Recent literature has highlighted the impact that state mandates requiring financial education for graduation have on improving students’ and young adults’ decision making on student loans and educational debt. This study expands on this research by assessing the longer-term effect that financial education in high school has on future difficulties repaying debts students borrowed for their own education. Exploiting variation in the timing of financial education mandates and multiple waves of the Federal Reserve’s SHED survey the study determines that financial education mandates may marginally decrease the likelihood that individuals aged 22-30 in the SHED surveys fall behind on their education debt payments. However, examining subsets based on reported levels of financial wellbeing and conducting an event study analysis, we find that the effect is large and strongly significant for those who are doing okay financially but not for other groups and that the effects decrease as time from financial education grows. This suggests that state mandates have an impact on educational debt burden for some borrowers, but that the policy may be a relatively blunt instrument that should be complemented with other efforts to assist borrowers who are struggling financially.

Accepted Poster Presentation