Phil Martin is the assistant for financial education and student aid in the U.S. Department of Education’s Office of the Secretary. He was in Providence recently as the keynote speaker at the 2010 Personal Financial Capability Conference, organized by the Jump$tart Coalition of Rhode Island, a financial-education advocacy group.
PBN: What are your primary responsibilities as assistant for financial education and student aid?
MARTIN: I work closely with department leadership on shaping our financial education strategy as part of the president’s 2020 college completion goal. We see the lack of financial literacy among students as a barrier to once again being first in the world in terms of the proportion of Americans with college degrees. So we’re looking across all of our programs and working with other federal agencies to step up our commitment in this area. My job is figuring out how the Department of Education can do a better job of helping students make smart financial decisions, whether about investing in higher education or the various other choices they’re faced with.
I’m also working with our higher education policy team on college affordability and access issues.
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PBN: Education Secretary Arne Duncan has said he is committed to focusing on personal financial education. What are some of the initiatives that carry this commitment forward?
MARTIN: Before he was the schools chief out in Chicago, Arne helped found a public elementary school, the Ariel Community Academy, that has financial literacy woven throughout the curriculum for all students. He saw how valuable the program was for those kids and their parents, so when he came to Washington he wanted to see what we could do on a national level. In the past year, we’ve launched the National Financial Capability Challenge with Treasury – which we’re doing again this year, and we hope to see a big turnout from high school teachers in Rhode Island; started the Financial Education for College Access and Success program, which has a strong focus on collaboration on measurable outcomes; and proposed a $265 million fund for a well-rounded education, including financial literacy. And there’s more to come.
PBN: President Barack Obama’s 2020 college completion goal is that the United States will return to the status of having the world’s highest proportion of college graduates. What is our current rank and how will we return to a first ranking?
MARTIN: [The Organization for Economic Cooperation and Development] just came out with their international comparisons, and we’re currently tied for ninth in the world in terms of college completion. We have the best institutions in the world, but we’re not the best when it comes to helping students – youth and adults – achieve their dream of a college education. Getting back to the top of that list is the number one priority for us right now. It’s what drives everything we do. For example, we’re working with the Department of Labor on a $2 billion community college program, which we’ll officially announce soon, and we’ve more than doubled our college access grant program for states. But what we’re most excited about is how cities and states, philanthropies and businesses, and students and colleges themselves are all coming together around the goal, challenging themselves and one another to take on a piece of it. We’re happy to help lead the charge, but the only way we’ll get back to the top is if we’re all pushing forward together.
PBN: How is financial literacy related to college completion?
MARTIN: Students and families routinely make decisions that just aren’t in their financial interest and that – especially for low-income and middle-class families – make it less likely they’ll graduate from college. For example, we know too many families overestimate the price of college, not understanding the difference between advertised price (“sticker price”) and net price (after grants, scholarships, loans, work-study, etc.), and so they believe college is out of their reach. At the same time, many students take on more debt than they can handle, and often they use private loans or credit cards to pay their tuition when they could instead use federal grants and loans. And nearly 2 million students eligible for Pell grants – federal aid they wouldn’t have to pay back – didn’t even apply for federal aid, while we know students cite lack of finances as one of the major reasons they drop out of college. And there’s plenty more. The point is, if we don’t help people understand the basics of personal finance as it relates to higher education, we’ll continue to lag behind other countries in getting more students into and through college.
PBN: What should be done at the state level to increase personal financial literacy for all age groups?
MARTIN: Some states train teachers not only to improve their personal finance instruction, but also to be advocates for financial education in their schools and communities. Others build bridges between credit unions and schools to promote financial access, asset-building (including saving for college), and financial education. Many state departments of education partner with the state treasurer, department of banking, or other state agencies who are natural allies for this work, and I hear more and more states talking about the importance of assessments in this area, which is of course critical for understanding what works. The reality, of course, is that it often comes down to local school districts to decide whether teaching students to make wise financial decisions is something that’s prioritized for all students, starting in elementary school and continuing through middle school and high school as part of a college- and career-ready strategy, or is just a “nice-to-have” elective that only shows up in high schools. We’d certainly like to see more states and districts working together on a comprehensive, strategic approach, and we will be helpful however we can.
