ABC News' Mary Bruce and Matt Jaffe Report:
In the wake of the worst financial crisis in generations, the Obama administration today announced a new campaign to promote financial education for high school students nationwide.
The joint effort by the Treasury Department and the Department of Education stems from a new survey by the Financial Industry Regulatory Authority Investor Education Foundation that showed that young adults had much lower financial literacy than prior generations. Respondents with higher levels of financial literacy were more likely to plan for retirement, have emergency "rainy day" funds, and avoid high credit card fees and interest rates.
The first step in this effort, the administration said, will be the National Financial Capability Challenge, a national award program designed to encourage financial education in schools nationwide. The administration will boost resources to support the program's implementation and increase its reach to focus on poorer communities, which the survey said suffer the most from little access to financial education.
Starting today teachers, schools, school districts, and youth groups can register online to participate and early next year a teacher "tool-kit" will be sent out to all registered teachers. The Challenge exam will be offered in late March of this year.
"The reality is that all children don't know the basics of saving and investing," Education Secretary Arne Duncan said in a statement. "It's a skill they need to be successful in our economy. The initiative we're announcing today with the Department of Treasury is a step in the right direction." Duncan has worked closely with financial literacy programs in the past. In 1996 Duncan helped launch the Ariel Community Academy, a public elementary school in Chicago built around a financial literacy curriculum.
Treasury Secretary Tim Geithner added that the administration is not solely focused on financial regulatory reform in the wake of the current crisis, but increasing financial education as well.
"We must also do a better job making sure our students graduate from high school with a better understanding of basic economics, basic finance, and the benefits and risks associated with debt," Geithner stated.
Geithner also pointed to a lack of financial education as one of the many causes of the economic crisis.
"The failures that led to this financial crisis were many. Banks and investors took on large risks, risks they did not understand. Washington allowed those risks to build up unchecked. And in communities across the country, Americans borrowed too much in part because they did not understand how to save prudently, how to borrow responsibly, and they did not understand fully that pension values and house prices, equity prices will not always rise," he told reporters today.
Earlier this month the Federal Deposit Insurance Corporation released a report conducted by the Census Bureau that showed that more than a quarter of all US households – a total of about 60 million American adults – have little or no access to banking services.
The FDIC report said these unbanked or underbanked households are disproportionately poor and minority. 71 percent of these households earn under $300,000 a year, the report found.