Cover: Financial Education among Financially Vulnerable Populations in the United States

Financial Education among Financially Vulnerable Populations in the United States

Published Aug 29, 2018

by Melody Harvey

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My dissertation examines if state-mandated financial education improves debt-related and college-going behaviors among economically vulnerable young adults. Young adults are more likely to be exposed to state-mandated financial education, yet are more likely to engage in adverse behaviors such as payday borrowing and sub-optimally financing postsecondary education. I employ a difference-in-differences approach to exploit cross-state and consumer-age (or student-cohort) variation in financial education mandates to detect causal effects in the aforementioned behaviors. Overall, I find that exposure to personal finance course requirements reduces engaging in adverse behaviors — particularly, reduces payday borrowing, increases full-time college attendance, and promotes selecting less risky institutions. Reductions in high-cost borrowing specifically occurred among subpopulations that are more likely to use AFS. However, in context of higher education, stronger improvements in college financing were seen among non-disadvantaged students. My findings reveal that financial education evaluations should account for all financial behaviors that are relevant to young adults. Otherwise, we may underestimate the impacts of school-based financial education; thereby, discourage policymakers from adopting these policies. Overall, policymakers should consider establishing these mandates to ensure that youth enter adulthood with a basic set of information to make sound financial decisions. They may wish to emphasize their efforts in underserved districts.

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This document was submitted as a dissertation in April 2018 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Grace Carman Grace (Chair), Trey Miller, and Jeremy Burke.

This publication is part of the RAND dissertation series. Pardee RAND dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a Pardee RAND faculty committee overseeing each dissertation.

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