University of Manchester Study Confirms Financial Education Qualifications Change Young People’s Lives
As home loan providers this year began offering borrowers five times their salary to obtain a mortgage, sinking many deeper into debt; as insolvency figures reach record levels, and as the Citizens Advice Bureau reveal they are dealing with 5,300 debt cases every day, the issue of debt has become a major feature of life in the UK.
The Government believe this can in part be tackled by better educating future generations about money. However, their plans currently amount to simply adding a couple of hours study on how to recognise the difference between notes and coins to the GCSE maths syllabus from 2008.
Last month the Conservatives appeared to go further by announcing that if elected to Government, financial education will be taught to all 11 – 18 year olds. Although they have not outlined precisely what form this will take, they have stated they do not believe Government plans to incorporate personal finance into GCSE maths are sufficient.
At present there is only one organisation in the UK offering standalone qualifications in personal finance to those aged 14-19 - educational charity the ifs School of Finance. This charity currently offer a GCSE, AS and A level equivalent qualification in financial education to over 6,500 students and the courses are making a very positive difference to the way these students view money.
The University of Manchester has released the interim findings of their three-year study into the effectiveness of financial capability qualifications, looking specifically at an AS level equivalent qualification, the Certificate in Financial Studies (CeFS), created by the ifs School of Finance.
The report provides powerful evidence of the effect financial education can have on behaviour, and on young peoples’ lives. It found that the majority of young people taking these qualifications had made positive changes to the way in which they manage their money.
The report shows that many students taking the course changed to a different bank account yielding a better return, whilst others purchased additional ‘non-traditional’ products, such as ISAs or investment bonds. There was an increase in the number of students owning multiple financial products and a decrease in the proportion of students who owned one or more credit or store cards.
95% of students were better able to manage their finances as a result of taking the ifs course. One teenage student said, “A lot of my friends …wouldn’t have any idea about how a fixed rate mortgage would work, or variable rate mortgage or how budget affects money but because I took the course I understand them.”
Gavin Shreeve, Chief Executive of the ifs School of Finance, said
“The feedback we have from teaching staff and students across the country is that our financial capability qualifications are making a very positive difference to the way young people manage their own finances. The interim findings of the University of Manchester Study back this up with hard evidence.”
One of the main reasons for the success in changing students’ financial behaviour was revealed by the study to be the fact students strongly identified the course as being ‘useful;’ and related to real life issues.
As a CeFS student from South Downs College in East Sussex said earlier this month, “In comparison to other AS and A levels, this course is more relevant to real life…even if I failed the course, which I wont, I would still have learned something of use.”
Another CeFS student who said,
“I’ve got lots of friends and family members that are so confused that they don’t know anything. They say how do you know this and it’s the course I’m doing, it really does make a difference you know because before when people talked about this, I didn’t know what goes on…”
Another key reason for the success appears to be as a result of the course being a standalone subject relating solely to financial management. As Professor Peter Farell stated, “There is already evidence that a specifically designated course where students know that its total aims relate to areas of financial management is more effective than courses which cover a wide range of areas. This view would appear to be supported by our study.”
Following the success of the CeFS pilot in 2002, the ifs School of Finance developed a Diploma in Financial Studies (A level equivalent) as well as a Foundation and Intermediate Certificate in Personal Finance (GCSE equivalent). Today there are approximately 200 schools and further education colleges offering these qualifications, benefiting over 6,500 students.
Despite this success, Gavin Shreeve concluded, “The number of school and college students taking one of our financial education qualifications in personal finance has almost tripled since last year but there are still thousands of schools and colleges across the country who are not offering their students this opportunity.
Policymakers could be doing more to actively encourage all schools and colleges to offer their students the choice of studying financial education as a stand-alone qualification.
There is also a need to provide financial support for the delivery of structured financial education on a nationwide basis and establish financial capability teaching as an integral part of all teacher training.”
