A new program aims to increase financial literacy for low to moderate-income students and help to encourage savings.

In a joint statement by the Department of Education, the Federal Deposits Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA), the three agencies on Tuesday announced a new agreement to help educate millions of students on financial matters.

The agencies will work together to facilitate partnerships among schools, financial institutions, federal grantees and other stakeholders to provide effective financial education; increase access to safe, affordable and appropriate accounts at federally insured banks and credit unions, and encourage saving.

"A lack of financial literacy is a major roadblock on the path to college access and success for too many students and families," said U.S. Secretary of Education Arne Duncan.

NCUA Chairman Debbie Matz said, "There is no better place for young people to learn these concepts than from their teachers at school, and no better partner to provide subject matter expertise for schools than financial institutions.

Teaching children about finances has been left up to the parents for generations of the past, but some parents don’t have the financial knowledge to teach their children good money management.

In cases like these, financial education for kids can potentially help the whole family as students pass along information to their parents and other family members.

“In many underserved communities, studies show that parents learn about finances from their children, so youth financial education can benefit adults as well,” Matz said.

FDIC Chairman Sheila Bair added, "Teaching young people how to responsibly handle their finances and use mainstream banking products isn't a luxury in today's economy – it is essential. Even though banking services and products evolve, consumers will always need to know the fundamentals, such as the importance of saving for a rainy day, the meaning of 'APR,' and deposit insurance. That is why this partnership between the nation's deposit insurers and the Education Department makes so much sense."

The three agencies said they will also work together to increase participation in the National Financial Capability Challenge, a voluntary awards program designed to challenge educators to teach high school students the basics of personal finance, and reward success.

According to research by the FDIC, today’s youth are less likely to have an account at a federally-insured financial institution and are more likely to incur sizeable fees.

And a study supported by the Treasury found that many young people don’t have the needed financial knowledge to manage their money wisely, and have a difficult time doing basic financial calculations.

And finally, research from the Center for Social Development at Washington University in St. Louis suggests that students with a college savings account are much more likely to attend college.

“Teaching students how to make smart decisions about money from an early age – and giving them and their parents the right tools and incentives to save for financial goals, including higher education – and will help them build strong financial futures and will help us reach the president's 2020 college completion goal. I applaud the cities, schools and financial institutions that are already working together on this, and I encourage others to take on this challenge," Duncan said.


Sources:
U.S. Department of Education
Federal Deposits Insurance Corporation
National Credit Union Administration