Legislation Aims to Reduce Foreclosures, Unsustainable Debt
Last week, Senator Sal DiDomenico (D-Everett) and his colleagues in the Massachusetts State Senate unanimously passed legislation aimed at improving students’ knowledge on saving, investing, insurance, banking, inflation, and other financial matters.
“Financial literacy is important for our students on so many levels, and it is critical that we take the necessary steps to ensure that our youth learn about how they can manage their personal finances to better prepare themselves for the future,” said Senator Sal DiDomenico, Assistant Majority Leader of the Massachusetts Senate. “I was proud to support this legislation that will ensure that our students graduate with the skills they need to make educated financial decisions and attain future economic success.”
“Today’s youth are bombarded with a multitude of financial options and responsibilities at an increasingly young age, yet many are ill-equipped to make informed decisions about financial matters,” said State Senator Jamie Eldridge (D-Acton), the bill’s lead sponsor. “By teaching children the financial education basics in school, we will help them make educated financial decisions in the future, preventing future bankruptcies, foreclosures, and unmanageable debt. The investment we make in teaching our children financial literacy now will pay substantial future dividends.”
The complexity of the American financial services market has made millions of consumers vulnerable to misleading and fraudulent business practices, which has bankrupted families, ruined communities, and contributed to the “Great Recession.”
According to a recent report by the Federal Reserve Bank of New York’s Center for Microeconomic Data, total household debt in the United States rose to an all-time high of $13.15 trillion by the end of 2017. Mortgage debt constitutes $8.88 trillion of total debt, while credit debt accounts for $834 billion. 2017 was the fifth consecutive year of annual household debt growth with increases in mortgage, student, auto, and credit card debt.
“Every student should be given the opportunity to learn how to manage their personal finances,” said Senate President Harriette L. Chandler (D-Worcester). “By passing this financial literacy legislation, the Senate has exemplified its commitment to providing Massachusetts’ students with the comprehensive education they deserve.”
“Personal financial security stems from the ability to work hard and save money and each of these can be enhanced by students learning how to create household budgets, manage debt, use the power of compounded interest, and understand the value of investing,” said Senate Minority Leader Bruce Tarr (R- Gloucester). “Financial literacy in all of its forms can change lives, families and communities for the better.”
S.2343, An act relative to financial literacy in schools, would allow personal financial literacy to be integrated within the existing mathematics, social sciences, technology, business, or other curricula where teachers have the capacity to teach financial literacy for all schools in the Commonwealth.
“Teaching young people basic money management skills and helping them to avoid debt is critical for their future economic success,” said Senator Karen E. Spilka (D-Ashland), Chair of the Senate Committee on Ways and Means. “I applaud Senator Eldridge for leading the charge to make sure young people are well-equipped to navigate the many financial decisions they will encounter in their personal and professional lives.”
The bill directs the Department of Elementary and Secondary Education (DESE) to create and implement standards and objectives on personal financial literacy for grades K-12.
This would include information on loans, borrowing money, interest, credit card debt,
online commerce, rights and responsibilities of renting or buying a home, saving, investing and planning for retirement, banking and financial services, balancing a checkbook, state and federal taxes, and charitable giving. The Student Financial Literacy Advisory Committee created in the FY13 budget will advise and oversee the development of such standards and objectives.
“Through our work in the Office of Economic Empowerment, I have personally seen how critical it is to provide financial education to everyone within our state,” said Treasurer Deb Goldberg. “Requiring these skills to be taught in our schools in an important step to ensuring that all students have access to the financial skills they need to make informed decisions throughout their lives.”
At least 20 states now require students to take a personal finance course or personal finance included in an economics course as a high school graduation requirement. By incorporating financial literacy in K-12 education, Massachusetts residents will be introduced to financial concepts earlier in life, and be better equipped to make prudent decisions based on their needs and budget considerations.
The bill now goes to the House of Representatives for consideration.