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Texas Better Off Under CFPB Proposal to End Payday Debt Trap

Posted by slopez on 04/20/2015

Tags: payday, loans, Auto Title, Predatory

Texas still needs unified ordinance that offers strong consumer protections

AUSTIN — The Texas Fair Lending Alliance (TFLA) is fighting to end abusive lending. The Consumer Financial Protection Bureau’s (CFPB) proposal to rein in payday and auto title loans is bringing Texas and other states a step closer to meaningful reform.

AARP Texas, Center for Public Policy Priorities, Christian Life Commission, Citizens for Responsible Lending (Waco), Lubbock Housing Finance Corporation, RAISE Texas, Texas Appleseed, Texas Catholic Conference, Texas NAACP, United Way of Central Texas, United Way of Greater Houston, United Way of Southern Cameron County, and United Ways of Texas — members and partners of TFLA — urge the CFPB to ensure all loans comply with a meaningful assessment of the borrower’s ability to repay the loan, and also stress that Texas’ unified ordinance, now adopted by 22 urban and rural Texas cities, remains necessary to protect borrowers.

In Texas, payday loans average over 500 percent APR, and car title loans average 268 percent APR.

The March 26 working proposal by the CFPB addresses abusive small-dollar lending schemes such as payday, auto title, and high-cost installment lending. The broad scope of the proposal is particularly important for Texas, as we are seeing an increase in high-cost installment and auto title lending in addition to short-term payday loans. From 2012 to 2013, the volume of high-cost installment lending increased by 46 percent in Texas, with average fee charges at 1.5 times the original loan principal. Short-term auto title lending increased by 13 percent.

The CFPB proposal includes essential guiding principles, including requirements to assess the borrower’s ability to repay the loan and protections to ensure that loan payments do not take precedence over basic necessities, such as rent, utilities and food. Given this industry’s history of exploiting loopholes to get around fair lending standards, any final proposal should ensure that fair standards are upheld in the marketplace.

Local Ordinances and State Reforms Still Needed

Texas’ unified ordinance adds basic, common-sense standards to control predatory practices in the payday and auto title lending marketplace. Timing for any new federal rules to take effect means Texas cities that adopt the unified ordinance will continue to protect borrowers from egregious payday and auto title loans. Additionally, city-specific measures can remain in place if they are stronger than federal rules.

Approximately 30 bills have been filed in the Texas Legislature to address payday and auto title lending reform. The best comprehensive measures to protect borrowers focus on two strategies — allowing Texas’ unified ordinance to become state law and adopting a meaningful rate cap for these high-cost loans.

More than 7 million Texans are protected under the unified ordinance, and the main components of the ordinance include:

  • Payday and auto title stores, operating as credit access businesses (the state licensing designation for these businesses), must register with the city.
  • Payday loans are limited to 20 percent of the borrower’s gross monthly income. Auto title loans are limited to the lesser of 3 percent of the borrower’s gross annual income or 70 percent of the vehicle value.
  • Loans cannot have more than four payments: either four installments or three rollovers or renewals.
  • The proceeds from each installment or renewal must reduce the loan principal by 25 percent.
  • A rollover or renewal is defined as an extension of consumer credit made within seven days of the previous extension of credit.

About the Texas Fair Lending Alliance

The Texas Fair Lending Alliance (TFLA) believes in a Texas market that encourages informed financial choices that are successful for both borrowers and lenders. TFLA is a coalition of over 60 organizations and individuals working to transform the Texas payday and auto title loan market from one based on a cycle of debt, to one that thrives on a cycle of success. Our goal is to strive for a market with fair and transparent payday and auto title loans that are a win for lenders, borrowers, and the Texas economy. www.texasfairlending.org

This article was originally published in The Gilmer Mirror on March 31, 2015.

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Denver Maps Connection Between Neighborhoods and Jobs

Posted by dbrown on 04/14/2015

Tags: homeownership, Jobs, Economic Development, new markets tax credit

Originally posted to nextcity.org

America’s slow post-recession rebound has been frustratingly asymmetric. The stubborn pace of wage growth has meant that many households that were struggling prior to 2008 are feeling even more constrained and pessimistic about the financial future. Many are living in neighborhoods where several failed attempts at revitalization, from urban renewal to Empowerment Zone initiatives, are fresh in people’s memories.

With seven pillars — business retention, small business advocacy, business recruitment, housing, strategic lending, and neighborhood and workforce development — Denver’s economic game plan moving forward, Jumpstart 2015, aims to be the most strategic roadmap for underserved neighborhoods that the city has ever attempted.

Jeff Romine, chief economist for the Denver Office of Economic Development (OED), says that the intentional development model is about “really knowing where we’re trying to go and signaling it to the private sector.” He says that Mayor Michael B. Hancock and OED executive director Paul Washington recognize that the bulk of investments into neighborhoods — even where the city is a partner in the investment — are coming from the private sector. “Throughout the document, we say, ‘This is where we think the economy is heading, this is where we think our city is heading, and this is where you are going to see us be the best partner you are going to find.’ Whether it be [because we have] the ability to bring focus, the ability to bring cash or, quite frankly, the intention.”

One of the ways that the OED is trying to focus and direct investments is through a newly expanded small business loan fund. Post-recession lending changes by commercial banks have strained an existing small business fund the city operated, so the city is exploring a new way to structure the funding and distribute loans to entrepreneurs.

Residual fees and income from the New Markets Tax Credit program, which expired in January 2014, have been used to set up what Romine likens to a “mini-New Market credit fund” for small businesses. While recipients of a typical New Markets Tax Credit investment could have expected to receive $5 million to $10 million for a project that could be around $40 million, the city-operated fund will use the same style to make smaller $250,000 to $500,000 investments for what might be a $2 million project. A potential borrower might end up awarding loans themselves on an even lower micro-level (potentially in the $50,000-$250,000 range).

“The target for that loan program is primarily in transit-enriched environments and must be in moderate-income areas,” says Romine. “We are trying to encourage the support of middle-income, middle-skill jobs. … We don’t want to become a bimodal community — that is, a rich and a poor community. We think it’s incredibly important to keep middle-class households in the city.”

Jumpstart 2015 also identifies four neighborhoods (Westwood, Globeville/Elyria-Swansea, Sun Valley, and the Welton Corridor) to concentrate programs related to employment/training, health and wellness, wealth-building, and affordable housing. Fresh food offerings will be expanded in Globeville/Elyria-Swansea through an existing Healthy Corner Store program; OED will partner with the Denver Housing Authority in pursuit of a Choice Neighborhood implementation grant for Sun Valley; commercial, retail and housing developments will be encouraged along the Welton Corridor.

Concurrently, the city will be completing a gentrification study to study how revitalization efforts impact low-income residents. The study comes on the heels of an analysis the city did last year to better understand where support programs existed and where they were needed.

“As we come in with our partners from the private sector and make these changes … we want to better understand what the impacts are and what we can do to mitigate any negative impacts,” says Romine. “As an example, if we were to invest in businesses on a commercial strip and cause a change in the types of businesses, will the new businesses be hiring from the local labor force? Or, are what we really doing is creating a disconnect between neighborhood residents and neighborhood jobs?”

It’s the type of question that not many city agencies across the country seem to be asking at the moment.

Even so, Romaine says that the Mayor and the Office of Economic Development are aware that there are limitations to what they can accomplish. “As we [make] progress through communities, we can’t do it all,” says Romine. “But we can say, ‘These are the places we are going to focus on over the next two years or so.’ We can signal to the private sector, ‘This is the place to go. We’re going to be there and be a sustained partner.’ What we are good at doing is being a catalyst of that change and then once it begins to take hold, we move on.”

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Rural Economic Mobility and Wealth Building

Posted by tedwards on 04/14/2015

Despite the general economic recovery in the United States, income inequality and wealth inequality are expanding. Perhaps more critically, it is becoming more and more difficult for families with lower wealth or income to achieve upward economic mobility. These two facts, that the wealth and income gaps are large and growing and that the relative economic position of families is becoming more fixed, chip away at the common notion of the American Dream – our ideal of equal opportunity. This is especially true in the South, the region with the lowest upward economic mobility.

In part because of this, many of the “hardest places to live” are in the South and almost all of the counties are rural. Low population density and population outmigration can make housing development, business development, and access to fairly priced financial services more challenging to provide even though those homes, jobs, and savings are critically needed. This occurs in part because of lack of access to capital which is often due to the loss of traditional financial institutions in rural areas.

Southern Bancorp Community Partners was founded in response to that need. Southern is a development finance organization that works to improve family and community net worth in order to promote economic opportunity. Southern and its bank partner, Southern Bancorp, are US Treasury certified Community Development Financial Institutions and, as such, offer lending, banking, and financial development services and promote policies that improve upward economic mobility in the rural Mid-South. These services make a real difference not only in the daily lives of the people in our communities but also the in the trajectories of their families and neighborhoods.

Abundant research and Southern’s experience shows that many people do not turn to banks when they need to make a financial transaction. Some use check cashers, pawn shops, payday loans, and other high priced, often predatory alternative financial services, even if they have a checking or savings account. The FDIC defines “unbanked” households as those that do not having either a checking or savings account at all, while “underbanked” households have a checking and/or a savings account but have used alternative financial services in the past 12 months. The most recent FDIC survey on unbanked and underbanked households shows the following for the two states in which Southern operates:

unbanked

The unbanked and underbanked rates for Arkansas and Mississippi are considerably higher that the US as a whole and the same is true for much of the South. The survey also shows the unbanked and underbanked rates by race and ethnicity, data which are consistent with reports on the racial wealth gap:

racial wealth gap unbanked

Southern’s own data from the Individual Development Account program support these findings. IDAs are matched savings accounts that help people save for appreciable assets such as a first home, small business development, or higher education. Since 1999, Southern has served more than 2,000 people through its IDA program in Arkansas and Mississippi. Recent data show that 50 percent of IDA participants had never had a savings account until opening the IDA. Given the unbanked rates (and the racial demographics of our service area), it is perhaps not surprising the 78% of our IDA participants identify as African American.

Ideally participants in the IDA program use their savings and match to purchase an appreciable asset and build net worth. But even if they do not save enough to complete the program before it ends, participants may accumulate significant savings for the first time in their lives. In addition, many choose to keep their savings account after leaving the IDA program. Such programs, especially when combined with financial education, credit counseling, tax preparation and other services, can help families develop savings and financial habits that allow them not only to weather economic shocks but also to build net worth. And according to Dalton Conley, “while race, income, job status and net worth all tend to vary hand-in-hand, careful statistical parsing shows that it is really net worth that drives opportunity for the next generation.”

It is important to note two features of the IDA account which may make it attractive as a first savings account: 1) The savings are targeted toward a particular purchase of the saver’s choosing, and 2) the saving plan is time limited. For people who may have never saved before, the targeted purpose makes the savings process relevant and the time limitation makes it more feasible. This is not unlike the ever popular “Christmas Club” accounts that have the same two features. These findings can be used to develop starter savings accounts that will be available to people who are unbanked.

By many measures, the South is the fastest growing region of the country. That is no surprise given the resources, climate, beauty, and often underrealized opportunity in our region. So it is important for CDFIs and others to work toward increase economic opportunity for all, regardless of where they live. The solutions are critical not only for rural Southerners but for our country as a whole.

Karama Neal, PhD, is Chief Operating Officer of Southern Bancorp Community Partners, a CDFI based in Little Rock, Arkansas.

This post originally appeared on State of the South, and can be viewed by clicking here.

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Women need to take active role in managing family finances

Posted by jware on 04/13/2015

Tags: Women, Texas, Dallas, Family Finance

This article originally appeared in the Dallas Morning News:

http://www.dallasnews.com/business/columnists/pamela-yip/20150329-yip-women-need-to-take-active-role-in-managing-family-finances.ece

By: Pamela Yip

Published: 29 March 2015 09:10 PM Updated: 29 March 2015 09:17 PM

I have long advocated that women take an active role with their spouses in the management of household finances.

Even if you’re not interested in the subject and would rather cede that role to your spouse, you should force yourself to get involved because you will likely outlive your husband or partner and will have to manage the finances on your own.

Insurance company Allianz found that women in modern families still report “surprisingly” traditional concerns and behaviors when it comes to finances.

“The things that concern women the most are often the risks of the unknown, and women just worry more about money,” said Aimee Johnson, Allianz Life Advanced Markets manager. “By taking a little bit more of a passive approach to their finances, they don’t feel as burdened with making the decision.”

In its study, Allianz found that 55 percent of women said they have joint responsibility for household financial management and planning.

However, more men than women said they have full responsibility and final say of the household financial management.

Not all women are passive when it comes to family finances. I know many women who are equal partners with their spouses when it comes to making major financial and investment decisions.

But women do have additional concerns when it comes to money for several reasons:

They most likely will outlive their husbands and partners, which means that their money will have to last them longer.

“If they happen to outlive their male spouse or partner, that’s a huge problem because it could be that they’re really diving into the financials for the first time in their life or very late in life,” Johnson said. “They’re trying to become educated, engaged and informed often at a very emotional point in their lives.”

They often make less than men, although women’s earnings vs. men’s have improved over the years.

In 2013, women made 78.3 cents for every dollar men earned, up from 60.2 cents in 1980, according to the nonprofit Institute for Women’s Policy Research.

During the past three decades, inflation-adjusted median earnings for women’s full-time, year-round work spiked nationally, from $30,138 to $39,157. Men’s earnings decreased slightly, from $50,096 to $50,033.

Women also often leave the workforce to care for family members. That not only affects their current income, but also their retirement income. For instance, Social Security benefits are calculated on the highest 35 years of earnings.

Also, traditional pension plans use a formula that usually involves salary and years of service to figure the benefit amount earned. The longer someone works under the same traditional pension plan, the larger the retirement benefit.

“As women, we face unique and sometimes overwhelming challenges when preparing for the retirement that we envision,” said Eleanor Blayney, consumer advocate at the Certified Financial Planner Board of Standards in Washington, D.C. “Men are typically well ahead of women in terms of financial security and the resources they bring into retirement. Given this reality, women must plan with equal parts strategy and tenacity in order to reach our retirement goals.”

That means getting educated.

“I encourage women to really get involved now, understand now, get educated now and become more engaged now, because regardless of what life throws in your direction, you’re prepared at least from an educational and financial standpoint to deal with those things,” Johnson said.

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Integrating Financial Capability: CFED Launches New Learning Partnership

Posted by mlulion on 04/10/2015

Tags: Integrating Financial Capability, Financial Capability

By Dominique Derbigny on 04/08/2015 @ 10:00 AM

As part of our commitment to establishing a pipeline of services that move families from stress to financial security, CFED is excited to launch the Community Financial Empowerment Learning Partnership! The Learning Partnership, a project of CFED’s Platforms for Prosperity Initiative, is an 18-month engagement combining tailored technical assistance and peer learning focused on integrating financial capability services within existing systems and programs, and creating synergies in communities to facilitate integration on a broader scale.

We posted a Request for Proposals in January 2015 and received 60 thoughtful applications. After a rigorous review and selection process, CFED has decided on seven new Learning Partnership members whose experiences with financial capability integration and opportunities for scale and replication make them an ideal fit for this opportunity. The new members of the Learning Partnership include:

Catholic Charities of the Diocese of Santa Rosa (Sonoma County, CA)

Catholic Charities of the Diocese of Santa Rosa seeks to integrate financial capability services, such as credit building and microloans, into their housing and shelter programs, and improve access to financial capability services for immigrant populations.

Clarifi, in partnership with the City of Philadelphia and Women’s Opportunities Resource Center (Philadelphia, PA)

Through a collaborative effort among Clarifi, the City of Philadelphia and Women’s Opportunities Resource Center, this partnership is focused on launching the Philadelphia Financial Empowerment Network to develop a uniform, scalable way to connect clients at multiple agencies and entry points with appropriate financial capability services using a technology solution.

Financial Guidance Center (Nevada)

The Financial Guidance Center is looking to explore avenues to further engage its partners, strengthen collaborations and make its services more robust—including furthering its IDA program, connecting clients with banking services and financial products, and leveraging financial empowerment opportunities at tax time.

Massachusetts Association for Community Action (Massachusetts)

Massachusetts Association for Community Action seeks to develop new relationships with workforce development agencies and create a stronger framework to expand its financial coaching services across the state.

United Way of Miami-Dade, in partnership with the City of Miami, Catalyst Miami and RISEP (Miami-Dade County, FL)

This collaborative effort in Miami is focused on implementing a participant feedback mechanism to evaluate the quality and satisfaction of their financial capability services, and make improvements to their customized financial coaching and tax preparation assistance.

Wayne Metropolitan Community Action Agency (Detroit, MI)

Wayne Metropolitan Community Action Agency is focused on anchoring its financial capability services in client-driven goal setting and decision making, and increasing buy-in for its financial empowerment pathway community-wide.

YWCA of Metropolitan Dallas, in partnership with Metrocrest and New Friends, New Life (Dallas, TX)

This Dallas-based collaborative is interested in exploring how financial coaching can help integrate all of their other financial capability services in order to provide a more holistic approach to financially empowering women over the life cycle of service provision.

Over the course of the next year and a half, members will interact with their Learning Partnership peers and receive tailored technical assistance from CFED to improve and expand financial capability services, and to measure their overall programmatic outcomes. We will continue to share updates on members and their progress throughout the Learning Partnership, so stay tuned!

CFED is grateful for JPMorgan Chase’s generous support for expanding financial capability services through integration to address the central and interrelated problems families face in achieving financial security

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White: Don’t limit asset-building for poor families

Posted by mlulion on 04/09/2015

By: Kate Birnbryer White 12:08 a.m. EDT April 2, 2015

Asset limits were adopted in Michigan and other states as a way to safeguard tax dollars spent on public assistance. Essentially, they place a cap on the money and value of property a person can have and still be eligible for public assistance.

Although asset limits may sound like a reasonable way to assure that tax-supported assistance only goes to people who need it, in reality the limits stymie the efforts of low-income families to become financially self-sufficient. And the costs to administer the multiple and differing limits are out of proportion to the amount of funding they attempt to protect.

Ultimately, we want low-income families to achieve economic stability so they no longer need to rely on public assistance. Asset limits interfere with that goal, making it all the more difficult for families to become financially independent. Four of 5 Americans will experience at least one year of economic insecurity, ranging from poverty to unemployment to the need for public assistance, according to recent research. Such families are perhaps the most likely to eventually become self-sufficient when effective resources are applied quickly and comprehensively, as opposed to allowing them to fall deeper into debt as issues multiply and become harder to overcome. The help families need to get over the short-term economic hurdles and avoid more serious financial struggles are often restricted by asset limits.

We agree with the need for accountability and robust stewardship of tax-supported public assistance, but asset limits can actually be counter-productive to the desired end goals. As low-income families struggle to gain secure economic footing, such obstacles actually defeat the goal of financial independence. Asset tests prevent families from having a little bit of money in reserve to absorb the cost of a car repair, fluctuating gasoline prices, a new prescription drug or a higher-than-expected utility bill. Removing asset tests can help adults maintain employment and empower children to stay in school.

In Ohio, the first state to eliminate asset limits for Temporary Assistance to Needy Families (TANF), the number of families receiving aid did not increase. When Michigan reinstated asset limits for its Supplemental Nutritional Assistance Program (aka Food Assistance Program) less than 1 percent of the cases were deemed ineligible because household assets exceeded limits.

Those advocating for smaller state government budgets should consider the high cost of enforcing and administering asset limits. In states where asset limits were eliminated, significant administrative cost-savings have occurred. Oklahoma and South Carolina, for instance, saved nearly $1 million by eliminating Medicaid asset limits. State employees that determine eligibility can be more productive and fewer may be needed if Michigan drops its current asset tests and resists the urge to expand asset testing further.

Kate White is executive director of Michigan Community Action, a statewide association of 29 member agencies addressing poverty.

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New report: Economic recovery has made no dent in NC poverty

Posted by dbrown on 04/07/2015

Tags: recovery, poverty, North Carolina

Originally posted to ncpolicywatch.com:

Study finds state has higher rates of deep poverty and child poverty than majority of U.S.

Poverty in North Carolina either climbed or stayed steady from 2007 to 2013, despite the economic recovery, according to a new report from the Budget & Tax Center, a project of the NC Justice Center. Both North Carolina’s off-kilter economy and policymakers’ decisions to cut back on vital supports for working families are keeping poverty high, as wages remain stagnant, economic gains bypass nearly everyone except those at the top, and lawmakers continue to enact policies that compound these economic disparities.

In 2013, poverty in North Carolina – which is defined as a family of four living on less than $24,000 each year – was the most widespread it had been since before the turn of the century, the report said. The rate was 17.9 percent in 2013, the 11th highest in the nation, with the deep poverty rate and child poverty rate both the 12th highest.

“From the mountains to the coast, poverty-level incomes are a harsh reality for more than 1.7 million North Carolinians who find affording the basics such as rent, food, and utilities to be a daily challenge,” said Tazra Mitchell, a policy analyst with the BTC and author of the report. “Making it just a little easier for people to increase their earnings not only helps families struggling to pay the bills but also makes the economy stronger for all of us.”

Poverty has consequences for us all, and the depth of North Carolina’s economic hardship is closely tied to demographics as well as where one lives, the report said.

Race and gender play significant roles in poverty. Communities of color, women, and children are more likely to face economic hardships than whites, men, and older adults, respectively.

Racial disparities in income not only harm people of color but have consequences for all of us because inequities keep the economy from reaching its full potential. North Carolina’s Gross Domestic Product—a measure of all goods and services produced in the state—would have been $63.53 billion higher in 2012 if there had been no gaps in income by race and employment.

North Carolina’s child poverty rate was 25.2 percent in 2013, an increase of 6 percentage points since 2007. More than 4 in 10 children who grow up in poverty are likely to remain there as adults, with even less economic mobility for African American children. Poverty’s reach varies considerably across the state, revealing a stark rural-urban divide. Out of the state’s 100 counties in 2013, the 45 highest county-level poverty rates were all in rural counties—up from 31 in 2012.

More North Carolinians live in high-poverty areas. Urban and suburban areas are contending with the growing concentration of poverty. In fact, the state’s metropolitan areas experienced some of the biggest jumps in the country for the number of people who are poor and living in high-poverty areas.

Work and income supports such the Earned Income Tax Credit, Supplemental Nutrition Assistance Program (SNAP), and temporary unemployment benefits helped lift 1.5 million North Carolinians – including 340,000 children – out of poverty each year, on average, from 2009 to 2013, under the Supplemental Poverty Measure. Unfortunately, in the last few years both state and federal lawmakers have cut back on these supports, making it harder for people who live paycheck to paycheck. In addition, tax cuts are costing upward of $1 billion this fiscal year and going forward, making it impossible to replace the most damaging cuts to anti-poverty programs and other vital services that lawmakers enacted in the aftermath of the recession.

“North Carolina needs policies that create equal opportunity, rebuild entryways to expand the ranks of the middle class, and ensure that prosperity is broadly shared so that all North Carolinians can reach their potential,” Mitchell said. “Until lawmakers fix the state’s and the nation’s broken economic model, large numbers of people from Murphy to Manteo will wake up to poverty, struggle to put food on the table, and be unable to afford the basics like rent and child care.”

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What is Texas doing to educate young people about money?

Posted by jware on 04/07/2015

Tags: Texas, Education

This article originally appeared in the Dallas Morning News:

http://www.dallasnews.com/business/columnists/pamela-yip/20150405-financial-literacy-essential-for-texas-students.ece

Financial literacy essential for Texas students

By Pamela Yip

Published: 05 April 2015 09:12 PM Updated: 05 April 2015 10:36 PM

April marks the start of Financial Literacy Month, so it’s a good time to ask how we’re doing at educating young people in the basics of money management principles and math.

“Overall, I see good things happening,” said Nan Morrison, chief executive of the Council for Economic Education in New York. “Two years ago we published a set of national standards for financial literacy. Those were adopted in four more states last year. Once you have standards, it’s the starting point for making sure that good curriculum can get developed in a state.”

In Texas, we’re fortunate that schools have a clear mandate to provide financial education to students.

Texas is one of 22 states to require that students pass economics to graduate from high school. The one-semester course now includes lessons on financial literacy and paying for college, said Laura Ewing, chief executive of the Texas Council on Economic Education.

“While these additions are important,” Ewing said, “they should be the culminating lessons as we send students into the world to earn a living. Instead, they were the only financial literacy lessons that students were required to take, and they were too little, too late.”

But after the implementation of a new law last fall, students in kindergarten through eighth grade are now required to take financial literacy lessons, she said.

Still, much needs to be done.

Texas ranks 42nd overall in financial literacy, according to WalletHub, a personal finance website.

“For Texas, the biggest issue is the percentage of unbanked households, and even more so than that, it ranked 47th for the amount of nonbank borrowing individuals,” said Jill Gonzalez, WalletHub spokeswoman.

The unbanked are people without bank accounts. Texas ranked 41st in the percentage of unbanked households.

“Texas’ ratings are abysmal, as usual,” Ewing said. “However, I have great hope that recent Texas legislation and action by the Texas Education Agency and the State Board of Education will begin turning around consumer spending and saving.”

It’s best to get to kids when they’re young and can build a strong foundation in financial literacy.

Consider the findings of a recently released survey of 43,000 college students by Higher One, which markets financial services to colleges and students, and EverFi Inc., an education technology company.

The survey found that students are taking out more and larger student loans, yet feel less prepared to manage their money than any other aspect of college life. Also, although students reported a higher level of financial experience than in previous years, they didn’t report higher levels of responsible financial behavior.

The benefits of financial education are clear.

A January study funded in part by the FINRA [Financial Industry Regulatory Authority] Investor Education Foundation found that students in states with financial literacy requirements had higher credit scores and did a better job of repaying debt when they became young adults.

Texas was one of three states evaluated by researchers from Montana State University, the Federal Reserve Board and the Center for Financial Security at the University of Wisconsin-Madison.

“We are able to demonstrate that more rigorous state mandates, such as in Georgia and Texas, have a greater effect on subsequent financial well-being for young adults,” the researchers said.

All the more reason why we can’t let up on requiring financial literacy in schools.

Follow Pamela Yip on Twitter at @pamelayip.

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