A bill introduced by Senators from both parties would help high school students achieve financial literacy by giving them money and then matching a portion of what they continue to save.
The Program to Inspire Growth and Guarantee Youth Budgeting Advice and Necessary Knowledge, or the PIGGY BANK Act, was introduced Thursday by Sens. Gary Peters, D-Mich., and Cynthia Lummis, R-Wyo.
If passed, the bill would create a financial matched savings pilot program where high school students would receive a $300 initial deposit and have up to $25 per month of any extra savings put in the account matched. The program would require students to take a financial literacy class.
"This bipartisan bill will provide students with an innovative experience and the tools they need to plan for the future, create stability for them and their loved ones, and lead to long-term financial security and success," Sen. Peters said in a statement.
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The students would then be able to withdraw their funds a year after graduating high school for certain things, such as paying for education, starting a business, buying a house or to offset medical hardship.
The legislation intends to boost financial literacy among young Americans by giving students a way to practice what they learn. Given the economic challenges exacerbated by the coronavirus pandemic, this kind of experimental learning is especially important in low-income and underbanked areas, according to the sponsors of the bill.
"Decreasing economic inequality and closing the racial wealth divide means creating saving pathways for low-income households to build wealth," said Gary Cunningham, CEO and president of Prosperity Now, a nonprofit that supports the legislation, in a statement. "Matched savings programs can incentivize working families to boost their savings and get on a wealth-building path through opportunities for higher education, work and homeownership."
The legislation is also supported by the National Education Association, the National School Boards Association and the Michigan Education Association.
Financial literacy in the U.S.
Many Americans have been impacted by a lack of financial literacy, which cost adults $415 billion in 2020, according to the National Financial Educators Council. Only about 57% of American adults are considered financially literate, according to the Global Financial Literacy Excellence Center. Some 66% of states earned a grade of "C" or worse from the Nation's Report Card on Financial Literacy, a study released by the American Public Education Foundation.
"Too many Americans suffer from a real lack of financial literacy, and at a time when new technology is completely changing what that term will mean in the future," Sen. Lummis said in a statement. "I want young people in Wyoming and across the country to have a better understanding than previous generations of how to responsibly handle their finances."
Of course, the legislation would have to first pass the Senate, and then the House of Representatives, to be signed into law by President Joe Biden. In the last few years, a few financial literacy bills have been introduced in both chambers of Congress that didn't see a vote.
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