Treasury Department (Officially) Releases Report from President’s Advisory Council on Financial Capability

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March 22, 2013 · by mlivolsi · Spark Notes

Prepared by: Wes Huffman

Though the document was presented to the President on January 29, the Treasury Department officially released the report of the President’s Advisory Council on Financial Capability (PACFC) yesterday.

The report covers many of the challenges and opportunities in financial capability. Further, it clearly defines “financial capability”—as opposed to “financial education” or “financial literacy”—by the “three-legged stool” approach. According to the report, “financial capability” consists of the following three “legs”:

1) Financial education (formal and informal) that delivers the basic understanding;

2) Regulation and consumer protection that assure some minimal ability to rely on available products and services; and

3) Thoughtful design of options – what behavioral economics has come to call “choice architecture” – in a way that facilitates the successful application of what has been learned.

The Council had four subcommittees—Youth, Partnerships, Underserved and Community Empowerment, and Research and Evaluation. Though higher education received relatively little specific attention, there are portions of the document which will be most useful for campus-based financial educators.

The Youth Subcommittee was one of the most active on the Council. In addition to the development of two websites aimed at elementary education ( and the teen years (, the Department of Education is attempting to implement the recommendation of a public service campaign on Title IV availability and information surrounding

The report also speaks to the question of efficacy—noting there are numerous financial education providers, but very few assurances their programs “work.” Accordingly, the report recommends that Treasury develop a “What Works” for financial capability similar to the efforts of the Department of Education. It also calls for additional research in this area.

“The report emphasizes the importance of research and the need to establish a baseline understanding of financial knowledge, particularly among young people. Financial education will not be successful unless we have a rigorous evaluation of metrics and testing to determine what actually works to change financial behavior. Last year, the Department of Education funded the Program for International Student Assessment (PISA) financial literacy module. PISA is the first ever international examination of high school students’ financial knowledge. The results, to be released next year, will give us a baseline picture of what high school students know about personal finance, and it will help us understand how our youth compare to their peers around the world,” Deputy Assistant Secretary Melinda Kolde wrote in a blog post announcing the report.

In its role chairing the Financial Literacy and Education Commission (FLEC), a collection of 21 government agencies with ties to financial literacy and education, Treasury is expected to take the lead in coordinating efforts across multiple agencies on these issues.

 • Kolde’s blog post is available online:

• The full report is available online: