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News #6

Finally, it seems like winter might be over. So it’s safe to say happy spring/summer from the Connecticut Asset Building Collaborative! Welcome to our sixth Quarterly newsletter.

Local opportunities to learn

Jump$tart Financial Literacy Summit

The next annual Jump$tart Financial Literacy Summit will take place on Friday, October 13th in Rocky Hill. The focus of the Summit this year will be on student loans. Save the date on your calendar and stay tuned for more details. Visit the Jump$tart website to learn more about Jump$tart, and to read about last year’s summit.

Peer learning – gamification and prize-linked savings

It’s too late for you to attend the peer learning session where Commonwealth (formerly Doorway to Dreams/D2D Fund) presented about their important work on gamification and prize linked savings BUT it’s not too late for you to visit Commonwealth’s website and find out more about what they do, and how you can apply it to your own work. Stay tuned for news about the next peer learning, which will likely take place in September.

FDIC event on Financial Inclusion

The FDIC will be holding an event on Financial Inclusion at the Hartford Lyceum, on 19th July. Hold the date in your calendar; we will send more details as they become available.

News you can use

Free debt management for New Haven residents!

The City of New Haven has contracted with Money Management International (MMI), the only non-profit credit counseling organization in the state, to provide FREE services to New Haven residents. MMI’s advice is always free, but it usually charges a fee to set up a debt management plan. Through the contract with the city, that fee is waived for New Haven residents. It’s a great deal for anyone who is ready to start dealing with their debt.  For those contemplating bankruptcy, credit counseling is the first step in that process.  Contact MMI on their dedicated New Haven number 1–877-486-8491. ** New Haven residents only.

Advice and support for Connecticut college-goers

Visit the new state portal, Connecticut’s one-stop shop for helping you plan, save and pay for college. It streamlines all of the state agencies and services that touch higher education funding, to provide up to date information about saving, looking for scholarships, considering a loan, or just figuring out how to put it all together.

University of Connecticut to provide financial literacy training

Recognizing that many students arrive in college knowing very little about managing their money or paying for college, this fall UConn will begin giving a financial literacy presentation to all freshman. The presentation will cover paying for college, including financial aid and taking out loans, credit and how to avoid accumulating debt, and the basics of budgeting, saving money, and using a bank account and credit card.  

As important as the state portal and the UConn initiative are, see the ‘financial literacy alone isn’t enough’ post below to see why we need to do much more than simply give our students financial literacy training……

The latest research that matters

Financial literacy alone is not enough

All credit to UConn for trying to help their freshman with their financial problems (see above), but we mustn’t lose sight of the fact that college is simply too costly for many students, and we need to find ways to make it more affordable to enable everyone to get the education they deserve; see here for some thoughts on that. 

This article makes the same point - here’s an excerpt “When I emailed Penn State to ask about how financial literacy could compensate for such things as the fact that college tuition nationwide has more than doubled since 1980, this is the response I got from Daad Rizk, the head of the program: “Financial literacy helps students to treat education as an investment in their future. The real problem is not the rising cost of education, it is in the lack of financial planning and lack of financial literacy skills of making sound financial decisions”. Here is one thing I would suggest any financial literacy program at Penn State should emphasize: state funding provided 62% of the school's budget in 1970, vs 14% in 2012. This might go a long way toward explaining the explosion in both tuition and student loans at the school.”

And at risk of laboring the point somewhat, academic research supports this view. See here for a summary of an article entitled "The Political Economy of Education, Financial Literacy, and the Racial Wealth Gap," written by a pair of public-policy professors, which argues that “the political appeal of basic financial training perpetuates a false narrative that students of modest means have run up debts not because they are poor, but rather because they are irresponsible.”

Promoting Youth Savings

If you work with youth, or even have one of your own in your home, take a look at this report from the FDIC which outlines effective strategies for promoting savings among young people, based on the experiences of 21 banks that participated in a two-year Youth Savings Pilot program. It has great information about bank/school partnership models, what types of accounts to offer and more.

Banks failing to meet National Account Standards

Talking of accounts, see this report, supported by the MetLife foundation, which compares how national banks’ basic, entry-level checking or transaction account compare to the 2017-2018 Bank On National Account Standards. Based on data collected from a sample of 1,625 banks, the research reveals that most banks do not have a basic, entry-level checking or transaction account that meets those standards. The research also found that bank representatives such as tellers and branch managers struggle to describe their banks’ overdraft policies, reporting that they often use discretion when deciding to charge these fees.

Inequality in America

We’ve said this before, but it’s so important we’ll keep on saying it. American has an inequality problem not only of income and wealth, as we all know, but also of financial stability. You probably know about the Financial Diaries research which reveals in great detail how hard it is for families to maintain financial stability in the face of fluctuating income and expenses. If you haven’t see it, see here for the latest, or just read this article in the Atlantic to see the major findings. Here’s a taster quote from that article “..over the course of our study, one-third of the families were threatened with (or actually experienced) eviction, the disconnection of utilities or cable, or repossession of an asset, most often their vehicles. Nearly half of those with bank accounts had at least one overdraft. Households were making only the minimum payment on about half of the credit cards that we tracked, which they’d often pay for dearly down the line”. The most recent report from the Federal Reserve Board on the Survey of Household Economics and Decision making confirms, on a nationally representative scale, the same thing as the Financial Diaries research.