Treasury today announced contracts for 11 research projects under the Financial Empowerment Innovation Fund. These projects will develop, test, and evaluate new ways to assist more Americans with financial options and help bring safe and affordable financial services to more families. The research projects will focus on several areas including, retirement savings and enrollment in myRA, higher education decision-making, innovative payments products, and ways to bring financial education to more classrooms.
New insights and innovation are needed in each of these areas. Rates of saving for retirement are low among low- and moderate-income families. At the same time, more students need guidance on higher education decisions, and far too many Americans are burdened by large student loan debts. Individuals who lack access to traditional banking services are often turning to high-cost options for their financial services, including payday lenders and other predatory services. And too many young people enter adulthood without a grounding in financial concepts to make good decisions.
Through the projects announced today, Treasury is supporting rigorous research and analysis by some of the nation’s leading innovators and research institutions – research that will develop knowledge and insights, and identify new and effective practices in these areas.
In April, Treasury requested proposals to spur new thinking in financial services and products. Many organizations submitted proposals including national research firms, advocacy organizations, state and local governments, community banks, credit unions, card providers, technology and development firms, institutions of higher education, and nonprofit and for-profit organizations.
After a competitive awards process, Treasury is able to fund a number of the proposals. We evaluated each proposal against the published technical evaluation criteria and on cost. More than $6.2 million has been awarded for the following 11 projects, and results from this research can better inform policy making on these issues.
Financial Empowerment Innovation Fund Research Projects:
Center for Financial Security – University of Wisconsin
Evaluation of an Experiential Elementary School Classroom-Based Financial Education Curriculum
The project will conduct a large-scale randomized controlled trial evaluation to examine the My Classroom Economy financial education curriculum that provides 4th- and 5th-grade students with hands-on learning experience in making spending and saving decisions in a simulated economy. It will involve a study of students in upwards of 100 elementary school classrooms across the nation. The research will examine changes in the students’ knowledge as well as attitudes and behavior around financial matters. It will also assess the effects of variations in the intensity of the curriculum, approaches for teacher training, and parents’ perceptions of the curriculum.
Center for Social Development – Washington University
myRA at Tax Time
This research project will examine strategies to enable tax filers to open and fund myRA accounts and other retirement savings accounts at tax time via Intuit’s online tax preparation service. The project also will test the effects of behaviorally informed messages that encourage tax filers to open and fund accounts with tax refunds.
Develop and Evaluate an Innovative Financial Capability Framework for High School Students
This research project will develop, test and evaluate a strategy to teach financial capability to high school students. This strategy includes: a hands-on financial capability curriculum; access to the mobile game Thrive ‘n’ Shine; teacher training; and student access to savings accounts. The curriculum will satisfy state financial education class requirements for high school seniors. The evaluation of this strategy employs a randomized controlled trial study design. The Economics Center: Education Division is developing the curriculum and teacher training components. The Cincinnati Ohio Police Federal Credit Union is providing the students with access to savings accounts.
Higher Education Decision-Making
Research on College Decisions and Whether Information about Projected Return on Investment would Influence Prospective Students’ Choices
This research project will explore how students and families from across the academic, socioeconomic, and geographic spectrums make choices about attending college. It will focus on whether information about the return on the investment of higher education, such as projected labor market outcomes, salaries, and the job success of graduates, affect students’ decisions on where to attend school. The research will involve students who attend public high schools throughout the Commonwealth of Virginia.
Center for Financial Security – University of Wisconsin
Evaluation of On-line Student Loan Counseling
This research project will examine the effects of online loan counseling services on student loan borrowing. The research will compare the effects of an existing proprietary online counseling service with a comparable service administered by the U.S. Department of Education’s Office of Federal Student Aid. The analysis will examine the content and format of the information provided by the two services.
Evaluation of the Financial Capability Components of a Near-Peer Higher Education Coaching Program
This project will evaluate the financial capability components of a higher education access and success program that provides targeted and individualized mentoring coaching services for low-income 11th and 12th grade students. The program uses “near-peer” AmeriCorps members who are recent college graduates to provide coaching and mentoring to small groups of students as they prepare for college, enroll in college, and progress toward completing a degree. The coaches use a structured curriculum to help the students gain financial knowledge and skills, connect them with other needed resources, and provide them with the support they need to succeed in college. The evaluation will be designed to develop insights around low-income high school students’ understanding of college costs; the degree to which these students are prepared for decisions around pursuing and financing a college education; and the effectiveness of the near-peer model for strengthening these students’ skills for making financial decisions about their post-secondary education.
Doorways to Dreams Fund
Examine the Effects of a Game-Based Mobile App to Teach High School Students about Higher Education Choices
This project will examine the use of a game-based mobile app that provides high school students with information about financial choices related to college, with a specific focus on five topics: college finances, financial aid, debt, return on investment and financial readiness in general. The app aims to first expose students to the topics and then help them develop important decision-making skills regarding attending and financing their higher education. The study will provide insights on the process for developing and refining an impactful game-based app of this nature for building students’ understanding of decisions around attending and financing college. Moreover, this project will inform policymakers and the higher education community on how to reach, influence, and spur action among prospective college attendees with low- to moderate-incomes.
Test of Innovative Community College Access and Retention Strategy
This project will test and evaluate a comprehensive initiative that aims to increase college access and retention for low-income students at three community colleges in Massachusetts. The project will examine the effects of a series of interventions: (i) providing recent high school graduates with reminders sent via text messages, email, and direct outreach throughout the summer between high school and college; and (ii) assisting enrolled college students with in-depth financial education, counseling and coaching, and (iii) access to a matched savings program for saving for college expenses throughout the school year.
Using Debit and Credit Card Transaction Data to Build Credit
This project will evaluate an innovative approach for strengthening low-income Americans’ access to consumer credit. Consumers with a history of responsible spending and saving from a prepaid debit card will be offered a secured credit card. A mobile app will be distributed to help participants manage both their prepaid and secured credit card and to deliver contextual financial guidance to them via mobile push messages in real time.
City and County of San Francisco
Innovative Financial Products and Financial Capability Programming Geared to Public Housing Residents
This multi-part research project will develop and evaluate a program that seeks to lower the risk of eviction by providing innovative financial products and services to under- and un-banked residents of public housing communities in San Francisco. Strategies to be evaluated include: (i) providing the residents with general purpose reloadable debit cards for receiving wages and benefits, managing their finances, and facilitating the electronic payment of rent; (ii) financial coaching and counseling; and (iii) assisting residents with building positive credit histories. The initiative will also research the effects of a matched savings program that enables public housing residents to save for unplanned expenses.
New Jersey Department of Children and Families
Financial Services for Youth in Foster Care
This research project will evaluate a statewide program through which cash benefits are distributed to young adults who are aging out of the foster care system. The State of New Jersey will distribute the benefits via general purpose reloadable debit cards and also provide youth with access to a mobile application that assists with budgeting and financial decisions. The research will examine the impact of the application and the extent to which the youth use the debit card features for managing financial transactions, savings, and budgeting.
Melissa Koide is the Deputy Assistant Secretary for the Office of Consumer Policy at the United States Department of the Treasury.