Arizona Becomes the Latest State to Strengthen its Financial Literacy Efforts

New law ensures that high school students will receive personal finance instruction.

Good news from the world of financial literacy: Arizona Gov. Doug Ducey signed new legislation into law last month that will require that high school students receive financial literacy instruction during their half-semester economics course as a requirement for graduation.

Senate Bill 1184, which was introduced by Sen. Sylvia Allen, passed unanimously in the Senate Education Committee before passing with strong support in the Arizona Senate and House.

What does the bill mandate?

While Arizona already encourages personal finance instruction in high schools, the bill establishes the half-semester economics course and the inclusion of money management education as a requirement of state law.

How will schools implement the new requirement?

The bill gives high schools flexibility with curricula and timing. Schools can choose how to scaffold students’ knowledge of personal finance topics by developing their own content and instructional strategies. There are plenty of financial resources that offer free curricula for teachers to use. Schools will also be able to determine when students take the course, but the bill mandates that a minimum of half of a credit for the course needs to be devoted to personal finance instruction.

Why is the legislation important?

Arizona Treasurer Kimberly Yee, a proponent of the bill, said the legislation would “give students the critical, basic life skills to manage their money and have the financial freedom to accomplish anything after.” She added, “It’s important that students are taught the essentials of personal finance, like balancing their checkbooks and understanding credit, before entering the real world.”

Americans are carrying nearly $4 trillion in collective consumer debt, according to the Federal Reserve. And about 40 percent of adults report that they would not be able to afford a $400 emergency expense without borrowing. While these figures are impacted by stagnant wages and rising housing and healthcare costs, they’re also indicative of a need for more robust consumer financial education.

Arizona residents have an average of $7,100 in debt, and the state ranks 30th for average balance. Yee said debt is an especially devastating problem for millennial women.

“Nearly 40% of [young women] simply say they don’t pay their bills on time and they will go out and get a high interest loan just to take out emergency funds and so some of those decisions might be different if they had just a basic understanding of finance management in their schools,” she said.

How does Arizona rank for financial literacy thus far?

Arizona lags behind other states for financial literacy, according to WalletHub. The state ranks 19th overall, and received an even lower ranking for “financial planning and habits” and “financial knowledge and education.” In their 2017 “Report Card,” Champlain College researchers gave Arizona a “B” grade for its high school financial literacy efforts.

Arizona also ranked below average for financial vulnerability in a study conducted by Prosperity Now. Despite the current economics requirement, Arizona didn’t make the top 10 in the U.S. News ranking of states with the most comprehensive financial education. Utah, which ranks number one, mandates that students take a semester financial literacy course and pass a standardized test following their instruction. There are even specific content requirements—for example, the class must educate students about the student loan process.

Yee said education is even more important than legislation in protecting consumers from predatory loans. Currently, classes that teach financial education are offered as electives, so many students never benefit from acquiring money management skills. The goal of the new legislation is to ensure that all students enter the world prepared to manage their money.

Bottom line

Beginning with the 2019-2020 school year, Arizona high schools will be required to teach money management to their students. Previously, students took a semester-long economics course, but personal finance instruction was not necessarily included.

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