AFSA Responds to Treasury Report on Financial Inclusion

AFSA Responds to Treasury Report on Financial Inclusion

Last week, the Treasury Department released their Financial Inclusion Report. AFSA responded to the RFI at the time it was released, emphasizing action that AFSA members take to encourage financial literacy and suggested that further work in the financial inclusion space include clear and enforceable guidelines around AI and machine learning, as new opportunities lie in this space.

The report lays out five objectives, with recommendations to further each objective. The objectives are:

• Promote Access to Transaction Accounts that Meet Consumer Needs
• Increase Access to Safe and Affordable Credit
• Expand Equitable Access to Savings and Investments
• Improve the Inclusivity of Financial Products and Services Provided or Backed by the Government
• Foster Trust in the Financial System by Protecting Consumers from Illegal and Predatory Practices
  • As a part of Objective Five, Treasury specifically calls out overdraft and late fees as reason that consumers might avoid opening accounts.

The report does not mention auto loans, credit cards, or personal loans. The report does address AFSA's AI question, saying that: "New analytical developments, such as artificial intelligence and machine learning models, may have the potential to more accurately assess creditworthiness and increase access to credit for consumers. However, these technologies could also potentially exacerbate financial inclusion disparities, such as by perpetuating discriminatory outcomes or by creating new privacy risks, and will require further scrutiny."

The report also discusses "Improving Financial Inclusion Through Education and Information", and states that any financial literacy program should "[ensure] that financial education materials are accessible to diverse communities and offered in plain language, [time] the delivery of financial information to when it is of most use to consumers, [leverage] tailored approaches, like financial coaching or the delivery of customized information on digital platforms, and [be] scalable, such as curricula deployable in multiple settings, as appropriate, and integrating financial information and education into academic content starting at an early age."

The AFSA Education Foundation follows these recommendations, and AFSA has presented on the Foundation before to the Treasury. The AFSA Education Foundation's free personal finance curriculum, MoneySKILL®, is offered in English and Spanish with 37 modules on a digital platform including content ranging from budgeting to retirement. Touted as the first online personal finance curriculum developed in 2002, 1.5 million users have enrolled to access the curriculum since inception.

An evaluation, MoneySKILL Impact: Evaluating Effects on Financial Knowledge and Behaviors®, conducted by Dr. Carly Urban, Professor of Economics at Montana State University measured changes in financial behaviors and knowledge, specifically among middle school, high school, and college MoneySKILL users between 2014 and 2022 showing it is being used in more than 50% of all U.S. counties. Importantly, areas using and not using MoneySKILL are very similar across economic and demographic characteristics, suggesting that educators select the curriculum for a diverse set of students. When comparing pre- and post-test exams, students completing MoneySKILL show average improvements in financial knowledge of 65% and knowledge gains are not concentrated among a small fraction of students: approximately 90% of students see improvements in financial knowledge. The adoption of MoneySKILL in high schools is also shown to increase a school's total FAFSA® (Free Application for Federal Student Aid) applications, indicating more students are taking advantage of lower-cost college financing options. The effect of MoneySKILL on FAFSA completions is higher in areas with more students in poverty, as measured by the fraction of students receiving free or reduced price lunch. The effects are also larger in schools that are located in rural areas or cities, when compared to schools in suburbs.

MoneySKILL is designed for students in middle school, high school, college, and beyond. Personal finance experts help vet the content to keep it easy to understand and at an appropriate reading level. The course is highly customizable making it a user-friendly resource for educators needing to meet state level financial education requirements. It is also easily scalable allowing teachers, nonprofit leaders, and government agency representatives to create classes designed for the particular students in mind.

The Consumer Financial Protection Bureau included MoneySKILL in a guide for advancing K-12 financial education and the Department of Treasury recognized MoneySKILL in 2011 and 2012 as a part of the Educator's Toolkit for the National Financial Capability Challenge. In addition, the Federal Trade Commission and the National Automobile Dealers Association partnered with the AFSA Education Foundation to create an Understanding Vehicle Financing brochure which complements MoneySKILL and is available with many other resources at www.afsaef.org. Lastly, during the pandemic the AFSA Education Foundation introduced an additional tool, a Supplemental Personal Finance Teaching Activities guide which encourages usage of digital vetted resources available in the public space.

As a result of the generosity of AFSA members, Foundation staff are able to provide MoneySKILL and a myriad of other resources free to schools, nonprofit organizations, and others. Foundation leaders recognize financial education cannot solve every challenge in people's financial lives. However as highlghted by the National Endowment for Financial Education and FINRA, it is just one, albeit critical, component of the Personal Finance Ecosystem. When properly administered, financial education can improve people's lives and communities-both directly and indirectly.

November 5th, 2024