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Training, employment, and education > 32. Financial Literacy

Overlap among financial literacy activities makes coordination and clarification of roles and responsibilities essential, and suggests potential benefits of consolidation.

Why This Area Is Important

Financial literacy plays an important role in helping to ensure the financial health and stability of individuals and families, and economic changes in recent years have further highlighted the need to empower all Americans to make informed financial decisions. As GAO reported in March 2011, federal financial literacy activities are fragmented among multiple federal agencies, which increases the risk of inefficient, uncoordinated, or redundant use of resources. This year’s report provides updated information on coordination activities, as well as additional information on areas of overlap and on the evolving role of the new Bureau of Consumer Financial Protection.

What GAO Found

Federal financial literacy programs and resources are spread widely among many different federal agencies. A 2009 survey conducted by the Departments of the Treasury and Education, which GAO cited in its March 2011 report, asked federal agencies to self-identify their financial literacy efforts, and 56 programs related to financial literacy were reported by 20 federal agencies. However, GAO’s subsequent analysis found that there was a high degree of inconsistency in how different agencies defined financial literacy programs and whether they counted related activities as one or multiple programs.

Using a more consistent set of criteria, GAO has identified 15 significant financial literacy programs or activities among 13 federal agencies. These efforts are defined as relatively comprehensive in scope or scale and include financial literacy as a key objective rather than a tangential goal.[1] As seen in appendix III, the estimated cost for 13 of these 15 financial literacy programs or activities was about $30.7 million in fiscal year 2010; GAO is still in the process of developing cost estimates for the activities of the Department of Defense (DOD) and for the Bureau of Consumer Financial Protection, which was not created until July 2010.

In addition, federal agencies spent about $136.6 million in fiscal year 2010 on housing counseling. GAO has separated out costs for housing counseling programs because education is only a limited aspect of most housing counseling, which often consists largely of one-on-one service and assistance to address individual situations. For example, foreclosure mitigation counseling typically focuses on helping financially distressed homeowners avoid foreclosure by working with lenders to remedy mortgage delinquency.

Having multiple federal agencies involved in financial literacy efforts can have certain advantages. In particular, agencies may have deep and long-standing expertise and experience addressing specific issue areas or serving specific populations. For example, the Securities and Exchange Commission has efforts in place to protect securities investors from fraudulent schemes, while the Department of Housing and Urban Development (HUD) oversees most, but not all, federally supported housing counseling. Moreover, DOD may be the agency most able to efficiently and effectively deliver financial literacy programs and products to servicemembers and their families. However, as GAO stated in a June 2011 report, relatively few evidence-based evaluations of financial literacy programs have been conducted, limiting what is known about which specific methods and strategies—and which federal financial literacy activities—are most effective.

In addition, fragmentation increases the risk of inefficiency and redundancy and highlights the need for strong coordination, or potential consolidation, of these efforts. In general, GAO has found that the coordination and collaboration among federal agencies with regard to financial literacy has improved substantially in recent years. The multiagency Financial Literacy and Education Commission (Commission) was created by Congress in 2003 and charged, among other things, with developing a national strategy to promote financial literacy and education, coordinating federal efforts, and identifying areas of overlap and duplication. Among other things, the Commission in concert with the Department of the Treasury, which provides its primary staff support, has served as a central clearinghouse for federal financial literacy resources—for example, it created a centralized federal website and has an ongoing effort to develop a catalog of federal research on financial literacy. The Commission’s 2011 national strategy identified five action areas, one of which was to further emphasize the role of the Commission in coordination. The strategy’s accompanying Implementation Plan lays out plans to coordinate communication among federal agencies, improve strategic partnerships, and develop channels of communication with other entities, including the President’s Advisory Council on Financial Capability and the National Financial Education Network of State and Local Governments. The Commission’s success in implementing these elements of the National Strategy is key given the inherently challenging task of coordinating the work of the Commission’s many member agencies—each of which has its own set of interests, resources, and constituencies. Further, the addition of the Bureau of Consumer Financial Protection, whose director serves as the Vice Chair of the Commission, adds a new player to the mix that will influence the Commission’s success.

GAO’s review thus far shows that there is little evidence of duplication among existing federal financial literacy activities—that is, cases where two or more agencies or programs are engaging in the same activities and providing the same services to the same beneficiaries. However, GAO did identify cases in which there is overlap—multiple agencies or programs with similar goals and activities—that raise questions about the efficiency of some federal financial literacy and housing counseling efforts. For example, four federal agencies and one government-chartered nonprofit corporation provide various forms of housing counseling to consumers—DOD, HUD, the Department of Veterans Affairs (VA), the Department of the Treasury, and NeighborWorks America.

  • HUD obligated about $65.4 million in fiscal year 2010 for certifying and overseeing housing counseling agencies, training housing counselors, and providing counseling agencies with competitive grants. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) required HUD to establish an Office of Housing Counseling, although as of October 2011, the office had not yet been established, in part due to budget constraints. HUD also has 15 other active programs that allow some portion of their funding to be used for housing counseling or have some housing counseling component.[2]
  • The federally chartered nonprofit corporation NeighborWorks America received an appropriation from Congress in fiscal year 2010 that included $65 million for the National Foreclosure Mitigation Counseling Program; the organization also spent $2 million of its appropriated funds for other housing counseling activities.
  • VA has loan counselors that address housing issues in its Regional Loan Centers to help veterans facing foreclosure or other financial problems. VA often recommends HUD-approved housing counseling to veterans who are seeking VA-guaranteed loans but does not require it.
  • DOD has a foreclosure counseling program for servicemembers returning from active duty abroad. This program is administered through the Military OneSource and the Military and Family Life Consultant Program.
  • The Department of the Treasury’s Financial Literacy and Education Counseling Pilot Program, created by the Housing and Economic Recovery Act of 2008, provided $4.15 million in grants in fiscal year 2010 for financial literacy counseling to prospective homebuyers.[3]

Another example of overlap lies in the financial literacy responsibilities of the Bureau of Consumer Financial Protection, created by the Dodd-Frank Act. The act established within the bureau an Office of Financial Education and charged this office with developing and implementing a strategy to improve financial literacy through activities including opportunities for consumers to access, among other things, financial counseling; information to assist consumers with understanding credit products, histories, and scores; information about saving and borrowing tools; and assistance in developing long-term savings strategies. This office presents an opportunity to further promote awareness, coordinate efforts, and fill gaps related to financial literacy. At the same time, the duties this office is charged with fulfilling are in some ways similar to those of a separate Office of Financial Education and Financial Access within the Department of the Treasury, a small office that also seeks to broadly improve Americans’ financial literacy. In addition, the Dodd-Frank Act charges the Bureau of Consumer Financial Protection with developing and implementing a strategy on improving the financial literacy of consumers, even though the multiagency Financial Literacy and Education Commission already has its own statutory mandate to develop, and update as necessary, a national strategy for financial literacy. As the bureau has been staffing up and planning its financial education activities, it has been in regular communication with the Department of the Treasury and with other members of the Financial Literacy and Education Commission, and agency staff say they are seeking to coordinate their respective roles and activities.

In addition, the Dodd-Frank Act created within the Bureau of Consumer Financial Protection several offices that are charged by statute with duties that are in some ways similar to those of other federal agencies. For instance, the act created an Office of Service Member Affairs, which is responsible for developing and implementing initiatives for servicemembers and their families intended to educate and empower them to make better informed decisions regarding consumer financial products and services; monitoring complaints by service members and their families; and coordinating with federal and state agencies regarding consumer protection measures relating to consumer financial products and services offered to, or used by, service members and their families. These activities potentially overlap with those of DOD’s Financial Readiness Campaign, in which Personal Financial Managers on military bases provide financial educational programs, partnerships, counseling, legal protections, and other resources designed to help servicemembers and their families reach financial goals such as reducing debt, setting up a spending plan, saving for college, addressing consumer protection matters, and many others. Staff from the Bureau of Consumer Financial Protection and DOD told GAO they are working closely to coordinate their efforts.

The Dodd-Frank Act also creates within the bureau an Office of Financial Protection for Older Americans, which is charged with helping seniors recognize warning signs of unfair, deceptive, or abusive practices and protect themselves from such practices; providing one-on-one financial counseling on issues including long-term savings and later-life economic security; and monitoring the legitimacy of certifications of financial advisers who advise seniors. Potential overlap exists with the Federal Trade Commission, which also plays a role in helping seniors avoid unfair and deceptive practices. Further, the Department of Labor and the Social Security Administration both have initiatives in place to help consumers plan for retirement, and the Securities and Exchange Commission has recently initiated efforts to address concerns about the designations and certifications used by financial advisers.[4] Officials at the Bureau of Consumer Financial Protection told GAO that they have been discussing and coordinating their financial literacy roles and activities with those of other federal agencies to avoid duplication of effort.



[1]According to GAO’s criteria, significant financial literacy and education activities and programs were those whose primary goals were to educate, inform, or encourage individuals to make informed judgments and take effective actions regarding the current and future use and management of money. However, GAO excluded (1) those for which financial literacy was only a minimal component; (2) programs that provided financial information related to the administration of the program itself (e.g., information on applying for student financial aid or evaluating Medicare choices) rather than information aimed at increasing the beneficiaries’ financial literacy and comprehension more generally; (3) activities or programs that were purely internal to the agency, such as information provided to agency employees on their employment and retirement benefits; and (4) activities that represented individualized services or advice (e.g. assistance with tax preparation or development of a debt management plan). For the purposes of this report, GAO counted as a federal agency NeighborWorks® America, a government-chartered, nonprofit corporation that receives federal funding for housing counseling, including through an annual appropriation from Congress.

[2]These programs are the Federal Housing Administration’s Home Equity Conversion Mortgage, Community Development Block Grant, HOME Investment Partnership Program, Second Mortgage Assistance for First-Time Homebuyers, Rural Housing Stability Grant Program, Public Housing Operating Fund, Section 8 Tenant-Based Rental Assistance Homeownership Option, Demolition and Disposition of Public Housing, Family Self-Sufficiency, Public Housing Resident Homeownership Programs, Conversion of Distressed Public Housing to Tenant-Based Assistance, Low Income Housing Preservation and Resident Homeownership Act Prepayment Options, Native American Housing Assistance and Self Determination Act Housing Block Grants, Native Hawaiian Housing Block Grants, and Section 8 Rental Assistance.

[3]The Financial Literacy and Education Counseling Pilot Program was appropriated $2 million in fiscal year 2009 and $4.15 million in fiscal year 2010; the program was not appropriated funds in fiscal years 2011 and 2012.

[4]The Federal Trade Commission’s Division of Consumer and Business Education plans, develops, and implements various web-based financial literacy activities that focus on consumer protection, some of which has focused on scams targeted at seniors. The Department of Labor’s Retirement Savings Education Campaign seeks to increase retirement savings through workplace plans so that employees are better prepared for a secure retirement. The Social Security Administration’s Special Initiative to Encourage Savings focuses on saving and retirement issues and informing the public about SSA’s programs related to old-age, survivors, and disability insurance system.

Actions Needed

GAO expects to recommend that Congress may wish to consider

  • requiring federal agencies to evaluate the effectiveness of their financial literacy efforts and, if appropriate, to identify options for consolidating such efforts.Federal agencies could potentially make the most of scarce resources by consolidating financial literacy efforts into the activities and agencies that are most effective. In addition to improving effectiveness, such consolidation could have potential monetary savings, an issue GAO is examining as part of ongoing work; and
  • monitoring the implementation of the Bureau of Consumer Financial Protection’s efforts. As the bureau’s financial literacy activities evolve and are implemented, it will be important to evaluate how those efforts are working and make appropriate adjustments that might promote greater efficiency and effectiveness.

The Bureau of Consumer Financial Protection should

  • delineate roles and responsibilities related to its new offices of Financial Education, Service Member Affairs, and Financial Protection for Older Americans. As these offices form more fully, they will need to continue their efforts to work with federal agencies that have overlapping responsibilities so as to carefully delineate their respective activities and avoid duplication.

How GAO Conducted Its Work

The information contained in this analysis is based on findings from the products listed in the related GAO products section and additional work GAO conducted. GAO collected information on the purpose, beneficiaries, costs, and subject matter of federal financial literacy programs and activities through interviews with staff of federal agencies and through budget justifications, strategic plans, and other documents. In some cases, costs provided are estimates because financial literacy activities are not organized as separate budget line items or cost centers within an agency. GAO also reviewed the Financial Literacy and Education Commission’s 2011 national strategy and implementation plan and memorandums of understanding and other documents related to collaborations among federal agencies. See pages 386-387 of the PDF version of this report (appendix III) for a list of the programs GAO identified that may have similar or overlapping objectives, provide similar services or be fragmented across government missions. Overlap and fragmentation may not necessarily lead to actual duplication, and some degree of overlap and duplication may be justified.

Agency Comments & GAO Contact

GAO provided a draft of this report section to the Bureau of Consumer Financial Protection, the Department of the Treasury, and the Department of Housing and Urban Development for review and comment. The Bureau of Consumer Financial Protection and the Department of the Treasury provided written comments. The Department of Housing and Urban Development provided technical comments, which were incorporated as appropriate. GAO also provided selected portions of the draft report section to those agencies listed in appendix III for their technical review, and GAO incorporated those technical comments as appropriate. All written comments are reprinted in appendix IV of the PDF version of this report.

The Department of the Treasury said that it agreed that federal agencies should evaluate the effectiveness of their financial literacy efforts and, if appropriate, identify options for consolidating such efforts. However, the department noted that it would be necessary for funding to be appropriated for such evaluation. In addition, the department said it believed that continued and enhanced coordination among agencies may lead to greater effectiveness, in some cases, than consolidation. The Bureau of Consumer Financial Protection’s written response highlighted the bureau’s efforts to coordinate its activities, avoid duplication with other agencies, and promote the evaluation of financial literacy efforts.

For additional information about this area, contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao.gov.

Comments from the Consumer Financial Protection Bureau

Comments from the Consumer Protection Bureau (Page 1)

Comments from the Consumer Protection Bureau (Page 2)

Comments from the Consumer Protection Bureau (Page 3)

Comments from the Consumer Protection Bureau (Page 4)

Comments from the Department of the Treasury

Comments from the Department of the Treasury (Page 1)

Comments from the Department of the Treasury

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Financial Literacy: Strengthening Partnerships in Challenging Times
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