SAC Federal Credit Union, Nebraska's largest member-owned financial institution, has decided to take a stab at fixing what it deems a major problem: plummeting financial literacy, particularly among so-called millennials born from the 1980s to the early 2000s.
The credit union, which now offers online classes in budgeting and credit basics, came to the conclusion after finding via surveys that 78 percent of millennials rely on the financial habits of friends as a model in forming their own and that 61 percent of people between 25 and 34 years old get financial assistance from their families.
To fight back, SAC Federal has become the first U.S. financial institution to offer an online personal finance program called Financial Avenue, a curriculum developed by the Lincoln nonprofit group Inceptia, which attempts to keep borrowers from defaulting on their student loans.
“We were getting a lot of feedback on financial literacy at our branches,” said Karen Guy, SAC Federal's business and marketing analyst. “It is a key component of everyone's life.”
The coursework is straightforward, requiring registration and a password via the credit union's website. That unlocks many pages and menus of self-directed study on a variety of financial topics, from how interest rates work to the basics of homebuying.
Guy said SAC Federal, with about 20 branches in the Omaha metro area and 75,000 members, began offering the program in November and has garnered about a new participant a day since. The program is designed to reach young folks, she said, but is available to anyone and helpful to most.
“The response has been overwhelming,” Guy said. “The parents we have heard from were looking for a resource like this.”
The Financial Avenue program includes Web pages with study material. Each lesson takes about 30 minutes to read and digest. There are also videos about five to 10 minutes long, plenty of articles, plus a blog regularly updated by SAC Federal staffers.
The Financial Avenue educational program was developed by Inceptia, part of the nonprofit group NSLP. NSLP started out about 30 years ago as the National Student Loan Program, a nonprofit group that guaranteed repayment of federal higher education loans if the borrower defaulted. It now concentrates on borrower education and lender compliance.
The education program was developed a few years ago, said Sue Downing, Inceptia's marketing vice president. Financial Avenue, she said, is now being offered at 325 U.S. colleges and universities; Creighton University's financial aid department offers Financial Avenue on its Web page. About 200 students at the college will be using the budgeting part of Financial Avenue as part of their classwork starting in January.
Downing said Inceptia consulted personal finance experts in developing the Financial Avenue program and used the financial education curriculum of the U.S. Treasury Department as a template. She said the goal was a lesson-based plan, not one based on a simulation, video game or other entertainment-derived vehicle.
About 30,000 courses of Financial Avenue have been completed in recent years, Downing said. Participants take a test at the beginning and at the end; the average improvement is 31 percentage points.
“There has been a shift,” Downing said. “Parents are moving to the view that schools are responsible for teaching many life skills, so it isn't happening as much in the home.”
Jennifer Davidson, director of the Nebraska Council on Economic Education, said the state's school districts are required to begin implementing a new financial literacy standard this month, as part of social studies curricula. It will probably be some time, she said, before all 250 Nebraska school districts get the whole curriculum enacted.
In the meantime, her group offers three nationally recognized programs for students from fourth grade through 12th grade: the Nebraska Stock Market Game, the Nebraska Economics Challenge and the Nebraska Finance Challenge. They are statewide competitions on the subjects at hand, with lots of learning and lessons going into a final presentation judged by a panel, whose verdict sends one group of Nebraska students to the national stage.
“The idea is to get people to think critically about money,” Davidson said. “That makes for better savers, investors and citizens.”
Cassie Hunt is a believer in upping the financial knowledge base. The senior at Lincoln Northeast High School was a participant in the stock market and economics challenges this year. She said she learned a lot about publicly traded companies and responsible spending and plans to take that with her to college next year.
Hunt agreed that most young people take their initial cues about money from their peers. In her group, Hunt said, conversation is common about who spent what, and it is usually on dining out. Fortunately, she said, no one has gotten into big trouble with credit cards. Debit cards — which come up as “transaction not authorized” when there is no money in the kitty — have been a different story.
“I am the girl who has done that,” Hunt said. “I was terrible with money. But I have learned to check my balance before I leave the house.”