Printer Friendly Version - National Conference of State Legislatures

Consumer Debt and Bankruptcy on the Rise.
American consumers now owe about $1.7 trillion in credit
card and other debt, an amount roughly equal to the gross
national product of England and Russia combined. 1
Of those polled in a 2000 national survey, 53 percent report
that they live from paycheck to paycheck. This statistic jumps to
64 percent for those who earn between $20,000 and $50,000
annually. 2
Furthermore, more than 40 percent of American families live
off of 110 percent of their incomes. 3
Bankruptcy cases filed in federal courts fell 2.6 percent in fiscal
year 2004, according to the Administrative Office of the U.S.
Courts. Despite the drop in filings, bankruptcies remain at historic
highs, well above the 1.5 million record first set in 2002. 4
Children Spending More.
One-third of high school students use a credit card. 5
In 2003, teens spent $175 billion, averaging about $103 per
week. 6
Children’s spending has roughly doubled every 10 years for
the past three decades and tripled in the 1990s. 7
The Jump$tart Coalition administered its annual financial
survey in 2004 to 4,074 high school seniors representing 215
schools in 33 states. Survey scores were slightly better than in
previous years, but students answered only 52.3 percent of the
questions correctly.
College Student Debt.
Eighty-three percent of undergraduate students have at least
one credit card, a 24 percent increase from 1998. 8
The average monthly credit card balance of an undergraduate
student is $2,237, and 21 percent of undergraduates have a
high balance of between $3,000 and $7,000. This is a 61 percent
increase from 2000.
By the time students graduate from college, they have an
average of $20,402 in combined education loan and credit card
balances. Students also double their average credit card debt and
triple the number of credit cards they carry by the time they
graduate. 9
NATIONAL CONFERENCE OF STATE LEGISLATURES
Personal Finance Education:
Overview
As state legislators tackle pressing education issues
such as funding, teacher quality, access to higher
education and implementation of the No Child Left
Behind Act, they also are struck by the reality that
the nation is failing miserably in one subject: managing
personal finances. The following statistics foretell a dismal
financial future for our nation’s children.
Each year, more Americans continue to spend beyond their
means and amass thousands of dollars in personal debt.
However, research indicates that a greater understanding of economic
issues leads to wiser economic activity and greater financial
independence for individuals. In light of this, many state
legislators are spearheading efforts to educate students and
adults about personal finance. In 2004, 23 states introduced legislation
that addressed personal finance education, and at least
30 states introduced similar legislation in 2005.
State and local policymakers are implementing various policies
to ensure that students and adults learn how to manage personal
finances. Policy options include requiring personal finance classes
for graduation, funding teacher professional development, prohibiting
a gift exchange for a student credit card application, creating
adult financial literacy initiatives, and revamping consumer
credit counseling. Education officials also are forming public-private
partnerships to create curriculum, establish teacher training
programs, and initiate student activities to foster personal finance
education at the national, state and local levels. Such organizations
include various banking and financial institutions, the
Jump$tart Coalition, Junior Achievement, the National Academy
of Finance, the National Council on Economics Education, and
the National Endowment for Financial Education.
1. “NPR Special Report: A Nation in Debt.” All Things Considered (National
Public Radio, Jan. 31, 2003);
www.npr.org/programs/atc/features/2003/jan/debt/index.html.
2. “CFA Research Reveals Most Americans Have Built Little Wealth,” Consumer
Federation of America Press Release, Feb. 20, 2001.
3. Junior Achievement Inkline, A Case for Economic Education,
http://www.ja.org/about/about_res_inkline_case_11.shtml.
4. Administrative Office of the U.S. Courts, Dec. 3, 2004.
5. R.D. Manning, Credit Cards on Campus: Costs and Consequences of Student Debt
(Washington, D.C.: Consumer Federation of America, 1999).
6. Ibid.
7. Teenage Research Unlimited, Jan. 9, 2004.
8. The U.S. Kids Market, Packaged Facts 2002;
http://www.marketresearch.com/product/display.asp?ProductID=928713&g=1.
9. Nellie Mae, Undergraduate Students and Credit Cards: An Analysis of Usage Rates
and Trends (Washington, D.C.: Nellie Mae, 2002).