[Congressional Record (Bound Edition), Volume 153 (2007), Part 14]
[Extensions of Remarks]
[Page 19902]
[From the U.S. Government Publishing Office, www.gpo.gov]




          UNITED STATES NEEDS TO INVEST IN FINANCIAL LITERACY

                                 ______
                                 

                          HON. DONALD M. PAYNE

                             of new jersey

                    in the house of representatives

                        Thursday, July 19, 2007

  Mr. PAYNE. Madam Speaker, there is an urgent need for the United 
States to invest in financial literacy. On June 15, 2007, the 
Washington Post reported that, according to the Mortgage Bankers 
Association, ``the percentage of U.S. mortgages entering foreclosures 
in the first three months of the year was the highest in more than 50 
years.'' With aggressive subprime lenders preying upon unknowledgeable 
yet eager homeowners, foreclosure rates around the country have reached 
unprecedented heights.
  On June 10, 2007, the New York Times reported that ``private loans 
have become the fast-growing sector of the student finance market, more 
than tripling over five years to $17.3 billion in the 2005-2006 school 
year, according to the College Board.'' Yet, in that same article, it 
was reported that many students fail to understand the risks associated 
with private loans as opposed to federally subsidized loans. Along 
those same lines, easy access to credit cards without the understanding 
of its potential pitfalls has led to the indebtedness of many college 
students.
  According to the Bureau of Economic Analysis, personal savings for 
Americans in May 2007 was negative $139.8 billion, which was an $18 
billion increase from the previous month. The Federal Reserve Board 
stated that consumer debt has exceeded $2.4 trillion as of May 2007. 
According to the 2007 Retirement Confidence Survey conducted by the 
Employee Benefit Research Institute, it is not registering with 
American workers that the U.S. retirement system is no longer one of 
defined benefits but that of defined contributions. In fact, fewer than 
50 percent of workers have retirement savings and investments over 
$25,000.
  These facts are unfortunately not surprising. The results from the 
JumpStart Coalition for Personal Financial Literacy's 2006 survey 
showed that of the approximately 5,700 high school seniors nationwide 
tested, participants scored slightly above 52 percent on a test of very 
basic financial literacy skills.
  The United States must address this growing problem of financial 
illiteracy. The consequences, as shown by these statistics, could be 
dire if more is not done. I would encourage the Federal Government to 
take proactive measures to stem this tide. The Department of Education, 
in particular, can play a key role in reversing this negative trend by 
instilling the principles of fiscal discipline while our children are 
still in their formative years and in fact, can work to incorporate 
these values into already existing subjects such as mathematics, social 
studies and business classes.
  As a matter of fact, I will soon be introducing the Youth Financial 
Education Act which would authorize monies for financial literacy 
through State block grants and through the Fund for the Improvement of 
Education. I hope to work with other Members of Congress and 
appropriators to see this important initiative realized.

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