"Average is not good enough." I couldn't agree more with that statement from U.S. Secretary of Education Arne Duncan about financial literacy. Yet average is what the United States is, according to the Programme for International Student Assessment's (PISA) recently released financial literacy data. The PISA results show that, despite significant U.S. financial literacy programming, more than one in six U.S. students lacks baseline proficiency in financial literacy, and less than one in ten U.S. students is a top financial literacy performer. Our average performance places us well behind Shanghai, China; Australia; Estonia; Poland and Czech Republic, among others.
The release of PISA's financial literacy data (an addition to established PISA assessments of reading, math and science) was a level-setting and thought-provoking milestone for financial education. Covering 29,000 students from 18 participating countries and economies, the survey provides an important baseline for financial literacy.
PISA's study also brings financial capability to the forefront of the educational landscape and reflects a growing recognition that building financial capability is about more than teaching young people to make sound choices about money. Financial capability prepares students to apply what they know in practical ways so they can prosper in the real world. These are skills they'll need for college and the workforce, and to become our future business leaders, entrepreneurs and consumers. Our communities and economy stand only to gain when our young people are better equipped to problem solve and think critically.
Pushing the U.S. past average to create a youth population and ultimately a workforce with the skills to weigh long- versus short-term outcomes, solve problems, and think critically and innovatively will require both expanding and improving existing efforts. At the PISA launch event, Andreas Schleicher, Director, OECD Directorate for Education and Skills, said that "our economy rewards us for what we can do with what we know," and I think this is an important insight. Based on the new data, the discussions at last month's launch and PwC's own experiences working to build financial capability, four key themes resonated with me to expand and increase the impact of financial education.
1. Recognize teachers are the linchpin.Teachers are the most common source of financial education, so it is essential to continue developing and refining programs that give them necessary training and resources. PwC's financial literacy initiative, Earn Your Future, includes a heavy focus on teacher training and development. We host with Knowledge@Wharton High School intensive training seminars to help high school educators deepen their financial education knowledge and teaching skills so that they can take that learning back to their classrooms. These professional development experiences are designed to give teachers much-needed resources, like financial literacy lessons plans. We also aim to help educators incorporate financial literacy into existing curricula, particularly math, and the Common Core State Standards. Most teachers and schools have limited resources and little time for an "extra" subject, like financial literacy. Providing teachers with the tools to transmit these crucial life lessons to their students is central to boosting financial capability.
2. Look beyond the classroom to increase impact. One particularly troubling PISA finding was the linkage between financial literacy and socioeconomic status. Approximately 17 percent of the variation in the U.S. is correlated with socioeconomic status. U.S. students with at least one parent in a skilled occupation generally scored 56 points higher on the assessment than students whose parents have semi-skilled or elementary occupations.
Reaching all American youth requires broader collaborations and more nuanced programs. For example, despite findings that parental involvement in financial education is highly impactful, discussing money matters at the dinner table is taboo in many communities. Adjusting programming to address this and other cultural variations and working with families, religious institutions and community groups are important supplements to school-based financial education, particularly in underserved communities.
3. Equip our youth to make good choices as they pursue higher education and their careers. Alexander Gonzalez, president of California State University at Sacramento and my fellow panelist at the PISA launch, pointed out that 75 percent of the students at his institution receive financial aid. Forty-one percent of student loan borrowers are delinquent at some point during the first five years of repayment, and, according to the forthcoming Junior Achievement/PwC Millennial and College Planning 2014 study, nearly one quarter of students believe their student loans will be forgiven. Clearly, too few grasp the full burden of the loans they take on, and too many fail to land the jobs they need to pay their bills. We must improve students' understanding of debt, interest and other basic financial principles so they can leverage -- rather than be hindered by -- their degrees and the accompanying debt.
We also need to correct the mismatch between the skills employers seek and the skills of our workforce. While many of our graduates struggle to find good jobs, our business leaders are scrambling to find qualified talent. Seventy percent of U.S. CEOs are concerned about the availability of key skill sets, up from 54 percent in 2013. Businesses can help by working with educators and school administrators to provide early guidance -- well before the job interview process -- on which majors, certifications and real world experiences employers value.
4. Businesses must be part of the solution. To solve a systemic problem, businesses need to be part of creating a systemic solution. When they apply their resources to leverage the extensive knowledge of teachers, school administrators and other members of the education community, businesses can replicate and scale leading practices. Business dollars and talent should also be sustainably connected with local endeavors to impact communities. By joining forces on financial education, we can drive the significant changes needed to push past average.
Shannon Schuyler is a Principal and Corporate Responsibility Leader at PwC, and President of the PwC Charitable Foundation, Inc. To learn more about Earn Your Future, click here.