[Congressional Record Volume 155, Number 48 (Thursday, March 19, 2009)]
[Senate]
[Pages S3552-S3553]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. MURRAY (for herself, Mr. Cochran, and Mr. Kaufman):
  S. 638. A bill to provide grants to promote financial and economic 
literacy; to the Committee on Health, Education, Labor, and Pensions.
  Mrs. MURRAY. Mr. President, there are a number of factors that caused 
the economic recession we are faced with today. All of us know that.
  We can blame executives on Wall Street, who made reckless choices and 
ignored long-term consequences to make a quick profit.
  We can blame the financial industry regulators, whose lax oversight 
failed to see the potential risks posed by the new, complex financial 
products that Wall Street was selling, and we can point a finger at 
those in the mortgage industry, who ignored that all bubbles eventually 
burst and that--in the case of housing bubble--the American taxpayers 
would be left to clean up the mess.
  But we also need to look a little closer to home as well. The reality 
is that one of the contributing causes of this recession is the fact 
that too many Americans made poor and very often uninformed financial 
choices when they bought homes in the last several years.
  Too many overestimated their own resources, didn't read the fine 
print, and didn't grasp the terms of their mortgages before signing on 
the dotted line.
  In fact, we need to recognize that too many Americans, from college 
students to senior citizens, are financially illiterate.
  The problem is not limited to mortgage holders. Too many Americans 
don't know how to budget their household expenses, manage their credit 
card debt, or even pay their bills on time.
  We need to ensure that we don't get into this situation again, by 
giving all Americans the skills to make sound financial decisions.
  We used to say the 3 R's of school are reading, writing, and 
arithmetic. Well, I think we need to add a fourth R--resource 
management.
  That is why today I am introducing legislation that will help ensure 
that all Americans get the skills they need to make financial decisions 
that will protect them and their families.
  The Financial and Economic Literacy Improvement Act of 2009 will 
require the Federal Government to step to the plate and become a real 
partner in helping Americans manage their finances and make good 
decisions about housing, employment, and education.
  This bipartisan bill, which is cosponsored by Senator Cochran, is 
aimed at helping people of all ages. Our goal is to ensure that high 
school and college students know the pitfalls of signing up for credit 
cards and can make informed decisions about student loans.
  All young people understand the importance of saving and making smart 
decisions to ensure a comfortable and dignified retirement and, most 
important, that we are taking steps to ensure we do not repeat the 
misguided and uninformed decisions that have contributed to the 
recession that we find ourselves in today.
  Under our bill, the Federal Government will become a strong supporter 
of making financial literacy education a core part of K-12 education.
  I believe that focusing this effort on young people is critical for 
two reasons:
  One, if we are going to avoid another crisis such as this one, we 
must begin by teaching the next generation to make smart financial 
decisions; two, because all signs point to another generation that is 
coming of age already saddled with debt, and we need to help them 
before it is too late.
  This past Sunday, this article ran on the front page of the Olympian 
newspaper from my State of Washington. I ask unanimous consent to have 
this article printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
  [From the Olympian, Mar. 15, 2009]

                    Teens Awash in Credit Card Debt

                          (By Les Blumenthal)

       The numbers are startling. More than half of all high 
     school seniors have debit cards and nearly one-third have 
     credit cards.
       One-third of college students have four credit cards apiece 
     when they graduate, and more than half of graduates have 
     piled up $5,000 each in high-interest debt. The number of 18- 
     to 24-year-olds who have declared bankruptcy has increased 96 
     percent in 10 years.
       Surveys show that many of these young people also are 
     financially illiterate: They don't understand such things as 
     interest, minimum payments, credit reports, identity theft or 
     that they might be paying off their school loans for years.
       The problem isn't just with the young, however. One in five 
     Americans thinks that the most practical way to become rich 
     is to win the lottery.

[[Page S3553]]

       Sen. Patty Murray, D-Wash., remembers that her kids started 
     receiving credit card applications when they were 16. She 
     said that she repeatedly heard from people, young and old, 
     who wished they knew more about financial matters.
       Murray will introduce legislation this week that would 
     authorize $1.2 billion in grants over five years to promote 
     financial-literacy education beginning in grade school and 
     stretching into adulthood.
       ``It's a perfect time to be doing this,'' Murray said.
       Ben Bernanke, the chairman of the Federal Reserve, agrees.
       ``In light of the problems that have arisen in the subprime 
     mortgage market, we are reminded how critically important it 
     is for individuals to become financially literate at an early 
     age so they are better prepared to make decisions and 
     navigate an increasingly complex financial marketplace,'' he 
     said nearly a year ago.
       Kerry Eickmeyer, 17, a senior at Richland High School in 
     Richland gave up her debit card after about a year when she 
     kept overdrawing her account.
       ``My mother was getting frustrated,'' she said.
       She and other students at Richland High must take a class 
     in consumer economics before they can graduate. Eickmeyer 
     said she received credit card offers all the time and 
     shredded them.
       ``I don't need 10 credit cards,'' she said.
       Jesus Pedraza, 19, wished he'd been prepared to handle his 
     personal finances when he entered Washington's Tacoma 
     Community College, even though he doesn't have a credit card.
       ``I thought I was ready, but money is running out faster 
     than I thought,'' Pedraza said.
       As part of its Human Development 101 class for freshman, 
     Tacoma Community College devotes a section to personal 
     finance. Students track their weekly spending and learn about 
     credit cards, minimum payments, savings plans and 
     investments. James Mendoza, who teaches the class, said he 
     focused on the nuts and bolts of finance.
       ``We don't expect them to be Warren Buffett, George Soros 
     or any of the big dogs,'' Mendoza said. ``But they need to 
     understand whether a venti mocha is a need or a want.''
       In the past five years, 17 states added personal finance 
     requirements to their curricula. Last year, former President 
     George W. Bush appointed an Advisory Council on Financial 
     Literacy to work with the private and public sectors to 
     promote financial education. The council is part of the 
     Treasury Department. Its members range from the chairman of 
     Charles Schwab to the leader of Junior Achievement USA.
       Murray's bill, co-sponsored by Sen. Thad Cochran, R-Miss., 
     would provide grants to state education agencies that agreed 
     to establish financial literacy standards and assess how well 
     students were doing in elementary, middle and high school. 
     Nonprofit organizations also would be eligible for grants. In 
     addition, grants would be available to community and four-
     year colleges to offer financial literacy classes for their 
     students and for older adults.
       In addition to financial literacy classes offered by school 
     districts, Junior Achievement operates programs in many 
     districts. About 4.5 million young people participate in 
     Junior Achievement programs nationwide.
       Other programs also are operating in the schools. Founded 
     by a bankruptcy judge in New York, the Credit Abuse 
     Resistance Education program sends bankruptcy judges around 
     the country to high schools to talk about personal finances.
       Pat Williams, a bankruptcy Judge in Spokane, said that when 
     she walked into a class of 25 or so 10th- or 11th-graders, it 
     wasn't hard for her to spot the five that would end up in 
     bankruptcy in three years.
       ``They are dealing with so much--cell phones, car 
     insurance, credit cards, debit cards,'' she said. ``It was 
     stunning to them to learn there were late charges on a credit 
     card bill.''
       High school and college students can end up paying for 
     their lack of financial knowledge, said Pam Whalley, the 
     director of the Center for Economic Education at Western 
     Washington University. One survey of high school students 
     found that they expected to earn an average of $143,000 a 
     year and were confident they could handle the money but that 
     few knew how to do a budget. College students know little 
     about savings, insurance and retirement, and are lured to 
     credit card deals too easily, she said.
       ``College kids will do anything for a T-shirt,'' Whalley 
     said.
       In the middle of a recession, she said, educating students 
     about financial matters is crucial.
       ``If you make a mistake during a recession, you have less 
     to fall back on,'' she said. ``If you make a mistake when 
     your job isn't safe, you could lose your house or your car. 
     When you have financial literacy, you have more control over 
     your life.''

  Mrs. MURRAY. Mr. President, the article discusses the legislation I 
am introducing today. It also talks about the financial path that the 
next generation is currently on. The article pointed out that, right 
now, one-third of our college students have four credit cards when they 
graduate. More than half of our graduates have piled up $5,000 each in 
high interest debt. The number of 18 to 24-year-olds who have declared 
bankruptcy has almost doubled in 10 years.
  That article also points out that many of our young people are 
financially illiterate. They understand very little about concepts such 
as interest or minimum payments or credit reports and the financial 
reality of having to pay off their student loans for years to come.
  Today, with many of our schools struggling to pay teachers and 
maintain their current programs, a lot of our State and local 
governments cannot afford to ramp up financial literacy education right 
now. That is exactly where I believe the Federal Government needs to 
step up. We cannot afford for our young people to not understand their 
own finances.
  Our bill will authorize $125 million annually to go to State and 
local education agencies and their partnerships with organizations 
experienced in providing high-quality financial literacy and economic 
instruction.
  This funding we will provide will help make financial and economic 
literacy a part of core academic classes, develop financial literacy 
standards and testing benchmarks, and provide critical teacher 
training.
  This bill will also help schools weave financial concepts into basic 
classes, such as math and social studies.
  Importantly, this training will not end in high school. Our bill 
makes the same $125 million investment in teaching financial literacy 
in our 2- and 4-year colleges.
  That is critical. My constituents often write or tell me about the 
financial trouble they are struggling with. A lot of them are very 
desperate for help. They got into situations they didn't understand, 
and they don't have the resources to fix.
  For example, one woman from Olympia, who put off credit card bills to 
pay her mortgage, wrote to me and said:

       I am educated, but was unaware that by being late on a 
     payment or by skipping a payment and trying to make it up, my 
     interest rate could skyrocket to over 26 percent, and late 
     fees could be exponential.

  Whether it is skyrocketing interest rates or credit cards or an 
adjustable rate mortgage that somebody can no longer afford or a 
retirement plan that they don't understand, I often hear the same thing 
from people: I wish someone had taught this to me in high school.
  This bill we are introducing ensures that we are teaching it in our 
schools, and it will help people learn the basic skills that will give 
them a leg up when they are dealing with their bankers.
  This crisis we are in cost us dearly. Every weekend when I go home I 
hear about another business that is closing or another family who 
cannot pay their bills. But we know if we make changes and smart 
investments, we can move our country forward. I believe this is one of 
those smart investments. In January, after President Obama took office, 
he called for an era of personal responsibility. I believe our bill 
helps Americans to usher in that era.
  I encourage my colleagues to take a look at the bill and cosponsor it 
and help us move it forward so we can make sure that we have a 
financially literate country.
                                 ______