How the CFPB is Furthering Financial Education to the Public
Written by: Kristy Welsh
Last Updated: August 30, 2017
Benjamin Franklin once advised, "An investment in knowledge pays the best interest."
In that same spirit, education is one of the chief aims of the Consumer Financial Protection Bureau (CFPB), the national agency tasked with protecting consumers of financial products and services.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 mandated that the CFPB’s work include the improvement of financial literacy among American consumers. To that end, the CFPB engages in a long list of initiatives, highlights of which are outlined below.
Financial Education Research
As stated in the CFPB’s 2014 Financial Literacy Annual Report:
"According to a 2011 Government Accountability Office (GAO) report on financial literacy: 'Relatively few evidence-based evaluations of financial literacy programs have been conducted, limiting what is known about which specific methods and strategies are most effective.'"
Thus, the CFPB’s financial education research program that focuses on:
- Determining how to measure financial well-being and identifying the knowledge, skills, and habits associated with financially capable consumers.
- Evaluating the effectiveness of existing approaches to improving financial capability.
- Developing and evaluating new approaches.
"The CFPB is taking up this challenge to provide stronger evidence of what works, in order to support and guide efforts to improve the effectiveness and quality of financial education, and therefore improve consumer decision making and outcomes."
Have a question about a financial product or service? Turn first to the Ask CFPB section at ConsumerFinance.gov, a comprehensive database of information on a wide range of financial products and services, from student loans and banking accounts, to auto loans and mortgages.
With this tool, you can:
- Search with your own unique question.
- Search by category.
- Scroll through commonly-asked questions.
The system includes a filter for sorting results by most relevant, most helpful, most viewed, or most recently updated.
Know Before You Owe
How much is that debt really going to cost you? The CFPB wants you to know before you owe, particularly when it comes to some of the most costly of financial decisions – credit cards, mortgages, and student loans.
Next time you're considering a credit card offer, take the time to look for the credit card agreement in the CFPB's database of from more than 300 card issuers. Study the agreement carefully to be sure you know the APR, balance transfer fees, cash advance fees, late payment fees, and more.
The CFPB has also created a simplified credit card agreement. While its use is not mandatory for credit card issuers, it will at least give you a good idea of what exactly you should be looking for in your agreement comparisons.
After more than 2 years of extensive research, the CFPB created simplified mortgage disclosure forms to help ensure borrowers understand what they’re getting into, particularly relative to risk factors, short-term and long-term costs, and monthly payments.
The Financial Aid Shopping Sheet helps students and their families easily compare the cost of college from one school to the next. Though its use is voluntary, thousands of colleges and universities are already on board. So if you you're shopping around for schools, be sure to ask them for it.
Training For Housing Counselors
Is your housing counselor up to speed? To ensure housing counselors know all the ins-and-outs of the latest mortgage servicing rules, the CFPB created the Guide to Mortgage Servicing Rules, covering:
- The 10-step loss mitigation process.
- Foreclosure prohibitions.
- Charges and fees that can be imposed on a borrower.
- The error resolution process.
- Borrower requests for information.
- Borrower requests for payoff statements.
The CFPB has also provided on-site and virtual training to thousands of housing counselors nationwide.
Free Credit Score Initiative
Do you know your credit score? Since FICO now allows lenders to share credit scores with cardholders at no additional charge, the CFPB has urged the nation’s top credit card issuers to do so. Many of them are (and were even prior to the CFPB’s formal request).
"If scores are lower than expected or if they change over time, more consumers may take the initiative to request their credit reports,” says CFPB Director Richard Cordray. “This will allow them to address concerns, dispute errors or fraud-related entries, and improve negative aspects of their credit usage."
Paying For College
In addition to the Financial Aid Shopping Sheet (referenced above under Know Before You Owe), the Paying for College initiative includes CFPB's creation of Guides to Student Loans and Student Banking.
Libraries as Hubs of Financial Education
The Community Financial Education Project:
- Provides librarians with a collection of financial education resources and tools.
- Helps libraries identify and connect with local partners in their communities.
- Helps libraries build an online community for local financial education librarians.
- Provides helpful trainings for library staff and managers.
Our libraries serve nearly the entire American population — close to 300 million people. That combined with the inherent nature of libraries as hubs of knowledge make them an obvious solution for improving financial education.
K-12 Curriculum Recommendations
What are we teaching our kids about finance? Infamously, the U.S. does not have a national standard for financial education. However, in 2013 the Consumer Financial Protection Bureau recommended K-12 finance education standards for the states.
Specifically, the CFPB recommends:
- Introducing key financial education concepts early and continue to build on that foundation consistently throughout the K-12 school years.
- Including personal financial management questions in standardized tests.
- Providing opportunities throughout the K-12 years to practice money management through innovative, hands-on learning opportunities.
- Creating consistent opportunities and incentives for teachers to take financial education training with the express intention of teaching financial management to their students.
- Encouraging parents and guardians to discuss money management topics at home and provide them with the tools necessary to have money conversations with their children.
Changes like these seem long overdue. While there are all sorts of reasons Americans find themselves deep in credit card debt or, worse, filing bankruptcy, the state of our nation’s finance education is surely some reflection of that.
Other Notable Initiatives
- Workplace Financial Education Program, seeking to address key life events and decision points in employees’ financial lives; augmenting tools such as automatic enrollment in retirement plans with training and information sessions for employees and free financial planning assistance.
- Ready, Set, Save!, encouraging EITC-eligible taxpayers to pre-commit to saving a portion of their refund at the time their taxes are being prepared and they first learn the amount of their EITC credit and expected tax refund.
- Money Smart for Older Adults (MSOA), an instructor-led curriculum for the FDIC’s Money Smart program to provide older consumers and their caregivers with information on preventing and responding to elder financial exploitation.
- Military Financial Educator Forums on consumer financial topics for service providers who deliver financial, educational, or legal counseling to service members and their families worldwide.
- Bridges to Financial Security for Persons with Disabilities, increasing access to financial education services for individuals with disabilities who are transitioning into the workforce.
The CFPB has created dozens of free publications for consumers, including:
- Tips for Homebuyers: Make the Most of the New CFPB Mortgage Rules, a one-page summary.
- Shopping for a Mortgage? What You Can Expect Under Federal Rules, an 18-page in-depth booklet.
- Your Money, Your Goals, a financial empowerment toolkit for social services programs.
- Employer’s Guide to Assisting Employees with Student Loan Repayment: A Toolkit for School Districts, Non-Profit Organizations, and Other Public Service Employers.
- Managing Someone Else’s Money, a four-part series that includes Help for Guardians of Property and Conservators, Help for Agents Under a Power of Attorney, Help for Representative Payees and VA Fiduciaries, and Help for Trustees Under a Revocable Living Trust.
"We have built the greatest system of economic liberty in the history of mankind," says CFPB Director Richard Cordray, "but it will only endure if we are willing to take the necessary steps to strengthen that system from the bottom up, starting with the individual."