Dr. Carly Urban answers this important question through her analysis of the impact of guaranteed high school personal finance courses on graduation rates. The answer might surprise you. 

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Link to paper in IZA - Institute of Labor Economics: Does State-Mandated Financial Education Reduce High School Graduation Rates?

Link to issue brief: Personal Finance Guarantees do not Change High School Graduation Rates

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Any time students have another box to check before being awarded their high school diploma, a natural worry is that for students already struggling, this one additional burden may keep them from graduating—or delay their progress. In a recent paper, I investigated this with recent financial education guarantees—states the require every student complete a full semester of personal finance education prior to high school graduation.

I compared students in states with and without guarantees before and after they went into place to students in states that have no financial education requirements in the same time periods. The results show that there was no change in the likelihood of completing high school by age 18 or 19. There is also no difference in the likelihood of being “on track” for high school graduation—meaning being in the expected grade for one’s age—after the guarantee goes into place.

But what if students from the most vulnerable backgrounds are most likely to be harmed by an additional course requirement? My findings suggest that this is not the case. Students from lower income families—those in the bottom 25th percentile, meaning their incomes were less than $27,301 per year—are also no more or less likely to graduate from high school. There are also no real differences in the effects by race or gender.

Why does an additional full semester of personal finance not change the likelihood of completing high school? This result is actually pretty similar to other work that shows expansions of math requirements do not reduce high school completion. A recent published paper also shows that graduation rates did not suffer after students in Louisiana were required to complete the Free Application for Federal Student Aid (FAFSA) before earning their high school diplomas.

Since states with guarantees are often careful to remove content that is redundant or obsolete from standards when the guarantee goes into place, there is likely less of a burden on students. Some states that add personal finance guarantees have lower total credit requirements to begin with. As long as states and school districts adding guarantees continue to be prudent in making sure they do not over-burden students, personal finance guarantees will likely not come at the cost of high school completion.

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More guest posts from Dr. Carly Urban:

• Digital vs. Traditional Financial Education
• Insights from Recent Meta-Analysis of Financial Education Experiments
• Podcast: Dr. Carly Urban on the State of Financial Education in 2022

About the Author

Carly Urban

Dr. Carly Urban is Associate Professor of Economics at Montana State University, a Research Fellow at the Institute for Labor Economics (IZA), and a research fellow at the TIAA Institute. She has a full page on her website dedicated to financial education research (https://www.carlyurban.com/home/financial-education), where most of her work has been centered on financial education in schools. This research has been published in top academic journals and covered by major news outlets. When she is not working, she usually spends her time adventuring in the mountains with her husband or her dogs, Cannon and Panda.

More posts by Carly