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The Effects of State‐Mandated Financial Education on College Financing Behaviors

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  • CHRISTIANA STODDARD
  • CARLY URBAN

Abstract

Students entering college have limited financial experience while making complex borrowing decisions. This paper examines a policy lever that may improve these decisions: high school personal finance graduation requirements. We use a difference‐in‐difference strategy to determine their effects on financial aid decisions of incoming freshmen at 4‐year institutions. Our results suggest financial education shifts students from high‐cost to low‐cost financing. The requirements increase aid applications and acceptance of federal loans, while decreasing the likelihood of holding credit card balances. Students from less affluent family backgrounds reduce their likelihoods of working and borrowers from more affluent backgrounds reduce private loan amounts.

Suggested Citation

  • Christiana Stoddard & Carly Urban, 2020. "The Effects of State‐Mandated Financial Education on College Financing Behaviors," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(4), pages 747-776, June.
    • Handle: RePEc:wly:jmoncb:v:52:y:2020:i:4:p:747-776
    DOI: 10.1111/jmcb.12624
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    References listed on IDEAS

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    Cited by:

    1. Lusardi, Annamaria & Kaiser, Tim, 2024. "Financial literacy and financial education: An overview," CEPR Discussion Papers 19185, C.E.P.R. Discussion Papers.
    2. Kaiser, Tim & Lusardi, Annamaria & Menkhoff, Lukas & Urban, Carly, 2022. "Financial education affects financial knowledge and downstream behaviors," Journal of Financial Economics, Elsevier, vol. 145(2), pages 255-272.
    3. Preston, Alison & Qiu, Lili & Wright, Robert E., 2022. "A Study of the Chinese Gender Gap in Financial Literacy," IZA Discussion Papers 15253, Institute of Labor Economics (IZA).
    4. Harvey, Melody & Urban, Carly, 2023. "Does financial education affect retirement savings?," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    5. Mangrum, Daniel, 2022. "Personal finance education mandates and student loan repayment," Journal of Financial Economics, Elsevier, vol. 146(1), pages 1-26.

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