White House uses competition to push financial literacy among high schoolers

The U.S. departments of Treasury and Education have teamed up for their annual challenge to get U.S. high schoolers better informed on issues surrounding personal finance. From now until April 13, students can access the National Financial Capability Challenge, a voluntary online exam that “enhances students’ financial capability by strengthening their understanding of saving, budgeting and investing, among other central personal financial concepts,” explains the contest’s release.

Educators can help students prepare for the challenge via an online toolkit created by the Education and Treasury Departments. Officials say the challenge helps inform and prepare students for a wide range of personal finance issues, including saving for college. The Education Department is encouraging all educators working with high school students aged 13 to 19 to prepare their students for the challenge and administer the exam.

“The Challenge is an exciting way to educate students on basic finance and encourage them to make smart money management part of their everyday behavior,” said Deputy Secretary of the Treasury Neal S. Wolin. “It is critically important that young people learn how to succeed financially, and I commend educators and parents across the country for taking the time to teach these valuable skills.”

The nation’s schools chief says the skills from the challenge are a necessary agent in addressing some of the nation’s larger financial issues as well as ensuring that students know how to manage their own personal finances.

“So many of the challenges we face today, both individually and as a nation, are because we have not taught these basic lessons about managing finances and making smart investments,” said U.S. Secretary of Education Arne Duncan. “The Challenge is an excellent tool for educators to help them teach these key skills so every student is receiving a well-rounded education and is prepared to make sound financial decisions, even from a young age.”

Students who place in the top 20 percent in the nation or have the top two highest scores in their school will receive an official certificate from the Obama administration. Students who place in the top 20 percent nationally will also be listed on the challenge’s website.

Here are two questions that are similar to what students will find on the challenge exam, as provided by the Department of Education:

1. Which one of the following best describes the relationship between the interest rate charged to a person for a loan and that person’s risk of nonpayment of the loan?
   1. Lower interest rates are charged on loans with a lower risk of nonpayment.
   2. Higher interest rates are charged on loans with a lower risk of nonpayment.
   3. Lower interest rates are charged on loans with a higher risk of nonpayment.
   4. I don’t know.

   (ANSWER: A)

2. John drove his car to the local Gas and Shop store. On the way to the store he got distracted while talking to his friend in the car and hit a street sign. Neither he nor his friend was hurt in the accident, but the front end of the car was damaged. What type of automobile insurance coverage will provide reimbursement for damages to his car?
   1. Liability
   2. Collision
   3. Comprehensive
   4. I don’t know

   (ANSWER: B)