
markets. Additionally, we must find ways to instruct our 
children, America's future, on how to manage their finances in 
the short term and save and invest for the long term.
    More than 25 years ago, a group of securities industry 
executives formed a nonprofit foundation affiliated with the 
Securities Industry Association to foster a better 
understanding of the American economic system and the role of 
the securities industry within that system. The cornerstone of 
this foundation is the Stock Market Game program, a simulation 
in which students in grades 4 through 12 learn the fundamentals 
of investing through a hands-on experience, investing a 
hypothetical $100,000 in real securities. Teachers receive 
grade-level-specific curriculum guides, lesson plans, and 
newsletters to incorporate into their activities.
    Since the program began in 1977, with 1,600 students 
selecting from around 2,400 listed companies, it has grown to 
more than 500,000 students a year picking stocks from more than 
7,500 companies on the New York Stock Exchange, NASDAQ and 
AMEX.
    SMG has been correlated to the national standards in 
mathematics, economics, and business and marketing, as well as 
to most States' individual standards of learning. The Stock 
Market Game is not an add-on. Indeed we worked with teachers, 
administrators and parents throughout the country to develop an 
intensive standards-based curriculum that can be easily 
assimilated and fully integrated into teachers' regular lesson 
plans.
    We are very proud of the fact that each school year we have 
approximately 25,000 teachers that use the Stock Market Game 
and value the program as one that contributes to student 
achievement in a fun, interesting way, and we are proud that 
our efforts to reach out to traditionally underserved 
populations have been enormously successful.
    The true value of the Stock Market Game is its ability to 
capture the interest of students and teachers as the economy 
comes alive. Events that occur in faraway places or neighboring 
States, cities or towns take on a new meaning as students begin 
to understand how a decision at Daimler-Chrysler in Michigan 
may affect workers and their families in Newark, Delaware.
    The skills and knowledge that SMG students acquire are more 
relevant today than ever. In 1977, only 15 percent of the 
population owned equities. By 2002, that number had jumped to 
nearly 50 percent of households, or roughly 95 million people 
owning equities, according to the SIA/ICI Equity Ownership in 
America report.
    Investors continue to tell us in our annual investors 
survey that they do not feel knowledgeable enough about 
investing, and that they want our industry's help in educating 
them. I am pleased to share with the Subcommittee that 
beginning November 6, SIA will launch an adult version of the 
Stock Market Game on its investor Website SIA Investor. SIA 
Investor Challenge will allow adults and families to research a 
company, buy and sell stocks, and build and monitor their 
portfolio just as students of the Stock Market Game do in 
school. The SIA Investor Website also provides answers to real-
life financial questions and features industry experts 
addressing a wide range of personal financial topics. Barron's 
recently awarded the site honorable mention in its ratings of 
investor education Websites for the second consecutive year, 
and I encourage you to take a look at this highly rated, 
informative site at siainvestor.org.
    We believe that much in the same way that compound interest 
brings great returns over time, so, too, does establishing 
quality educational programs that provide a solid return for 
our children. Thank you for your efforts to advance the goal of 
improving Americans' financial literacy, and we look forward to 
working with you to achieve this essential mission.
    Chairman Castle. Thank you, Mr. Strong.
    [The prepared statement of Mr. Strong follows:]

  Statement of Robert Strong, Vice President and Executive Director, 
         Securities Industry Foundation for Economic Education

    Chairman Castle, Ranking Member Woolsey and members of the 
subcommittee, I am Robert Strong, Vice President and Executive Director 
of the Securities Industry Foundation for Economic Education, 
1 and I appreciate the opportunity to testify on this very 
important topic. We support and applaud your efforts to improve 
Americans' financial literacy, as well as the recent initiatives 
undertaken by the Administration.
---------------------------------------------------------------------------
    \1\ The Securities Industry Foundation for Economic Education 
(SIFEE), an affiliate of the Securities Industry Association, was 
established in 1976 to promote economic education and financial 
literacy among children and adults. The Securities Industry 
Association, established in 1972 through the merger of the Association 
of Stock Exchange Firms and the Investment Bankers Association, brings 
together the shared interests of more than 600 securities firms to 
accomplish common goals. SIA member-firms (including investment banks, 
broker-dealers, and mutual fund companies) are active in all U.S. and 
foreign markets and in all phases of corporate and public finance. 
According to the Bureau of Labor Statistics, the U.S. securities 
industry employs nearly 800,000 individuals. Industry personnel manage 
the accounts of nearly 93-million investors directly and indirectly 
through corporate, thrift, and pension plans. In 2002, the industry 
generated $222 billion in domestic revenue and $356 billion in global 
revenues. (More information about SIA is available on its home page: 
www.sia.com.)
---------------------------------------------------------------------------
    Unprecedented education reform has swept across America over the 
past decade as parents, teachers, legislators, and business leaders 
strive to improve instruction and curricula to help students learn. 
These efforts have resulted in new education standards, new performance 
indicators, and rigorous standardized testing that in most states will 
determine whether or not a student will be promoted or allowed to 
graduate. We fully recognize that classroom time is at a premium and 
that, above all, we must ensure that students learn, achieve, and gain 
the relevant skills to succeed in life.
    America's strength lies in the cumulative knowledge of its 
citizens. And that knowledge must include a basic and thorough 
understanding of the economy and the role of the capital markets. 
Additionally, we must find ways to instruct our children--America's 
future--on how to manage their finances in the short-term and save and 
invest for the long-term.
    More than 25 years ago, a group of securities industry executives 
had a vision: that individuals throughout the United States would 
understand the fundamentals of investing in the capital markets and 
improve the management of their financial affairs. Their idea took form 
as a non-profit foundation affiliated with the Securities Industry 
Association, the purpose of which would be to foster a better 
understanding of the American economic system and the role of the 
securities industry within the system. The cornerstone of this 
foundation would be the Stock Market Game'', a simulation in which 
students in grades four through 12 would learn the fundamentals of 
investing through a hands-on experience investing a hypothetical 
$100,000 in real securities. Teachers would receive grade-level 
specific curriculum guides, lesson plans, and weekly newsletters to 
incorporate into their classroom activities.
    Since the game began in 1977 with 1,600 students selecting from 
around 2,400 listed companies, it has grown to more than 500,000 
students a year picking stocks from more than 7,500 companies on the 
New York Stock Exchange, NASDAQ and the AMEX.
    SMG has been correlated to the national standards in mathematics, 
economics, and business and marketing, as well as to each state's 
individual standards of learning. The Stock Market Game'' is not an 
add-on; indeed, we worked with teachers, administrators, and parents 
throughout the country to develop an intensive standards-based 
curriculum that can be easily assimilated and fully integrated into a 
teacher's regular lesson plans.
    We are very proud of the fact that each school year we have 
approximately 25,000 teachers that use the Stock Market Game'' and 
value the program as one that contributes to student achievement in a 
fun, interesting way. And we are proud that our efforts to reach out to 
traditionally underserved populations have been enormously successful.
    The true value of the Stock Market Game'' is its ability to capture 
the interest of students and teachers as the economy comes alive. 
Events that occur in far-away places or neighboring states, cities, or 
towns take on a new meaning as students begin to understand how a 
decision at Daimler-Chrysler in Michigan may affect workers and their 
families in Newark, Delaware. Students begin to understand economic 
relationships between government, businesses, and individuals.
    The skills and knowledge that SMG students acquire are more 
relevant today than ever. In 1977, only 15 percent of the population 
owned equities. By 2002 that number had jumped to nearly 50 percent of 
households, or roughly 95 million people owning equities (either 
directly or indirectly) according to the Securities Industry 
Association//Investment Company Institute Equity Ownership in America 
report.
    I am pleased to share with the subcommittee that beginning November 
6, SIA will launch an adult version of the Stock Market Game'' on its 
investor Web site: SIA Investor. SIA Investor Challenge will allow 
adults and families to research a company, buy and sell stocks, and 
build and monitor a portfolio just as students of the Stock Market 
Game'' do in school.
    The SIA Investor Web site also provides answers to real-life 
financial questions and features industry experts addressing a wide 
range of personal finance topics. Barron's recently awarded the site 
honorable mention (3.5 out of a possible four stars) in its ratings of 
investor education Web sites for the second consecutive year. The site 
was praised for its ``lengthy, thorough dictionary'' and how ``experts 
bring educational tools to investors'' on the site. I encourage you to 
take a look at this award-winning, informative site at 
www.siainvestor.org.
    In addition, SIA produces Your Guide to Understanding Investing, a 
comprehensive handbook for new and experienced investors, as well as a 
series of educational brochures available in print or online.
    Thank you for your efforts to advance the goal of improving 
Americans' financial literacy. We believe that in much the same way 
that compound interest brings great returns over time, so too does 
establishing quality educational programs that provide a solid return 
for our children. We look forward to working with you on the essential 
mission of improving financial literacy for all Americans.
                                 ______
                                 
    Chairman Castle. We will go to the question and answer 
phase now, and I will yield 5 minutes to myself. I am going to, 
I think, ask one question and ask you each to try to answer it, 
which means you each have about a minute or maybe less by the 
time I get through talking; so be thinking about a fairly rapid 
answer.
    All of you, particularly when we started to look at the 
film clip, but you all talked about age factors in this, and I 
asked the question earlier of the earlier witness about this. 
At what age is it most effective to start the educational 
process? And to me the educational process has become 
infinitely more complicated, and obviously you don't educate 
everybody at age 3. It is a matter of evolution. But indeed in 
the Sesame Workshop has there been a realization that this is 
truly working?
    For example, Dr. Duvall, you talked about a program that 
was grades 3 through 12, as I recall, and, by the way, we can 
talk about it earlier than kindergarten, even though that is 
the jurisdiction of our Subcommittee. I am interested if that 
has changed. Your operation has been going on for some time 
now. With all the new changes in the economy, has that changed? 
And I am very interested also as an add-on, as you go through 
all this and educate these young people in the various ways you 
all spoke about, does this make a connection to their economic 
goals? When they begin to understand this, do their economic 
goals begin to become more realistic? Do the 12-years-olds 
realize that maybe they aren't going to be ballplayers and they 
are going to have to do something else? Are we educating them 
not just in terms of what to do with their money, but in terms 
of how to make money?
    Let us start with Mr. Knell.
    Mr. Knell. I think, Mr. Chairman, you need an educational 
program that tracks different age groups. I mean, there are 
appropriate things to talk to preschoolers about that a 10-
year-old will have no interest in it and vice versa. We believe 
at the Workshop that there needs to be a much better nexus 
between formal and informal education with the underlying 
belief that children do not learn only between 9 o'clock and 3 
o'clock. When Mom takes that preschooler to the grocery store, 
that is an enormous learning experience, and there are probably 
ways to begin to build in a better direct educational 
experience for that preschooler, even making a day-to-day life 
experience like that more relevant to financial education. 
There are things that grocery stores could do to make them more 
kid-friendly to understand those things, et cetera.
    So it is about a partnership between the informal community 
on television and in retail with more formal school settings.
    Chairman Castle. And I meant to mention that in my 
question, but I didn't. I talked about that earlier. I believe 
the media-cultural connection is an extraordinary connection in 
all of this. Frankly, I am glad you brought that up.
    Dr. Duvall?
    Dr. Duvall. Yes. We know that after 60 years of experience, 
that you can teach young people. Our focus is on kindergarten 
through 12th grade, and we know that young people in 
kindergarten, first and second grade can learn some basics 
about saving, borrowing, lunch money and paying it back through 
games, interactive activities that begin to deepen their 
experience.
    One of the problems we face in our schooling, I think, is 
that it is piecemeal, and one of our hopes is that through the 
attention that this Committee and others are addressing to the 
issue, we will begin to see in this country more of a focus on 
an incremental approach to financial education.
    Chairman Castle. Thank you, Dr. Duvall.
    Dr. Lyons, what does your research show you about all this?
    Dr. Lyons. My research is primarily focused on college 
students, but I am familiar with the research that Dr. Duvall 
is talking about, and I completely agree. I think to just add a 
little bit to what he said is the fact that we need to be 
thinking about if we are talking about the younger kids, who 
are they having the contact with? The teachers and parents. And 
I know a lot of times what I hear from the teachers is that I 
don't feel comfortable incorporating this stuff in because I 
don't have a grasp of how to do it. I have got to think more 
about my lesson plans.
    I think if more readily available materials can be there 
for them to easily incorporate things in--and also I am very 
aware that the national council holds parent workshops in 
conjunction with their student curriculums, and I have been 
very involved and had contact with the University of Illinois/
Chicago, their center up there. They have been incredibly 
effective with their parent workshops, tying that in with the 
students and the teacher workshops as well.
    Chairman Castle. Thank you.
    Bob, as I recall, the Stock Market Game is grades 4 through 
12, but do you see a difference in the way you have to approach 
this in fourth grade versus later years or in terms of the way 
the kids absorb?
    Mr. Strong. I think, yes. It is a difficult subject for 
most Americans, much less students, but it is an interesting 
subject, and the language at the 4th grade is the same as the 
language for a 12th-grader or an adult. And the language of 
investing and the language of saving and the language of 
understanding personal responsibility, financial 
responsibility, is constant. And I think what we have tried to 
do is build through the core academics that lesson so it is a 
long-term sustainable initiative that you can build on over the 
years.
    In the earlier grades, using the Stock Market Game, there 
are many options. You could buy on margin, you could short-
sell, you can buy long, you can earn interest on cash balances. 
You don't have to buy any stocks. But the trick is that the 
kids understand that and they begin to understand that the 
money begins to work for them. So through the teacher training 
that we do and the workshops that we do for the earlier grades, 
we limit the lessons, and we help the teachers understand what 
it is they can teach to the standard and identify the indicator 
of success in that individual State's standards of learning. 
So, you know, it's more of a ramp-up approach to building a 
nice solid foundation for understanding what it means to save 
and invest long term.
    Chairman Castle. Thank you. I thank all of you.
    I turn to Ms. Woolsey for 5 minutes.
    Ms. Woolsey. Thank you, Mr. Chairman. Thank you, Mr. Knell, 
for not bringing Elmo. I couldn't sit here with my 3-1/2-year-
old grandson in California if he were in this room and my 
grandson wasn't. It would have been impossible.
    I keep thinking of the 1970's and recycling. I mean, that 
is when my kids all went to school. They brought the lesson of 
recycling home to our family, and believe me, they are all in 
their late thirties and early forties, all four of them, and 
they know to recycle. It was inbred in them. Of course, we are 
from California, Sonoma County, I give you all of that.
    But this is what we want to do with what we are talking 
about today. In fact, these kids can go home and actually pass 
on some of their learning experience to their parents, who want 
to ignore it because there is so much that they are dealing 
with. But I have one question for all of you, and it is looking 
at wanting to prepare our kids and make sure that we are 
successful in getting them where they need to be, can we do it 
by integrating, or do we need to insist on a dedicated program? 
I mean, it would be at different levels throughout the 
curriculum, but can we do it piecemeal, or must it be done by 
dedicating the real time and making it a priority?
    So starting with you, Mr. Knell.
    Mr. Knell. Well, I think obviously we are dealing with 
preschoolers, so it is probably less of a specific program, but 
it certainly could be integrated as part of a basic whole child 
preschool education.
    And I just want to reemphasize the power of media in 
educating kids. And there was a big event this morning that the 
Kaiser Family Foundation released a major study about media 
usage for very young children, we are talking about zero to 6-
year-olds, and you will be astounded at the results out in 
America. The media has become ubiquitous in this country and 
being able to use it in such a way as a teaching tool--parents 
actually view educational television as a very important part 
of raising preschoolers today. It is just second to books in 
terms of educational value.
    We need to harness the power of television and other things 
to include financial literacy as one of those things, again, 
not teaching how Elmo can sell derivatives, but in teaching 
basic values about patience, like Cookie Monster showed and 
responsibility and things like that. So beginning to work those 
things into a basic preschool curriculum I think is something 
that we could do, and then I will hand it off to my colleagues 
to talk about kids in school.
    Dr. Duvall. I think we need to work to have both the 
opportunity to have stand-alone courses in economics and 
personal finance, but where that is not possible or even 
complementary to those stand-alone courses, to be able to 
infuse it into other disciplines.
    The fact of the matter is, as was earlier stated in 
testimony, there are many schools and school districts where 
talking about an add-on is just impossible. So we are not going 
to make very much progress if we try to do that. On the other 
hand, our studies at the NCEE have shown that students who take 
advanced placement economics, particularly students in inner-
city schools and underserved populations who take advanced 
placement economics, get into better colleges and get better 
jobs. So we want to be able to multiply that, but also at the 
same time to be able to infuse it into mathematics, language 
arts so that some business economics and the principles of good 
financial management of your resources are being taught.
    Dr. Lyons. I think integration at the very minimum is 
great. I would like to see us go for the full curriculum, and I 
think where I am coming from as a researcher is I see these 
numerous programs and narratives out there, and we see studies 
like the jump-start study that says, OK, we have got all this 
stuff out there, but yet they are still really doing poorly on 
these tests. Why is this? And in many of the schools, at least 
in the State of Illinois, I mean, we have got a pretty good 
integration going on because we have got a State mandate for 
consumer education.
    So I guess where I am coming from is maybe before we can 
address that issue, taking a step back and saying, why is it 
that what we have got now is not working, because they are 
still doing poorly on these tests?
    Mr. Strong. I think it would be great if there were stand-
alone courses, but I think given the restraints and the demands 
on the classroom teacher to work to help each student meet or 
exceed the standard that is evidenced by a State test begs us 
to consider other ways to teach the same core content in a 
unique, fun and interesting way.
    I think historically the Stock Market Game was used in the 
social studies strand in economics, civics for seniors or 
something like that, but we are finding our largest growing 
group of teachers that are now using the Stock Market Game 
program are math teachers because of the mathematical concepts 
that the students now have to--they have to calculate, compute, 
project. They are doing an awful lot of different things, and 
by the Foundation correlating the game to the standards both at 
the State and national level, and being able to demonstrate for 
the teacher how easily this can be incorporated into their core 
lesson planning by demonstrating the indicator of success that 
each individual State has identified as what each student must 
know, we find that that works, and for us it is a very exciting 
prospect. And I think that, you know, the time constraints and 
the demands on student achievement are what is going to dictate 
this conversation, but the financial literacy discussion is 
paramount.
    Ms. Woolsey. Mr. Chairman, can I ask Mr. Strong just a 
really short question?
    Chairman Castle. Sure.
    Ms. Woolsey. I am assuming that your company doesn't donate 
this game to schools. How do you get it in the budget?
    Mr. Strong. In many places the game is made available at no 
charge. In some cases my partner Bob Duvall here, we are 
affiliated with many of the councils, the State Council on 
Economic Education and Centers for Economic Education, and the 
game is managed by their staff at the local level, and there is 
a charge. But we also work with local firms around the country 
to sponsor the program, and we also work with State regulators 
as well.
    Ms. Woolsey. Thank you very much.
    Mr. Strong. You are welcome.
    Chairman Castle. Thank you, Ms. Woolsey.
    The Chair yields 5 minutes to Mrs. Biggert.
    Mrs. Biggert. Thank you, Mr. Chairman.
    Mr. Knell, I just wanted to say thank you for all that you 
did for my children who grew up on Sesame Street and loved 
every minute of it. And I also learned from Sesame Street. The 
first year of Head Start I was a volunteer in the program one 
summer, and I was in Chicago at Hull House in a Hispanic 
community, and I spoke French and read Latin, but had no idea 
about Spanish. So I would rush home after being a day at the 
center and turn on Sesame Street so that I could learn to count 
and use the few words of Spanish so that I could communicate 
with the students. So I have some feeling that maybe counting 
was some financial literacy that I was able to impart to them. 
But I appreciate all you did.
    Dr. Duvall, Dr. Lyons mentioned your parents' workshop, and 
I know you have a workbook for parents. Could you expand on--a 
little bit on that and how parents gain access to that and how 
it is used?
    Dr. Duvall. As others have testified, we are seeing more 
and more in our work the importance of connecting what happens 
to the students in school with what they take home and what 
happens at home. One of our studies showed that the place most 
young people go to for financial advice through their college 
years is their parents. The question is what kind of advice are 
the parents giving the students, their children? On the other 
hand, in school one of the challenges we face is that there are 
not enough teachers who themselves are comfortable talking 
about economics and personal finance. There is a standing joke 
in our national network that a lot of high school economics 
teachers have the same first name: Coach. They are people who 
have been drafted into doing an economics course, and they come 
to our centers for help in doing that well.
    But the connection between school and home is very 
important so we are trying to add that dimension to all of our 
materials, to have take-home materials that they can share with 
their parents and in doing that electronically, too. There are 
some excellent Websites that we have helped to develop with 
corporate sponsorship like It All Adds Up and The Mint, which 
can be used by parents to talk with their children about money 
matters.
    Mrs. Biggert. But how does this get out? If teachers are 
trained, they don't know to tell the children--do you 
distribute the materials to the school, and then they take it 
home?
    Dr. Duvall. Yes. It is distributed through the schools, 
through the teachers as take-home materials. But we also are 
working all the time to get the word out, the advocacy role, to 
let parents and school districts and teachers know what is 
available. There is such a wealth of materials available that 
one of the challenges is being able to help people sort it out 
and know how to use it. But increasingly as we are able, 
through our national network and other means, to get the word 
out about these Websites that can be helpful and about the 
educational programs that are available, we are finding that 
the calls are increasing from parents, what have you got for 
us, and that we are able to give a good answer.
    Mrs. Biggert. I would suppose so that many of these parents 
could probably use it to be the most helpful don't have access 
or don't have computers yet, although we think that most people 
are involved.
    Dr. Duvall. That is why the core of our work is still the 
print publications.
    Mrs. Biggert. Mr. Knell, you had talked in your testimony 
that you used the network of child care resource and referral 
agencies to help distribute your financial literacy materials 
to the underserved communities. Was this an effective method of 
distributing them?
    Mr. Knell. It is actually being rolled out as we speak. It 
started in September. We are going to go back and do some 
testing as we like to do. Again, these are parent-directed 
materials; so we want to make sure that parents are the ones 
who are gaining from this knowledge. It is more of an awareness 
that you can have a big impact as a parent or a child care 
provider in a group setting or as an individual. So we will be 
going and testing those, and we will be happy to report back to 
the Committee how that turned out.
    Mrs. Biggert. It would be interesting to have your results.
    Dr. Lyons or Mr. Strong, do you have anything other to add 
on the awareness or how we get the word out as far as financial 
literacy?
    Dr. Lyons. I think it just comes down to the fact that we 
really do need more national awareness on this. Even at the 
State level, I mean, it is hard to push things in the 
classroom, but if there is national backing on this, that 
really helps. And I think also--I think--you know, I mentioned 
this before, but we have got so many programs and initiatives 
out there. Let us take stock of what we have got and evaluate 
it, what is working and what is not working. I don't think we 
have a good grasp on that yet. And then let us take that to the 
national level and say, here are the success stories, let us 
run with this and do this.
    Mrs. Biggert. Thank you.
    Mr. Strong?
    Mr. Strong. I think that is true. We work with the 
councils, and we work with many newspaper and education 
programs throughout the country, and we do advertising and 
print mailings. We attend many of the conferences, national 
Council of Teachers of Mathematics, social studies. We work 
with a lot of vocational student organizations like DECA, and 
Future Business Leaders of America, and professional teacher 
groups to sort of demystify what financial literacy is, and the 
way we can demystify that is by showing them that they can 
teach it, and they can also learn by doing some of those 
things. And I think that is one way to do it for sure, and I 
think Dr. Lyons touched on something a minute ago about finding 
some champions.
    In Chicago we have a wonderful champion for the Stock 
Market Game. We have a young man. His name is Martin Cabrera, 
who played the game 20 years ago at a high school in the south 
side. He lost his father when he was 12, and he was hooked onto 
the Stock Market Game from a teacher. We met Martin when I was 
in Chicago for a dinner at the Illinois Council on Economic 
Education dinner, and the bottom line is that Martin, through 
his participation in the Stock Market Game, now owns Cabrera 
Capital Management in Chicago, and there isn't a week that goes 
by that I don't have Martin calling me to do something in 
Chicago or somewhere else.
    Those sort of--I will call them heroes, they recognize the 
value of the game. They recognize the value of the alternative 
learning, while still the teachers recognize the value of 
taking something that is such a necessary life skill and 
finding a way to fit it into the core content area. And that is 
where I think we are the most proud is that we do everything we 
can to support the teacher, and if we can help the teacher 
understand the material through teacher training and workshops 
and online tutorials, et cetera, then we win, and then the kids 
win.
    Mrs. Biggert. Thank you.
    Thank you, Mr. Chairman.
    Chairman Castle. Thank you, Mrs. Biggert.
    Mr. Hinojosa is recognized for 5 minutes.
    Mr. Hinojosa. Thank you, Mr. Chairman.
    Mr. Knell, my two youngest daughters, one 7 and one 10, 
love Sesame Street, and I took them on our family vacation this 
last August in the summer to Mexico, and neither had been 
practicing Spanish; so this was an opportunity for them to take 
a few classes. And so we would ride a bus from where we were 
staying to the school, and I made the youngest one, the 7-year-
old, the cashier and be responsible every morning for coming up 
with enough currency to pay the bus driver for the whole 
family. And in 2 weeks she became an expert in speaking to the 
bus driver and controlling the money part as a cashier. So it 
is amazing how much children can learn even at the age of 7.
    So just 2 weeks ago there was a function in front of our 
home, a garage sale that they called it, for the block party, 
and she set up a booth, and she sold doughnuts, Cokes, and 
coffee, and made $32 in about 4 hours, and it was amazing how 
she could handle the change and everything that was going on. 
So there is no doubt that your programs are working.
    And to you, Dr. Lyons, I think that you are addressing a 
group that is of great interest to me, and that is the college 
students, high school graduates and college, because that is 
where I am getting so much feedback that they want help, they 
want the education.
    Dr. Lyons. I think it is an issue of remedial versus 
prevention, and with the college students it is the prevention.
    Mr. Hinojosa. I agree.
    And for you, Mr. Strong, I am going to ask you a question 
because I think that the Stock Market Game that you described 
is one that is being played in my congressional district by 
some of the schools with the help of the newspaper the Monitor 
that is in this area, and all the students who play the game 
and compete with teams from other schools are enjoying 
themselves.
    So tell us how does the program operate; No. 2, how does 
the Stock Market Game fit in with the curriculum being taught 
today? And the last question is how does the Stock Market Game 
fit in with overall student achievement?
    Mr. Strong. Thank you, Congressman.
    The way the game operates, and we work with teachers around 
the country in school districts, there is an 8- to 15-week 
window that students can participate, and depending on the 
school district or block scheduling, we can adapt to that local 
school district's needs. And the kids operate in teams of three 
to five, teachers--it is suggested that they pick different 
levels of student achievement for the kids and develop these 
teams. And the students receive a portfolio with a hypothetical 
value of $100,000, and they are tasked with developing--doing 
research and developing companies that they may like to invest 
in.
    For example, in Wilmington, Delaware, a few years ago we 
did a program with the Stock Market Game at Wilmington High 
School, and the students were required to pick three companies 
from the State of Delaware out of their portfolio because they 
have to pick a minimum of five stocks. We want them to build 
basically a mini mutual fund, and we want them to understand 
risk and diversification and the value of long-term savings and 
investing. Those are the core concepts right there, and the way 
we do that is through the core academics, but as they are 
developing this portfolio, we are trying to give them an 
understanding and a taste for what goes on in their community.
    So, for example, one thing we know anecdotally and we hear 
this around the country is that students will go home and talk 
over the dinner table about their stocks, and parents will tell 
us, my son came home and asked me, Daddy, you and your 401(k) 
or you and your 403(b). And that is an exciting conversation. 
We hear that from brokers, and we hear that from teachers as 
well.
    So over the course of 3 weeks, they compete, and they are 
competing against other schools, same grade in a specific 
geographic region, and at the end of the 8 weeks or 15 weeks, 
there is a winner, and there is a winner based on the value of 
the portfolio. But I will strongly suggest that the students' 
portfolio that has the least value, they win just as well. The 
opportunities that they are offered, speakers in the classroom 
from member firms' brokers where possible, trips to exchanges 
like the New York Stock Exchange or Cincinnati, or trips to 
Federal Reserve banks. So we work with a lot of different 
groups to reinforce all the components that comprise the 
economy, and the capital markets are one big piece of that.
    Mr. Hinojosa. I like that competition and the fact that 
there will be a winner at the end of that program, but I hope 
that you would consider expanding the program to include 
programs such as the Federal Deposit Insurance Commission's 
Money Smart. That program is one that I have been trying to 
promote in my area both in English and in Spanish, and it is 
one that possibly could help us enrich this financial literacy. 
I think that there is a lot to be said about that Money Smart 
that FDIC is promoting and would like to see you consider that.
    Mr. Strong. We are looking--there is a competition, and the 
kids do get excited about the competitive nature of it.
    One of the things we have done with two other groups for 
various other themes has been with DECA, which is the 
vocational student organization, and with the National Academy 
Foundation, and in both those instances, with NAF, for example, 
NAR Academy of Finance, we have taken the Stock Market Game and 
inserted it into the securities course, which is a semester-
long course in the school. So at the end of that semester, the 
students will have to demonstrate their competency not by 
dollar value of portfolio, by depth and breadth of 
understanding of what it means to save and invest in long term.
    And with DECA, what we did with DECA as well was we created 
a competitive event for their students to participate at the 
national level. Last year we had our first national winner. But 
the students in a blind pick from regions presented their 
strategies, and it had nothing to do with dollar value.
    Mr. Hinojosa. Thank you, Mr. Strong.
    Chairman Castle. Thank you, Mr. Hinojosa.
    Mr. Osborne is recognized for 5 minutes.
    Mr. Osborne. Thank you.
    I would like to thank the panel for being here. I find this 
very interesting. I used to work with young people in a college 
setting, and I found that even though you could present a lot 
of information to them, that sometimes there is almost a 
visceral emotional reaction to money, and there is a mindset 
that if you have it, you spend it, and that somehow you are 
going to hit the lottery. So some folks, even though they 
intellectually know it, rather than taking $100 a month and 
investing it, will buy lottery tickets, and they realize 
probably intellectually that they will come out ahead investing 
$100, but they will still do it.
    The National Football League Players Association indicates 
that 50 percent of the players coming out of the National 
Football League are broke, and most of these guys have had 
hundreds of thousands, if not millions of dollars, in salary.
    So this is a very difficult question. It is a very broad 
question, but have you given any thought as to how to change 
this mindset? Because it seems like we sort of have a mentality 
on the part of a large part of our population today that they 
are going to have it all now, instant gratification, and in the 
end the government will take care of you, and we all know that 
that may not happen.
    So it is a concern of mine because I saw a lot of lives, I 
think, somewhat wrecked by that type of thinking, but it is so 
prevalent, and it is prevalent even among educated people who 
have been taught the theory of compounding, who have been given 
classes that have shown them the consequences of that type of 
thinking.
    So it may be an impossible question, but have you given any 
thought as to how you sway such ingrained cultural or almost 
emotional ways to dealing with money?
    Mr. Knell. We certainly believe starting early is what you 
have to do, and it is really about values education at the end 
of the day, and it is building in values about patience and 
responsibility, to have small children understand that you 
can't always have what you want, and being able to extend that 
to older children, even adults, eventually; right? And we think 
building in values education is a very important part of a 
young child's experience and building that kind of a base, and 
make certain that parents are also reinforcing that at home to 
their children. Parents have an enormous sway over what their 
children learn, and I think by making this connection for them, 
which we can do through the media and through leadership in 
Washington and elsewhere, that will go an enormous way toward 
beginning to build those values in, Congressman. And I 
completely agree with your concern, and we would like to help.
    Dr. Duvall. I think it is a matter of education, and we are 
seeing some trend lines that would suggest that we are gaining 
some ground in the very issues that you are articulating, 
Congressman. The job is never done. There is always a new 
generation. There is always a new set of challenges, but I 
think cumulatively we are beginning to be able to be more 
effective in teaching the teachers and in reaching the parents, 
getting into the homes with the kind of values education that 
was just mentioned and with a sense of responsibility.
    In a way perhaps some of the hard times that we have been 
going through in the last couple of years help encourage 
questioning, encourage an awareness of the need to have a 
better understanding of how the real world works and to try to 
get that understanding through education. It says that--real 
estate people say location, location, location. I think it is 
education, education, education. We just keep chipping away at 
it, trying to do a better job all the time with new approaches, 
with innovative ways of getting the message across like the 
Stock Market Game, and getting some of these basic concepts 
into the heads of young people so that they do use them and 
apply them.
    Dr. Lyons. I think before we even start trying to think 
about a solution to that question, I think we need to think 
about what might be the causes of that. I mean, I don't think I 
am that old, and I think about all the financial changes that 
have occurred in the last 10 years. And we gave a lot of--threw 
a lot of new financial innovations at people that did not have 
access to that before, and we didn't really give them financial 
education about how to use that, especially credit, especially 
for low-income minority groups and women, who historically did 
not have that access to credit.
    So, you know, one of the things that come to mind is just 
thinking about the fact that we had all these technological 
challenges, there is so much more. It is not just balancing a 
checkbook anymore that we are teaching. It is like the Stock 
Market Game, investing and mutual funds and all these 
complications.
    I think another thing we need to think about is just when I 
talk to all these different groups at the different levels, 
whether it be researchers on a university campus, 
administrators for elementary schools and high schools, 
teachers in the classroom, students, parents, there seems to be 
some sort of disconnect between all of these groups. And I am 
not sure what exactly is going on or how we can kind of bring 
everybody together on the same page, but I think everybody 
might be coming at this from a slightly different angle and 
trying to get everybody more connected on this. And also I 
think it is just more the bottom line is, you know, fast-paced 
lives. Everything now is so fast, so quick and so easy, and I 
think that is carried over into the financial setting not just 
of how students see things, but they do what they see, and, you 
know, the parents are in--households are in so much debt now 
themselves that they do what they see, so-- .
    Mr. Strong. I think we will all agree that children model 
what they see, their experiences. And the statistics speak for 
themselves about the number of households that are in trouble 
and how many adults are in trouble. So the children, that is 
where they are going to get--the majority of their information 
they are going to receive at home anyway.
    And I think that that is one of the good things about the 
new SIA investor Website for adults is that we are now going to 
provide a place for adults to participate in a simulated 
investment account and begin to understand why you need to save 
and invest for the long term, and I think that will have some 
spill-over effect onto the students.
    And as we continue to build the program for the students--
and we have talked about a lot how to do this, stand-alone 
classes, integration, but we are looking at accountability, we 
are looking at State testing, we are looking at No Child Left 
Behind. And I think it is important that we find a way, and I 
sort of call it stealth learning, where we are able to take 
difficult concepts like economics, for example, or savings and 
investing and incorporate it into the core academics. You are 
able to help a student understand in real terms something that 
they probably wouldn't do if you just stood there and told them 
you need to open a bank account or you need to save or you need 
to invest.
    Here there is applied learning. We know that applied 
learning works. We know that contextual learning works. The 
whole movement out of Brown was about if a student can teach 
another student, they win, they have mastered it, and I think 
that is what we need to be doing. We need to be demystifying 
these subjects that probably don't get a whole lot of time at 
home or even on the job and find a way to incorporate it into 
the core academics.
    Mr. Osborne. My time is up, Mr. Chairman, but I might offer 
just an observation. I know part of Head Start is to involve 
parents, and it may be that even this part of the Head Start 
program, maybe if parents are given some information that they 
can use, it might develop some attitudes in children that--and 
I really like your comments about values because basically that 
is what it comes back to. So I yield back. Thank you.
    Chairman Castle. Thank you, Mr. Osborne. We appreciate your 
questions and your comments.
    Ms. Majette.
    Ms. Majette. Thank you, Mr. Chairman, and I thank the 
witnesses for being here this afternoon, and if Elmo is 
available--I serve on the Budget Committee. If he is available 
to come and talk to us about deficit spending and balancing the 
budget, I would really enjoy that.
    Mr. Knell. That is the Count.
    Ms. Majette. I am sorry. The Count.
    I agree with just about everything that all of you have 
said, but my concern is that we have really gotten away from 
basics, and I was disturbed to see in the National Council on 
Economic Education their survey that was published in April of 
2003 that their 2002 survey findings showed that only 17 States 
out of 50 plus the District of Columbia, only 17 States 
required an economics course to be offered, and then only 14 
States required students to take an economics course. So even 
if 17 States offered it, only 14 States required students to 
take it.
    And, Dr. Duvall, you talked about students taking AP 
economics and how we can integrate this kind of education with 
that, but if you are looking at only 14 States that have 
students--that require students to take an economics course, 
and I think we can see that the majority of States, the 
majority of students aren't even getting that basic training. 
So I am very concerned about how we are going to actually 
really educate our citizens so that they can know what they 
will need to know and be able to integrate the information that 
you all have talked about. And certainly having parents that 
can teach children is very important. I learned a lot about 
balancing a checkbook and managing money from my parents, and I 
know my children have learned a good deal from me and my 
husband.
    But what are we going to do about this lack of basic 
education, or do you see that having the kinds of programs that 
you have talked about will supplant or can supplant that basic 
education in terms of economics?
    Dr. Duvall. You referred, and thank you, to this report 
card on the Nation, what the States are doing in terms of 
setting standards, State-by-State requirements, the mandate 
that it be taught and taken, and testing and assessment that is 
being done in economics and in personal finance, and copies of 
this have been made available to the Committee. I think, as I 
said earlier, that our essential challenge is to keep working 
with you to effect education reform, reform in the direction of 
making economics and financial education part of the core 
curriculum rather than just an elective, an add-on, and I think 
we do that by, as some of my colleagues have indicated, 
demystifying economics. Too many people think of it as to what 
they do at MIT, not what you do around the kitchen table when 
you are making basic decisions as a consumer, saver and 
investor and so forth.
    We are making some progress in that direction of being 
advocates and calling public awareness to the need for 
improving economic and financial literacy, as this meeting 
today indicates. But we have got to make some deliberate moves, 
and that is why I would urge the formation of a national 
commission that would take a look at best practices and make 
some recommendations for how that could be pushed in the 
future.
    Ms. Majette. Dr. Lyons?
    Dr. Lyons. I just want to say I love the point that you 
made about 17 States offering an econ course and then 14 
requiring it, because I think this is kind of the bottom line. 
The burden of this is on the teachers, and we are not there 
when they close the door and teach them. And if they don't have 
the incentives--I mean, the incentives that are there now, at 
least from the State of Illinois, and I think this is fair to 
say nationally, is that they have got the pressure of whatever 
State exams there are, that they have got to be making sure 
that they teach those things so that they are covered when the 
students take those State exams.
    And then the other thing is, and this is an observation I 
have made in my research, is that those students who tend to 
get this information the least are those that are college-
bound. The community college students are doing much better. 
They typically tend to take the personal finance course, and 
the reason is because there is all this--they need to have this 
for college, this for college, this for college. We don't see 
personal finance or, you know, some type of financial 
management on that list.
    Mr. Strong. In education, we speak of paradigms; and it is 
very difficult to change the ways we approach a given subject 
in schools.
    I think that one of the ways that we have been successful 
with the stock market game is that it is not limited to a 
particular course but rather it is available through the 
curriculum. I think by having correlated the game to the 
standards in mathematics, which is our largest group of 
teachers, to economics, to business and marketing--and we are 
working on the English language arts standards as we speak, 
because that is another way students can do extemporaneous 
research in business. Time is the issue, but this is a subject 
that transcends the curriculum, and I think you can find places 
almost across the board where you can include the discussion 
about financial literacy and savings and investing long term.
    Mr. Knell. If I could just have one word, as media use 
grows, kids are getting targeted younger and younger. Their 
spending habits are being set at an extraordinarily young age. 
Do not wait until they are in middle and high school to start 
teaching these values. It is critically important we start very 
early.
    Ms. Majette. I agree.
    Thank you.
    Chairman Castle. Well, on that word of caution, great words 
of wisdom throughout the day, we appreciate this panel being 
here, sharing with us your thoughts.
    I think there is a long way to go in this area, and I think 
you have given us a good base for it all, and we appreciate 
that. If there is nothing further, with that we stand 
adjourned.
    [Whereupon, at 4:35 p.m., the Subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

  Response of Dr. Robert Duvall to a Question Submitted for the Record

To: The Honorable Judy Biggert
Committee on Education and the Workforce

From: Robert F. Duvall
President & Chief Executive Officer
The National Council on Economic Education (NCEE)

Date: November 4, 2003
NCEE: Leading the charge for economic & financial literacy for 54 years

Subject: Follow-up Question from Testimony Given to the Sub-Committee 
on Education Reform, October 28, 2003:

What do you see as the relationship between economics education and 
        financial literacy?
    The question about what we mean when we use the terms ``economic 
literacy'' and ``financial literacy'' received considerable attention 
in the first National Summit on Economic and Financial Literacy, which 
the National Council on Economic Education (NCEE) convened and 
conducted, together with the Federal Reserve, in May 2002. The 
consensus of the symposium at that time--and, I believe, the growing 
common practice today--is that Financial Literacy serves as the 
umbrella term for referring to useful knowledge of concepts and 
principles of applied economics and personal financial decision-making 
skills.
    Too many people think that Economics is what the academics do at 
MIT or Harvard, not what they do when making decisions about managing 
resources, planning for retirement, or how to vote on public policy 
issues.
    But practical, applied Economics is already for the most part 
included in the accepted core curriculum in our nation's schools. All 
but two states include Economics in their standards.
    The Voluntary National Content Standards in Economics (published in 
1997 by the NCEE, a non-profit, non partisan foundation), include what 
students ought to learn in Personal Finance as a sub-set of basic 
Economics, integrated with knowledge of concepts such as ``scarcity,'' 
``comparative advantage,'' and ``opportunity cost.''
    The first-ever NAEP Assessment of Economics, scheduled for 2006, 
will use the Voluntary National Content Standards in Economics as the 
framework for its tests. The NAEP Assessment treats Personal Finance as 
a component of effective education in Economics.
    The educational goal--the goal of the NCEE--is not to make all 
citizens economists, but to make them financially literate.
      Financial literacy means that people have an 
understanding of economics that informs personal finance and public 
policy decisions.
      Financial literacy is a two-step process that begins with 
personal finance and leads to broader economic issues that all of 
society faces.
      Economics education leads to ``the economic way of 
thinking,'' where personal planning, saving and investing, and issues 
of citizenship, responsibility, and ethics are joined.
      Financial literacy, therefore, is not simply a matter of 
balancing one's checkbook, or paying off one's credit card, or avoiding 
predatory lenders--important as these concerns are. It is knowledge--
like ``literacy'' in language and mathematics--that puts such matters 
into a context and enables one to evaluate them.
    Financial literacy is the result of economics education. And 
because we are seeing more and more the dire consequences of financial 
illiteracy, we are coming to recognize the critical importance in real 
education reform of more and better sound, basic, applied, practical, 
sustained, and incremental education in economics.

Respectfully submitted,

Robert F. Duvall
                                 ______
                                 

                Additional Statement of Dr. Angela Lyons

    In my October 28, 2003 testimony at the subcommittee's hearing 
entitled, ``Financial Literacy Education: What Do Students Need to Know 
to Plan For the Future,'' I stated that ``a greater effort is needed at 
the national level to bring awareness to the fact that financial 
education is just as important as reading and arithmetic.'' With 
respect to this testimony, you have requested that I provide a written 
response to the following question: ``Do you think that a national 
outreach campaign and Presidential Commission would accomplish this?''
    The recent economic slowdown and the rise in the number of 
bankruptcies for those under the age of 25 have generated concern that 
students are financially ill-prepared to face today's complex financial 
marketplace. Proposed legislation to privatize Social Security has 
intensified these concerns. It is clear that students are facing a 
significant number of financial challenges. Now, more than ever, there 
is a need for financial education. The challenge is how do we 
effectively incorporate financial education into the classroom and into 
students' everyday lives?
    Efforts to launch a national outreach campaign and Presidential 
Commission related to financial education would be welcomed by the 
financial education community. However, without having a proposal to 
review, it is difficult for me to make recommendations as to whether 
these efforts would be effective. Numerous programs and initiatives 
currently exist that promote and provide financial education to 
students at the local, state, and national levels. Yet, studies such as 
the one recently released by the Jump$tart Coalition indicate that 
students continue to do poorly when it comes to financial education.
    Thus, while interest in financial education is welcomed at the 
national level, I am concerned that a national campaign may not 
``trickle down'' to changes at the local level in terms of 
incorporating financial education into the curriculum. If a national 
campaign were launched, it would first need to take stock and 
critically examine the efforts that are currently underway to determine 
what is working and what is not. An effective national campaign would 
also need to move beyond brochures, press releases, and websites and 
focus on 1) placing resources in the hands of local teachers and 
community-based organizations and 2) providing support to current 
educational programs with proven results.
    We need to remember that curriculum decisions and educational 
programming are primarily made at the local level. At the beginning of 
the day when the school bell rings and the classroom doors close, it is 
up to the teachers to insure that financial education has been 
effectively incorporated into the classroom. Right now, teachers are 
under a tremendous amount of pressure to focus on reading and 
arithmetic. They have the pressure of making sure that their students 
score well on state exams and that their students are adequately 
prepared to pursue opportunities at the post-secondary level.
    Efforts at the national level are needed to provide incentives at 
the local level for teachers and administrators to insure that 
financial education is effectively being taught as individual courses 
and/or integrated into current curriculum. Incentives are also needed 
to encourage community-based organizations to provide financial 
education to both students and parents (i.e. after school programs, 
parent workshops, programs through faith-based organizations).
    School administrators, educators, and community leaders are aware 
that financial education is important. However, the challenge for them 
is finding ways to incorporate financial education into the classroom 
and community given limited time and resource constraints. In 
situations such as these, curriculum and programming decisions are made 
according to where incentives and resources are currently available. 
Specifically, what is needed right now are financial resources at the 
local level to send the message that financial education is just as 
important as reading and arithmetic.
    I would encourage the committee to consider a single federal 
government entity that would pool resources to aid in the delivery of 
community-based educational programs through a competitive grants 
program. One agency that is currently is place that would be adept at 
providing this service is CSREES (the Cooperative State, Research, 
Education, and Extension Service). Historically, CSREES has a proven 
track record of helping to put resources in the hands of state and 
local organizations to deliver effective, performance-based 
programming.
    If a national campaign is launched, I would also encourage the 
committee to think about moving away from using the term ``financial 
literacy'' and instead using ``financial security.'' A number of groups 
at the state and national level have made this switch. The reason being 
that financial literacy simply means that you are more knowledgeable 
about your finances where as financial security implies that knowledge 
has been translated into financial action (increased savings, reduced 
debt levels, etc.).
    Thank you for the opportunity to provide additional testimony. 
Please do not hesitate to contact me if you need further assistance. I 
commend the committee for its efforts to address this issue at the 
national level. A difficult challenge lies ahead, and I would welcome 
the opportunity to provide whatever assistance I can to aid in the 
development of a national campaign or Presidential Commission.
                                 ______
                                 

    Statement of John Bryant, Founder, Chairman and Chief Executive 
                      Officer, Operation HOPE Inc.

    First and foremost, thank you for inviting me to give testimony on 
the vital importance of economic literacy in our country to the U.S. 
House Committee on Education, Subcommittee on Education Reform.
    I am also honored to be here representing the only national urban 
delivery system for economic literacy in the nation today; Banking on 
Our Future.
    Even as I prepare this important testimony for leaders in the 
United States Congress, I am literally traveling across America 
promoting the vital importance of economic literacy in our 21st Century 
American economy.
    From Los Angeles, California co-teaching with California Insurance 
Commissioner John Garamendi, Watts, California with superstar singer, 
actor and model Tyrese, to Oakland, California with Donald McGrath, 
president and chief executive officer of $25 billion asset Bank of the 
West, to Portland, Oregon with Tom Perrick, president of the Oregon 
Bankers Association, to Cleveland, Ohio with Federal Reserve Bank of 
Cleveland President Sandra Pianalto, to New York City with New York 
State Banking Superintendent Diana Taylor, to Kansas City just today 
with Federal Reserve Bank of Kansas City President Tom Hoenig, I and 
Operation HOPE have embarked our 3rd Annual Banking on Our Future 
Across America economic literacy marathon; covering 12-cities over 60-
days, with more than 1,000 volunteer banker-teacher HOPE Corps members, 
teaching inner-city and low-wealth youth the basics of checking, 
savings, credit, investment and the history of banking.
    In the coming weeks I will co-teach celebrity Banking on Our Future 
economic literacy educational sessions in Chicago, Il, with Chicago 
City Treasurer Judith Rice, Roberto Herencia, president of Banco 
Popular and others, in Boston, Mass. with popular Boston Mayor Menino, 
the Boston superintendent of schools, Lynn Pike, managing director of 
consumer banking for Fleet Bank, Robert Mahoney, vice chairman of 
Citizens Bank and others, in Baltimore, Maryland with Maryland Lt. 
Governor Michael Steele and Donn Weinberg of the $2 billion asset 
Weinberg Foundation, a foundation focused on poverty eradication, and 
our nation's capitol, Washington, D.C., where Mayor Anthony Williams, 
like the mayors of Los Angeles, New York and Boston, respectively, will 
proclaim it BANKING ON OUR FUTURE DAY IN THE DISTRICT OF COLUMBIA and 
co-teach a culminating economic literacy session on December 11th, 
2003, along with FDIC Chairman Donald Powell, the national honorary 
chairman of Banking on Our Future Across America, and myself.
    At the end of this marathon we will have taught approximately 
20,000 youth economic literacy, building upon our year-round, national 
program and economic literacy movement Banking on Our Future, which has 
taught more than 112,000 youth, grades 4-12, in hundreds of partner 
schools, faith-based institutions, Boys & Girls Clubs, after-school 
programs and wherever else we find youth.
    And why all of this effort around economic literacy, and youth?
      Because approximately 80% of the energy driving our 
national economy is provided by you and me, the U.S. consumer.
      Because we have a President that wants each of us to 
manage our own Social Security accounts, when the facts suggest that 
most of us, today, cannot manage our own checking account.
      Because Wells Fargo Bank, just a few short years ago, 
changed its name to simply Wells Fargo--dropping the work BANK; thus 
stressing their new focus on becoming a leading, diverse and 
sophisticated provider of a broad range of ``financial services.'' And 
with this change came the need for us--their customers--to understand 
MORE, not less.
      Because the number one cause of divorce in America, still 
today, is money.
      Because there were 1 million non-business bankruptcy 
filers in America in 2000.
      Because there were 1.5 million non-business bankruptcy 
filers in 2001, and more than 1.7 million (filers) in 2002. Almost a 
100% increase in just two-years time.
      Because the LARGEST GROUP of bankruptcy filers in 
America, according to a report by the Jump$tart Coalition, is youth 
between 18-24 years of age! Those are not Black kids, or Latino kids, 
but mainstream (read White) middle class young adults.
      Because the average junior in college has approximately 
$3,000 in consumer dept, and the average senior in college has 
approximately $7,000 in consumer dept, (4) four credit cards, and no 
job.
      Because recent studies have confirmed that more than 1/
3rd of all graduating college students have no clue how they will make 
their FIRST payment on student loans!
      Because the tragedy of 9/11 was not only a human and an 
emotional disaster for America, but in the three months following 9/11, 
it also devolved into an economic disaster in communities, cities and 
states clear across America. American consumers--the drivers of our 
economic engine--became dear caught between economic headlights.
      Because a good deal of our economic stability relies on 
confidence--our personal, individual confidence. In short, in order to 
make good decisions for our families, and ourselves and in order to 
ultimately become not only good consumers, but good savers, borrowers, 
clients and customers--America needs to be economically literate. AND 
WE ARE NOT.
    We live in the largest and fastest growing economy in the world 
today, yet no one is teaching our kids to be economically literate. No 
one is teaching our kids what I call Life 101 skills; the basics of a 
checking account, a savings account, and the importance of credit and 
investment in their young lives.
    And while Operation HOPE, a national 501 3 non-profit charitable 
organization, has 9 non-profit companies under its umbrella, my legacy 
leaver is Banking on Our Future; teaching every child in a major urban 
city in America economic literacy by the time they reach 8th grade.
    My Phase II vision for the Banking on Our Future movement includes:
      25,000 volunteer banker-teacher HOPE Corps members.
      A 5-year campaign.
      5 million youth educated.
    And just like our nation's educational system cannot accomplish 
this Herculean goal of economic literacy education by themselves, or at 
least not within the next 5-8 years, we at Operation HOPE have learned 
that we cannot do this alone. We need partners, and increasingly, we 
have them.
    Banking on Our Future--the Movement. The Work. The Partners.
    Last year Beacon Books published my book, BANKING ON OUR FUTURE, 
teaching adults and their children about economic literacy, which is 
fast becoming a resource staple for school libraries across the 
country.
    In 2002 and 2003 I have had the pleasure of co-teaching landmark 
Banking on Our Future feature sessions with national and international 
leaders, including former U.S. President William Jefferson Clinton, 
U.S. Federal Reserve Chairman Alan Greenspan, FDIC Chairman Donald 
Powell, U.S. Secretary of Housing & Urban Development Mel Martinez, 
amongst of others.
    Banking on Our Future is the official economic literacy after-
school program for the Los Angeles Unified School District's ``Beyond 
the Bell'' Program, the New York City Department of Youth and Community 
Developments Beacon Schools, and the citywide economic literacy program 
for the Boston Public Schools.
    Banking on Our Future was selected in 2003 to receive a one of a 
kind innovations in education grant from the Office of the Secretary 
for the U.S. Department of Education, focused on our on the ground work 
in New York and California.
    Banking on Our Future, the on-the-ground program, has more than 
1,000 active volunteer banker-teacher HOPE Corps members, working year-
round in 9 states across America.
    Banking on Our Future has a powerful national online partnership 
with $400 billion asset Wells Fargo & Co., where 
www.bankingonourfuture.org - providing 100% free economic literacy 
education online--has registered more than 2.8 million hits to its 
website from January to August, 2003.
    Banking on Our Future is honored to be a national partnership for 
economic literacy with the Federal Reserve System, the FDIC's Money 
Smart Program, the America's Community Bankers, the American Bankers 
Association Education Foundation, the Consumer Bankers Association, the 
Independent Community Bankers Association, as well as Citibank, Fleet 
Bank, Wells Fargo (online) and Banco Popular.
    Important regional partners include the Williams Jefferson Clinton 
Foundation in Harlem, the New York Bankers Association, the Department 
of Banks and Financial Institutions for the District of Columbia, E 
Trade Bank and others.
    Tested Results: The best reflection on the ultimate effectiveness 
of our work around economic literacy, with youth, is summarized in a 
pre and post-test conducted by the Federal Reserve Bank of Boston on a 
pilot program for Banking on Our Future. The Federal Reserve's report 
found a 700% improvement in economic literacy comprehension and 
understanding by the students tested.
    And aspects of our work are now even being incorporated within our 
nation's strategy for homeland security. Recently Michael D. Brown, 
FEMA Director and Under Secretary for Emergency Preparedness and 
Response at Homeland Security, in announcing our HOPE Coalition 
America, emergency economic triage program partnership with FEMA and 
the U.S. Department of Homeland Security said, ``Operation HOPE is the 
nation's leading force in promoting economic literacy and we are 
excited that John Bryant is making his special expertise available to 
the people of California at a time of their greatest need.''
    And recently Operation HOPE has announced our intention of 
introducing what we refer to as The HOPE Accord.
    The HOPE Accord asks the following of and from our nation's 
private-sector financial services leaders;
    1.  CEOs to stand with Operation HOPE in support of a national 
economic literacy agenda.
    2.  CEOs agree to personally co-teach a Banking on Our Future 
economic literacy course with me, as founder of Operation HOPE and 
Banking on Our Future.
    3.  CEOs agree to encourage their employees to volunteer in their 
local community.
    4.  CEOs agree to compensate their employees up to (4) four hours 
per month (the Wachovia Bank model) to volunteer in their local 
community.
    5.  CEOs agree to incorporate community service as a line item in 
EVERY EMPLOYEES annual employee performance reviews.
    And so, as you can see, Operation HOPE is on the move across the 
nation with its powerful and effective economic literacy movement. As 
Federal Reserve Chairman Alan Greenspan has said, ``the only 
irreversible asset in America today is education and access, and 
information and access.'' Translation: once you have education, no one 
can take its benefits and wisdom away from you.
    At Operation HOPE Inc. we believe that education is the ultimate 
poverty eradication tool, and accordingly, we strongly believe that 
this issue of economic literacy education, in a capitalist country, is 
of vital importance and relevance to the American public as we move 
into this new economic era. In fact, THIS was the issue (economic 
empowerment) that Dr. Martin Luther King, Jr. had taken up as his last 
movement before his untimely death; and it was called the Poor People's 
Campaign. Dr. King realized that you could not legislate goodness, nor 
could you pass a law to force someone to respect you. That the only way 
to achieve social justice in a democracy rooted in capitalism, was 
through economic parity. Ownership.
    At Operation HOPE Inc. we believe that if the 20th century was 
defined by race and the color line (the Civil Rights Movement), all 
over the world, then the 21st Century will be defined by wealth and 
poverty (the Silver Rights Movement).
    Economic literacy lies at the very core of what we at Operation 
HOPE see as THE movement of the wealthless and the under-served in and 
for the 21st Century; the Silver Rights Movement.
    And so, on behalf of all of us here at Operation HOPE, I thank the 
Committee for taking up this issue for substantive debate.
                                 ______
                                 
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                     Statement of Visa U.S.A. Inc.

    Visa U.S.A. Inc. applauds the efforts of the House Committee on 
Education and the Workforce Subcommittee on Education Reform for 
addressing the importance of financial literacy education for our 
nation's youth. Congressional focus on this subject is essential to 
building the national awareness that will benefit all Americans.
    We thank you for the opportunity to submit a written statement for 
the record outlining our efforts to address many of the specific issues 
raised during your hearing on ``Financial Literacy Education: What Do 
Students Need to Know to Plan for the Future?'' held October 28, 2003.
    Financial literacy education is a priority for Visa U.S.A., which 
is why we are especially honored that Visa U.S.A.'s Practical Money 
Skills for Life program now reaches more than 37 million students in 
more than 100,000 schools across the country.
    Many of America's youth are graduating from secondary school or 
even college today without the vital skills necessary to enable them to 
have a successful financial life--skills like how to create a budget 
and how to develop a savings plan for retirement and other future 
needs.
    In a recent national survey conducted by Visa, 77 percent of 
American adults surveyed said young people are learning money 
management skills in the ``school of hard knocks.'' Nearly half of the 
adults surveyed said today's youth believe they are more likely to 
become millionaires by starring in a reality TV series than by learning 
how to budget and save wisely.
    It is critical that children learn these important financial facts 
of life before leaving home. Money skills are lessons a student can 
take from the classroom to the boardroom. Visa U.S.A. is proud to bring 
teachers, students and consumers our educational program, Practical 
Money Skills for Life, free of charge online at 
www.practicalmoneyskills.com. This cutting-edge Internet-based personal 
finance curriculum program is designed to educate consumers of all ages 
about a number of key personal finance subjects, including budgeting, 
saving and investing.
    Practical Money Skills for Life has customized material for 
parents, teachers, students and general consumers, including lesson 
plans, interactive calculators, games and budgeting worksheets. In 
addition to the Practical Money Skills for Life online material, the 
following at-home and in-class resources are available:
      A 14-chapter lesson plan book with overhead projection 
materials, activities and exercises covering budgeting, saving, 
investing and how to recognize financial trouble, along with resources 
to find solutions.
      An interactive CD-ROM, which includes a fun interactive 
game about financial decision making, a quiz show to test students' 
fiscal savvy, and a loan and credit card calculator, as well as a 
series of budget worksheets.
      A teaching video that corresponds with the lesson plans, 
designed to illustrate a variety of financial situations and spark in-
class conversation.
    These financial literacy tools--developed by teachers for teachers 
are available in English, Spanish and traditional Chinese. Teachers and 
college professors can integrate the curriculum directly into their 
lesson plans for a one-time course or a year-long program. Visa U.S.A. 
is working to make sure Practical Money Skills for Life meets each 
state's standards for academic curriculum so that teachers may easily 
incorporate the program into their classrooms.
    Additionally, Visa U.S.A. has partnered with the Council for 
Exceptional Children to provide a version of the Practical Money Skills 
for Life curriculum for children with special needs.
    Practical Money Skills for Life has received the stamp of approval 
from educators at the 2001 National Education Association's Expo. More 
than 94 percent of the educators surveyed graded the program an ``A'' 
or ``B'', and 98 percent said they would recommend it to fellow 
educators. This ``educator developed and educator approved'' program 
has received a ``four star'' rating from The Detroit News and Free 
Press, hailed for offering ``a great mixture of educational and fun 
activities that can help teachers, parents, students, and consumers 
manage money.'' Additionally, Practical Money Skills for Life has been 
recognized by Teacher.com as a Teacher Information Network Gold Award 
winner, and is also the recipient of the prestigious Golden Web Award 
presented by the International Association of Web Masters and 
Designers.
    Visa U.S.A. is proud to partner with the Jump$tart Coalition for 
Personal Financial Literacy to bring financial literacy to the 
forefront of the national agenda. Visa actively supports their efforts 
to promote April as Financial Literacy for Youth Month.
    To more directly engage teachers in incorporating financial 
education in the classroom, Visa U.S.A. co-sponsors the annual 
Practical Money Skills for Life Educator Challenge with Future Business 
Leaders of America. Winning participants show how their students have 
increased their financial literacy using elements of Practical Money 
Skills for Life. This past year, more than 900 high school teachers 
from all 50 states went to www.practicalmoneyskills.com to enter for a 
chance to win computers and school supplies.
    Beyond providing a free personal finance curriculum, Visa U.S.A. 
continues its efforts to bridge the digital divide. Working with 
Members of Congress, Visa U.S.A. donates computer equipment to schools 
in need and provides free Practical Money Skills for Life training for 
teachers. During the 2003-2004 school year, Visa U.S.A. plans to donate 
computer labs and introduce our educational program to 10 more high 
schools across the United States. To date, Visa U.S.A. has donated more 
than 40 computer labs nationwide.
    Visa U.S.A. is proud of each of these achievements and strives to 
make every American teacher, parent, student and consumer aware of the 
availability of Practical Money Skills for Life in order to do our part 
to promote financial literacy. Visa U.S.A. appreciates the opportunity 
to submit a written statement on this very important matter.
                                 ______
                                 

   Statement of David F. Woods, CLU, ChFC, Chief Financial Officer, 
National Association of Insurance and Financial Advisors and President, 
           Life and Health Insurance Foundation For Education

    Chairman Castle, Ranking Member Woolsey and Members of the 
Subcommittee on Education Reform, thank you for permitting me to submit 
testimony in connection with your recent hearing on ``Financial 
Literacy Education: What Do Students Need to Know to Plan for the 
Future?'' I commend you for focusing on this issue, which is so 
important to the well-being of individual Americans and to the Nation's 
economy as a whole.
    My name is David Woods. I am the Chief Executive Officer of the 
National Association of Insurance and Financial Advisors (NAIFA). NAIFA 
is a federation of approximately 800 state and local associations 
representing over 225,000 life and health insurance agents and advisors 
and their employees. Originally founded in 1890 as the National 
Association of Life Underwriters, NAIFA is the nation's oldest and 
largest trade association of life and health insurance agents and 
financial advisors. NAIFA's mission is to improve the business 
environment, enhance the professional skills and promote the ethical 
conduct of agents and others engaged in insurance and related financial 
services who assist the public in achieving financial security and 
independence.
    I also currently serve as the President of the Life and Health 
Insurance Foundation for Education (``LIFE''). LIFE, a non-profit 
organization founded in 1994 by six life and health insurance agent 
organizations in the United States, was formed to address the growing 
need to educate the public about the essential role of life and health 
insurance in a sound financial plan and the value added by insurance 
agents and other financial advisors. LIFE is not a legislative advocacy 
organization.
    The need for financial education--always important--has become 
increasingly critical in recent years. As we hear often in the news, 
bankruptcies are up, credit card debt is skyrocketing, and personal 
savings are at historic lows. In addition, the financial services 
marketplace is more complicated than ever. Individuals not only have 
the basic financial services tools with which we are familiar--personal 
savings and checking accounts, basic life insurance and, perhaps, 
stocks--but they also have the opportunity to take advantage of 
numerous other products designed to appeal to their specific needs and 
goals. The strength and diversity of the financial markets help make 
our economy strong and the ``American Dream'' attainable for all 
Americans. Without proper financial education, however, the benefits of 
these vast financial opportunities will go unused for many Americans, 
and may become liabilities for others, resulting in the debt and 
bankruptcies that have become all too common.
    I am heartened to see the efforts being made to encourage financial 
literacy among our young people. As the Subcommittee heard at its 
recent hearing, the public and private sectors are working--together 
and separately--to educate children so they will not be confronted with 
the ``money problems'' many face as adults. The Treasury Department's 
Office of Financial Education has developed standards for financial 
education programs and is helping states and schools integrate 
financial education into their core curricula. Non-profit organizations 
and trade associations are also sponsoring programs to assist educators 
in preparing students with basic financial knowledge, realizing that 
financial literacy, like reading, writing and arithmetic, is key to a 
successful future.
    I would like to take this opportunity to give you a view of 
financial literacy from an insurance sector perspective. Specifically, 
I would like to make three points: (i) insurance is critical component 
of financial literacy education; (ii) financial education is a life-
long process; and (iii) the insurance agent community is actively 
engaged in financial education programs.

Insurance is a critical component of financial literacy education.
    Insurance is an integral part of the financial sector and any 
discussions of financial literacy should include insurance as a 
critical component. Life, health, disability income and long term care 
insurance provide basic financial security for consumers in times of 
need. In addition, numerous other insurance products, such as variable 
annuities, include investment components. These products provide 
consumers with the security of basic insurance coverage.
    My goal here is not to ``sell'' insurance. Rather, it is to point 
out that financial literacy is not limited to knowledge of bank 
accounts and stock portfolios. Although those are clearly part of 
financial education, knowledge of risk and insurance forms the base of 
a well rounded financial education. Basic financial risks should not be 
overlooked when we teach our young people how to manage their finances 
and invest. People and families need to understand how to provide for 
their immediate financial needs and long-term financial security. It is 
important to know how all these financial products fit and work 
together to avoid financial disasters and ensure a safe and sound 
financial future.

Financial education is a life-long process.
    The title of this hearing is ``Financial Literacy Education: What 
do Students Need to Know to Plan for the Future?'' and its focus is 
rightly on young people. It makes sense to start early and mold good 
financial habits for a lifetime. It is important to point out, however, 
that financial education is a lifelong process. Particularly with 
insurance, continued education and ``literacy'' is critical as needs 
change over time.
    Earlier this year, I testified before the House Financial Services 
Subcommittee on Capital Markets, Insurance and Government Sponsored 
Enterprises on the life insurance needs of senior citizens. My 
testimony pointed out how important it is for seniors to understand 
their insurance needs and choices. Seniors often face a terrifying 
prospect--the inability to generate new income at a time when their 
life spans are uncertain and their health needs are inevitably going to 
grow. Therefore, it is critical that every financial decision be based 
on as much information as possible and be flexible enough to address 
current and potential needs. Financial education for seniors (and other 
adults, for that matter) need not be limited to insurance. Indeed, 
seniors'' potentially vulnerable financial positions make literacy in 
all aspects of personal finance very important.

The insurance agent community is actively engaged in financial 
        education.
    There are two aspects to the agent's role in financial education. 
First, financial education is an everyday part of an agent's job. An 
insurance agent is the essential link between the consumer and 
insurance company, providing and servicing the products of the insurer 
while educating the consumer as to how to manage their financial needs 
and make informed choices regarding their insurance purchases.
    Second, agents are involved in coordinated outreach to educate 
consumers. As I mentioned previously, in 1994, six insurance agent 
groups, representing 160,000 agents, founded the Life and Health 
Insurance Foundation for Education (``LIFE''). LIFE's founding members 
saw a strong and growing need to inform and educate the public. In the 
decade since it was created, LIFE has developed a diverse educational 
program which educates consumers and empowers them with the knowledge 
needed to make informed insurance decisions.
    LIFE's education programs include:
      Next Generation: Next Generation is a multimedia 
insurance educational program designed to education high-school 
students about the basics of insurance. This program is provided to 
teachers free-of-charge and is incredibly successful with teachers and 
even students give it high grades.
      Insurance Matters: Insurance Matters is a multimedia 
community education kit designed for insurance professionals to teach 
consumers, in adult education settings, about insurance.
      Life-line.org: This award-winning education website 
provides everything from basic information about different types of 
insurance, to tips on what to look for in an agent, to interactive 
calculator features that help consumers determine their own insurance 
needs.
      realLIFEstories: To help people get a better 
understanding for the need for sound financial planning, LIFE promotes 
an annual award to uncover the best ``realLIFEstories --real stories of 
real people that illustrate how the benefits of insurance helped them 
get through very difficult financial times.
      Public education advertising: ``Life insurance isn't for 
the people who die. It's for the people who live.'' LIFE's national 
advertising is a reminder of the crucial role of life insurance in 
financial planning, and reminds consumers how important it is to make 
sure your loved ones are financially taken care of in your absence.

What can Congress Do?
    It is my belief that Congress can play an invaluable role in 
encouraging and enhancing financial literacy education. This hearing is 
an excellent tool for helping to spread the word about the critical 
need for increasing financial literacy. In addition to its ``bully 
pulpit,'' there are specific steps Congress can take to promote 
financial literacy education. There are currently several measure 
pending in the Congress on the issue:
      S. 2660, the Fair Credit Reporting Act reauthorization 
legislation recently passed by the Senate includes a provision 
(sponsored by Sens. Debbie Stabenow and Mike Enzi) creating a Financial 
Literacy Education Commission, which would have broad authority to 
streamline, improve or augment financial literacy education programs, 
grants and materials of the federal government;
      H.R. 2990, introduced by Rep. Judy Biggert, would create 
the Commission to Educate Our Nation's Teachers and Students on 
Financial Literacy Skills. The commission would make recommendations on 
integrating economic and personal financial education into primary, 
secondary and post-secondary curricula.
      H.R. 3294, sponsored by Rep. David Dreier would require 
the Secretary of the Treasury to establish a pilot national public 
service multimedia campaign to enhance the state of financial literacy. 
The Secretary would work with nonprofit, public or private institutions 
to develop a multimedia campaign aimed at target audiences.
      S. 1470, introduced by Senator Paul Sarbanes, would 
establish the Financial Literacy and Education Coordinating Committee. 
The Committee would develop a national strategy to promote basic 
financial literacy among consumers through the development of methods 
to increase the general financial education level of consumers and 
enhance the general understanding of financial services and products.
    Although NAIFA does not have a position on these bills, the 
proposals have a great deal of merit and should be studied closely. 
Congress is in a unique position to foster financial literacy education 
across the country and we encourage you to take a thorough look at 
these and any other financial literacy initiatives that are proposed.

Conclusion
    Thank you again for holding this hearing on the important issue of 
financial literacy education, and for the opportunity to share my views 
and the views of NAIFA with you. Financial literacy education is the 
key for all people--students, young adults and seniors--to a successful 
future and the opportunities of sound credit, home ownership, 
retirement savings and a safe and sound financial future. Insurance is 
an important aspect of that sound future. NAIFA and LIFE have actively 
sought to improve the financial literacy of insurance consumers and 
look forward to working with you to further that goal.

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