Highlights of a GAO Forum: The Federal Government's Role in	 
Improving Financial Literacy (15-NOV-04, GAO-05-93SP).		 
                                                                 
Research has shown that many Americans lack the knowledge of	 
basic personal economics they need to make informed financial	 
judgments and manage their money effectively. Yet financial	 
literacy is increasingly important in a world where consumers	 
must choose from an array of complicated financial products and  
services and employees must take on more responsibility for their
retirement savings. Title V of the Fair and Accurate Credit	 
Transactions Act of 2003, known as the Financial Literacy and	 
Education Improvement Act, created the Financial Literacy and	 
Education Commission, comprised of 20 federal agencies, and	 
charged it with coordinating federal efforts and developing a	 
national strategy to promote financial literacy. The act also	 
mandated that GAO report on recommendations for improving	 
financial literacy among consumers. To help in developing our	 
work, on July 28, 2004, GAO hosted a forum on the role of the	 
federal government in improving financial literacy. Forum	 
participants included experts in financial literacy and education
from federal and state agencies, the financial industry,	 
nonprofit organizations, and academic institutions. Participants 
discussed the topics federal efforts should cover, populations	 
that should be targeted, methods of delivering information, and  
the role of program evaluation. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-93SP					        
    ACCNO:   A13412						        
  TITLE:     Highlights of a GAO Forum: The Federal Government's Role 
in Improving Financial Literacy 				 
     DATE:   11/15/2004 
  SUBJECT:   Consumer education 				 
	     Financial management				 
	     Government information dissemination		 
	     Interagency relations				 
	     Reporting requirements				 
	     Conferences					 
	     Public/private partnerships			 

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GAO-05-93SP

[IMG]

November 2004

HIGHLIGHTS OF A GAO FORUM

         The Federal Government's Role in Improving Financial Literacy

What Participants Said

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

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

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

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

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

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

                 United States Government Accountability Office

                                    Contents

Letter 1

Financial Literacy:

The Federal Government Should Serve as a Leader in Efforts to
Highlights of Forum Improve Financial Literacy
Discussion Increased Public-Private Partnerships and Interagency

Coordination Are Needed
Consumers Require Financial Information on a Broad Range of
Topics
While All Consumers Need Financial Education, Certain
Populations Need to Be Targeted
A Variety of Methods Are Needed to Deliver Financial Education
Effectively
The Federal Government Should Conduct and Facilitate Program
Evaluation

                                                             5 5 6 8 10 11 13

Appendixes

Appendix I: Forum Participants 17

Appendix II: Related GAO Products 20

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separately.

Comptroller General of the United States

United States Government Accountability Office Washington, D.C. 20548

November 15, 2004

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

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

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

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

Financial literacy has broader public policy implications as well. The
financial markets work best when consumers understand how financial
services providers and products work and know how to choose among them.
Further, informed consumers can help discipline markets by choosing
appropriate financial investments, products, and services. In addition,
our income tax system requires citizens to have an adequate understanding
of the tax system and financial matters in general. Educated consumers are
also essential to well-functioning retirement systems-consumers must
understand, for example, that Social Security is

not intended to be an individual's only source of retirement income.
Finally, financial literacy is important in ensuring that Americans who
receive public assistance successfully transition to greater
self-sufficiency.

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

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

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

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

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

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

Finally, I believe that a clear understanding of the country's overall
financial condition and future fiscal outlook is an indispensable part of
true financial literacy. The financial futures of the American people are
shaped not only by their own personal planning and individual investments
but also by the fiscal choices made in Washington. The official U.S. gross
debt now stands at more than $7 trillion, and that does not include tens
of

trillions in unfunded Social Security and Medicare benefits, veterans'
health care, and a range of other commitments and contingencies. Due to
current demographic trends, rising health care costs, and other factors,
we face the possibility of decades of mounting deficits, which left
unchecked will threaten our economic and national security, while also
adversely affecting the quality of life and opportunities available to
future generations. Americans must be aware of these developments in
planning for their own financial futures, since, for example, we can no
longer assume that current federal entitlement programs will continue
indefinitely in their present form.

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

The act also mandated that GAO report on recommendations for improving
financial literacy among consumers.2 On July 28, 2004, GAO hosted a forum
to develop recommendations on the role of the federal government in
improving financial literacy among consumers. The forum's participants
included a select group of individuals with expertise in financial
literacy and education. They included representatives of federal and state
agencies, the financial industry, nonprofit organizations, and academic

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

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

institutions. Participants were asked to consider the appropriate role of
the federal government in financial literacy, particularly in relation to
the role of state and local government agencies, nonprofit organizations,
and financial services institutions. Participants discussed how the
federal government could coordinate its efforts and partner with others
more effectively. They also discussed the appropriate topics, target
populations, and methods of delivery for federal financial education
efforts and the role of program evaluation.

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

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

David M. Walker Comptroller General of the United States

Financial Literacy: Highlights of Forum Discussion

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

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

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

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

o 	The federal government's role in financial education should be to fill
the gaps left by others and serve as an unbiased source of information.

Participants said that the federal government exists to serve its citizens
by addressing a broad set of needs. With regard to improving financial
literacy, the government should direct its efforts to the gaps in
coverage-topics and populations that are not being addressed

               Financial Literacy: Highlights of Forum Discussion

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

Increased Public-Private Partnerships and Interagency Coordination Are
Needed

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

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

o  makes the most efficient use of scarce resources,

o 	facilitates the sharing of best practices among different
organizations,

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

Financial Literacy: Highlights of Forum Discussion

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

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

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

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

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

               Financial Literacy: Highlights of Forum Discussion

conflicts of interest. One participant also said the federal government
should facilitate more intergovernmental partnering. States and localities
tend to look to the federal government for leadership, and federal
agencies can do more to bring together state treasurers, state securities
commissioners, governors, and others in support of efforts to improve
financial literacy.

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

Consumers Require What topics should federal efforts to promote financial
literacy emphasize?

Forum participants said that basic money management skills are
mostFinancial Information essential and that individuals should be
educated on meeting future on a Broad Range of financial obligations.
Investment and retirement savings were also Topics commonly cited as
important topics. But participants views varied on the

need to incorporate into financial education broader issues such as the
budget deficit and long-term fiscal challenges facing the nation.

Financial Literacy: Highlights of Forum Discussion

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

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

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

               Financial Literacy: Highlights of Forum Discussion

that the Social Security Administration sends to most Americans as a means
of delivering some of this financial education.

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

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

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

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

               Financial Literacy: Highlights of Forum Discussion

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

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

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

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

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

A Variety of Methods Are Needed to Deliver Financial Education Effectively

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

o 	The federal government should initiate a major media campaign on the
importance of financial literacy. Participants said such a campaign should
be directed at the general population and should include a simple, clear,
direct message-for example, "Financial Security for All Americans"-that
would motivate consumers. Television and the Internet were cited as two
potentially effective ways to deliver such a message. Participants noted
the success of certain federal public service announcements, such as
Department of Agriculture's Smokey Bear campaign. One participant
suggested a campaign encouraging consumers to do a periodic "financial
check-up." Another suggested that members of the Financial Literacy and
Education Commission promote a "message of the month." For example, the
Department of Labor might

Financial Literacy: Highlights of Forum Discussion

sponsor a message on the importance of contributing to employersponsored
retirement plans. These messages could be delivered through channels that
regularly dispense financial literacy information, such as financial
planning professionals, community organizations, church seminars, and
radio talk shows. In contrast, however, one participant believed that
broad-based efforts to raise awareness are overly costly and are far less
effective than in-depth community-led education in changing behavior.

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

o 	Delivery methods for financial information should vary according to the
target audience, but interaction with individuals is key. Although
participants favored using a variety of different delivery methods to
reach different audiences, they added that personal interaction is often
the most effective vehicle for conveying information in a way that
actually impacts behavior. One participant noted that the Department of
Defense incorporates person-to-person counseling in its financial literacy
initiative. Another said that the government should encourage

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

               Financial Literacy: Highlights of Forum Discussion

companies to make greater use of their benefits counselors to provide
employees with financial counseling. The federal government could also
develop a closer partnership with the Financial Planning Association,
perhaps to encourage financial planning professionals to provide pro bono
counseling services to individuals in need of financial expertise.6
Certified public accountants were also seen as a potentially effective
means of reaching the general population.

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

The Federal Government Should Conduct and Facilitate Program Evaluation

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

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

Financial Literacy: Highlights of Forum Discussion

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

o 	Evaluations of financial literacy programs should try to assess
behavioral change, if feasible. A number of different measures can be used
to evaluate a financial literacy program, participants said. A program can
be assessed by measuring such things as changes in the target audience's
financial knowledge and skills or by changes in actual behavior. Ideally,
any evaluation of a financial literacy program should measure the impact
on behavior, such as changes in program participants' personal savings,
credit scores, or homeownership rates. The Federal Deposit Insurance
Corporation's Money Smart program was cited as an example of an effort
that has resulted in behavioral change, as some 50,000 people have opened
bank accounts after completing its curricula. One participant noted that
the Department of Defense could serve as a particularly good laboratory
for learning what is effective in financial education, as it already has
standardized financial literacy programs and a "captive audience" that is
easy to track over time. In general, someone noted, behavioral change can
be measured on a micro level (the impact on individual program
participants) or on a macro level (the impact on society or the economy as
a whole).

While participants said that evaluation efforts should attempt to measure
behavioral change, they also acknowledged that this type of evaluation can
be extremely difficult. It can require tracking actions and decisions by a
program's participants over a long period of time- activities that may be
unduly expensive, time consuming, or infeasible. In addition, because many
variables can affect consumer' behavior and decision making, ascribing any
long-term changes to a particular

Financial Literacy: Highlights of Forum Discussion

program is difficult. One participant emphasized that we must acknowledge
programs with significant intangible benefits that nonetheless do add real
value.

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

o 	A primary goal for federal evaluation efforts should be to facilitate
the evaluation efforts of other players. Participants said the federal
government could play a constructive role by developing an evaluation
infrastructure that would help local organizations build their capacity

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

Financial Literacy: Highlights of Forum Discussion

and evaluate their programs appropriately. For example, the federal
government could serve as a clearinghouse for evaluation results. At the
same time, at least one participant had reservations about establishing
federal standards for financial literacy programs, fearing that a topdown
approach might inadvertently serve to hamper efforts at the community
level. In fact, several participants said an assessment should be built
into the evaluation of any federal financial literacy program to determine
whether the federal government was indeed the best entity to be conducting
the program. Participants noted that federal agencies should carefully
consider whether they have sufficient expertise to deliver financial
education effectively or whether another entity, such as a private or
nonprofit organization, might be a more appropriate choice.

Appendix I

                               Forum Participants

Facilitator

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

Participants William L. Anthes

Marcus Beauregard

Don M. Blandin
Kelvin Boston
Stephen Brobeck
Sharon Burns

Denise Voigt Crawford
Dara Duguay
Timothy J. Forde

President and CEO
National Endowment for Financial Education

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

President and CEO
Investor Protection Trust

President
Boston Media, Inc.

Executive Director
Consumer Federation of America

Executive Director
Association for Financial Counseling and
Planning Education

Securities Commissioner
State of Texas

Director, Office of Financial Education
Citigroup

Vice President for Strategic Analysis
Investment Company Institute

                                   Appendix I
                               Forum Participants

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

Carl R. George	Chief Executive Officer Clifton Gunderson LLP

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

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

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

Elizabeth W. Jetton	President Financial Planning Association

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

Angela C. Lyons	Assistant Professor of Economics University of Illinois

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

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

Gary John Previts	Professor of Accountancy Case Western Reserve University

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

Colleen Tressler	Senior Project Manager Federal Trade Commission

                                   Appendix I
                               Forum Participants

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

Appendix II

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D.C.: July 29, 2003.

Describes the information that pension plans make available to
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Appendix II
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extent to which its outreach efforts have increased the public's knowledge
and understanding of retirement saving and makes recommendations related
to such an evaluation.

Consumer Finance: College Students and Credit Cards. GAO-01-773.
Washington, D.C.: June 20, 2001.

Describes credit card issuers' practices for marketing to college students
and universities' policies and practices on credit card solicitation.
Discusses the advantages and disadvantages that credit cards present to
college students. Includes description of financial education efforts by
some universities, particularly those responding to concerns about
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Social Security: Capital Markets and Educational Issues Associated With
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Discusses the public education efforts that would be needed should the
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accounts. Finds that a broad-based educational effort would be required to
educate individuals on making appropriate investment decisions and to
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