LD 843, “An Act to Promote the Financial Literacy of High School Students.”

LD 843, “An Act to Promote the Financial Literacy of High School Students.”

I am proud to be a co-sponsor of LD 843 “An Act to Promote the Financial Literacy of High School Students.” The bill was introduced by my fellow co-chair of the Youth Caucus, Representative Matt Pouliot. The bill would ensure that all young Mainers leave our school system with a good grounding in financial literacy. It was a pleasure to work on this bill with Rep. Pouliot and I hope we can pass this important measure. 

You can read a great article about the bill and its tripartisan support here: http://www.kjonline.com/news/Young-lawmakers-behind-bill-requiring-schools-to-teach-financial-literacy.html

I also wanted to share with you my testimony for the bill that I delivered on behalf of the Youth Caucus:

Maine Youth Caucus

Testimony in Support of

LD 843 “An Act to Promote the 

Financial Literacy of High School Students”

Senator Millett, Representative MacDonald and distinguished members of the Joint Standing Committee on Education and Cultural Affairs. I am Representative Matthea Daughtry, and I am the co-chair of the Youth Caucus. I am here today, on behalf of the Youth Caucus, to testify in support of LD 843, “An Act to Promote the Financial Literacy of High School Students.”

The Youth Caucus is a group of bipartisan legislators, of all ages, who share the common goal of  ensuring young Mainers can live and have a prosperous and vibrant future in our state. In order to accomplish that goal we have set out to endorse legislation that helps bring about positive change for young people in Maine. LD 843 is exactly that type of bill.

Financial debt is an epidemic in America, especially for Americans under the age of 35. College debt is strangling my generation. A college degree is seen as a requirement for financial and career success but it is a reality that is becoming increasingly more difficult to attain. The average price for undergraduate tuition, room, and board at public institutions rose 42 percent to around $13,600 from 2000 to 2011. During the same period the average price for undergraduate tuition, room, and board at private institutions rose 31 percent. This comes during a period where the amount of grant aid available to students has barely changed. Students are increasingly taking on more of the financial burden in order to attain a college degree. The amount of twenty-five-year-olds with student debt has grown from just 25 percent in 2003 to 43 percent in 2012. The amount of student debt grew by 91% over this same period from $10,640 in 2003 to $20,326 in 2012. To make matters worse the amount of student loan delinquencies has risen as students find it harder and harder to pay off their debts in this recession.

Straddled with college debt that can seem insurmountable, college students also now carry more credit card debt than ever before. In 2009, 91% of college undergraduates had at least one credit card, up from 76% in 2004. The average amount of credit cards that undergraduates have has grown to 4.6, with over half of all students having more than 4 credit cards. The average undergraduate carries $3,173 in credit card debt, with seniors having an average of $4,100 in credit card debt. This amount of debt has risen 41% since 2004. According to a 2008 U.S. PIRG report 25% of students reported that they had paid a late fee on their credit cards and 15% had paid fees for over-drafting their accounts. A 2008 FDIC study of bank overdraft programs found that 18-to-25-year-olds pay more overdraft fees than any other age group.

Underlying this problem is a basic lack of financial literacy among young people leaving high school.  We go to great lengths to insure that they have math skills, but it is the application of those skills to practical life situations that is lacking. This is where financial literacy plays a role of insuring that graduating high school seniors will have the necessary tools to address the financial challenges that they will face the minute they step out of the protective bubble of high school and family.

A 2011 Charles Schwab survey of teens found that only 35% of those surveyed had any knowledge of how to use a credit card. The same survey found that only 31% understood credit card interest and fees. This survey reveals the greater lack of knowledge amongst teens of financial literacy. Only 31% understood what a credit score is and how it works. Only 22% said they understood how income taxes work and how they are filed. Even more revealing only 17% understood what a 401(k) plan, which demonstrates that our students are not aware of the skills needed to save for their futures. Even more disturbing is that the study shows that our students financial literacy is getting worse. From 2007 to 2011 teens knowledge about financial affairs has declined dramatically. But the most applicable part of the study is what it revealed in regards to teens’ desire to learn about finances. Of the teens surveyed 86% say that they would like to learn about money management in school before making financial mistakes in the real world and 75% say that learning money management skills is a top priority for them.

Financial literacy can not be relegated to an extracurricular or elective offering. It needs to be part of the core curriculum and integrated into our instruction of math and economics. Financial literacy can provide an opportunity for applied learning for students to use their knowledge of math in a real world application. The key is integrating it across our schools. The word mandate is a feared buzzed word in today’s political environment but there are some things that are worth requiring in our schools. Financial literacy is one of them. Our students must know how to manage money.

How much of the mortgage crisis could have been avoid with better financial literacy? Much of the financial catastrophe that devastated our economy and triggered a recession (which we have still not recovered from) could have been mitigated by a more informed populace. Predatory lending and lack of understanding of what they were doing left countless homebuyers unable to meet their obligations.

The personal success of our young people depends on their being able to navigate the financial world. In order to reverse the disturbing trend of increasing debt burden amongst our youngest Americans we need to make sure they understand the basics of financial literacy.

We feel that this bill is a crucial step in the right direction and urge the committee to give LD 843 their unanimous support. Thank you for your time today and I am  happy to answer any questions you may have regarding this testimony.


Representative Matthea Daughtry, Co-Chair

Representative Matthew Pouliot, Co-Chair

Representative Justin Chenette, Vice Chair

Representative Corey Wilson

Representative Craig Hickman

Representative Bryan Kaenrath

Representative Scott Hamann

Representative Nate Libby

Representative Joshua Plante

Representative Beth Turner

Representative Ryan Tipping-Spitz

Representative Alexander Willette

Representative Adam Goode

Representative Andrew McLean

This post was written by
Matthea “Mattie” Daughtry, a Brunswick native, is the State Representative for the Maine House District 66

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