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Financial Education and the Debt Behavior of the Young

Author

Listed:
  • Meta Brown
  • John Grigsby
  • Wilbert van der Klaauw
  • Jaya Wen
  • Basit Zafar

Abstract

Young Americans are heavily reliant on debt and have clear financial literacy shortcomings. In this paper, we study the effects of exposure to financial training on debt outcomes in early adulthood among a large and representative sample of young Americans. Variation in exposure to financial training comes from statewide changes in high school graduation requirements. Using a flexible event study approach, we find that both mathematics and financial education, by and large, decrease reliance on nonstudent debt and improve repayment behavior. Economics training, on the other hand, increases both the likelihood of holding outstanding debt and the prevalence of repayment difficulties.Received July 9, 2014; accepted December 5, 2015 by Editor Stefan Nagel.

Suggested Citation

  • Meta Brown & John Grigsby & Wilbert van der Klaauw & Jaya Wen & Basit Zafar, 2016. "Financial Education and the Debt Behavior of the Young," The Review of Financial Studies, Society for Financial Studies, vol. 29(9), pages 2490-2522.
    • Handle: RePEc:oup:rfinst:v:29:y:2016:i:9:p:2490-2522.
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    More about this item

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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