1300 Linden Drive Madison, WI 53706

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Contact: Andrea Plassman Center for Financial Security University of Wisconsin-Madison Phone: 608/890.0508 or 608/347.2080 Fax: 608/265.4969

Email: [email protected]

1300 Linden Drive

Madison, WI 53706  

NEWS  RELEASE  

University of Wisconsin's Center for Financial Security Awarded Two Research Contracts from United States Department of Treasury

Madison, WI – (October 7, 2014) – The Center for Financial Security (CFS) at the University of Wisconsin’s School of Human Ecology has received two prestigious research awards totaling

$604,165 from the United States Department of the Treasury’s Financial Empowerment Innovation Fund. The Treasury Department made the announcement Thursday at an open meeting of the President's Advisory Council on Financial Capability for Young Americans in Washington, D.C. CFS Director J. Michael Collins attended on behalf of CFS and the UW.

In talking about the awards, Collins shared:

“The Center for Financial Security is grateful to the Department of Treasury for taking leadership on funding applied research on financial capability. The Financial Empowerment Innovation Fund is a wonderful example of how agencies can support new ideas and generate insights that improve the financial wellbeing of Americans.

The CFS has a strong record of applied research and pilot projects that result in actionable results that can guide local and national policies and programs. Finding support for this kind of research is challenging. These awards are critical to advancing our work in the areas of youth financial education and understanding student decision making related to borrowing.”

Out of 325 submissions and 11 finalists, CFS is the only applicant for the funds to receive multiple awards. The Treasury’s Innovation Fund was created to develop, test, and evaluate new strategies for providing financial services and products that support consumers in making

informed financial choices and promote their financial capability. The research supported by the Innovation Fund will inform policymaking efforts, as well as the efforts of the financial industry and community organizations.

The combined CFS awards will support three faculty, two graduate students, and three academic

staff, as well as the UW Survey Center and project partners.

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The two projects that will be supported by the funding are:

1) Borrow$mart: A Field Study of an Online Financial Capability Tool’s Effects on the Schooling and Financing Decisions of Private-Sector College Students – This project studies the role of online financial counseling for college students who are at high risk of problems in the student loan market.

Sara Goldrick-Rab, Ph.D., UW-Madison professor of educational policy studies and sociology and the founding director of the Wisconsin HOPE Lab, will serve as Principal Investigator; J. Michael Collins, Ph.D., CFS faculty director and an associate professor in the UW-Madison School of Human Ecology and at the La Follette School of Public Affairs will serve as Co-Investigator.

2) My Classroom Economy: Developing Life-Long Financial Capability through

Experiential Learning for Elementary Students – This innovative program is designed to increase the financial capability of elementary school students. With this program, 4

and 5

grade students practice making decisions about spending and saving while learning about the consequences of their choices in real time within their classrooms.

J. Michael Collins will be Principal Investigator, with Co-Investigator Elizabeth Odders- White, Ph.D., U.S. Bank associate professor in finance, investment, and banking at the Wisconsin School of Business, and associate dean of the school's full-time MBA Program.

For more information, visit http://cfs.wisc.edu/.

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About the Center for Financial Security

The Center for Financial Security (CFS) is an applied, interdisciplinary research center that informs practitioners, policymakers, and the general public on strategies that build financial capability and security over the life course. CFS research examines the role of products, policies, and advice in helping households overcome personal financial challenges.

Housed in the School of Human Ecology at the University of Wisconsin-Madison, CFS is an

intellectual hub for research and outreach across disciplines. CFS research draws from the

fields of consumer science, psychology, economics, finance, social work, and sociology, with

the aim of improving knowledge around consumer financial behavior through primary and

secondary data analyses and randomized field experiments. CFS faculty and staff have

extensive experience with program development, implementation evaluation, and outcome

evaluation.

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About My Classroom Economy:

The project My Classroom Economy: Developing Life-Long

Financial Capability through Experiential Learning for Elementary

Students will study the effectiveness of this innovative program designed to

increase the financial capability of elementary school students through experiential learning.

My Classroom Economy provides a “simulated economy” in which students practice making spending and saving decisions while learning about the consequences of their choices in real time. In testing the effects of the program on elementary school students through a large-scale, randomized controlled trial, this project will focus on four research areas:

• Testing whether a simulated classroom economy results in student learning about financial management.

• Assessing the impacts of the program on student behavior and overall school performance.

• Documenting the implementation of the simulated classroom economy and obtaining teachers’ views of its costs and benefits relative to formal financial education curricula.

• Understanding how the spending and savings decisions of students evolve over time.

These results will inform educational policy about the optimal ways to increase the financial capability of youth and young adults.

My Classroom Economy was developed by an award-winning teacher in California and the Vanguard Group. To date, the program has been conducted with approximately 200,000 students nationwide. Many researchers and policy makers believe that financial education is a key

ingredient to developing informed financial consumers, but existing school curricula have yet to fulfill this promise. The hands-on, experiential learning available through My Classroom

Economy might better engage students and help them build skills, as well as prove more feasible for teachers to implement given the time and resource demands of state curriculum standards.

About Borrow$mart:

The project Borrow$mart: A Field Study of an Online Financial Capability Tool’s Effects on the Schooling and Financing Decisions of Private-Sector College Students studies the role of online financial counseling for college students who are at high risk of problems in the student loan market. Borrow$mart will yield new insights into strategies for using technology-based tools to assist people in making more informed choices regarding higher education financing and student loan debt. The main goal is to increase college student retention and graduation rates.

This field experiment will be conducted with 4,000 students attending DeVry University Online who are taking out federal student loans for the first time. Students will be randomly assigned to either a standard website that offers a basic explanation of how student loans work, or an

enhanced interactive online counseling platform called Loanlook, which is designed to

emphasize visual information and to guide students to information specific to their situation.

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This study will focus on three primary areas:

• Assessing student take-up and completion rates of online counseling.

• Testing whether students have improved academic success and rates of continued college enrollment.

• Testing whether students change their borrowing choices.

The study will track borrowing behaviors and college re-enrollment decisions for the next year, with the longer-term intention of following students through graduation. The students involved in this study are an especially important target population given their high rates of borrowing and higher risk of default. These students tend to be non-traditional, older, and have lower incomes.

Borrowing and schooling decisions may be of key importance for this otherwise vulnerable population. While the time required to complete the program is short—most students will complete Loanlook in less than 2 hours—this program allows students to make more informed choices about how much they borrow and how intensively they pursue higher education.

Students may decide to change their course of study or take on more classes to graduate faster, for example.

This study will guide the development of other counseling platforms and perhaps inform changes to the Department of Education’s loan program overall. Borrow$mart has the potential to

stimulate innovation in the student lending market and highlight effective practices among schools and lenders. In addition, students may attain improved financial capability.

About the Principal Investigators and Co-Principal Investigators

J. Michael Collins, Ph.D., is faculty director of the Center for Financial Security and an

associate professor in the School of Human Ecology at the University of Wisconsin-Madison and at the La Follette School of Public Affairs. He directs the Center for Financial Security and studies consumer financial decision-making in the financial marketplace, including the role of public policy in influencing credit, savings and investment choices. He holds a Ph.D. from Cornell University and master's degrees from John F. Kennedy School of Government and Harvard University. He will serve as the Principal Investigator for My Classroom Economy and as the Co-Principal Investigator for Borrow$mart.

Sara Goldrick-Rab, Ph.D., is a professor of educational policy studies and sociology at the University of Wisconsin-Madison, and the founding director of the Wisconsin HOPE Lab. She is an affiliate of the Center for Financial Security, the Institute for Research on Poverty, the

Consortium for Chicago School Research, the Institute for Research on Poverty, and the La

Follette School of Public Affairs. Goldrick-Rab also is a Senior Scholar at the Wisconsin Center

for the Advancement of Postsecondary Education. She holds a Ph.D. and MA in sociology from

the University of Pennsylvania, in addition to a BA in sociology from George Washington

University. She will serve as the Principal Investigator for Borrow$mart.

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Elizabeth Odders-White is the U.S. Bank Associate Professor in the Department of Finance, Investment, and Banking at the Wisconsin School of Business. She serves as an affiliate of the University of Wisconsin-Madison Center for Financial Security and Associate Dean of the Full- Time MBA Program. She is working with CFED on the U.S. Consumer Financial Protection Bureau’s Youth Financial Well-Being study and also worked on the U.S. Treasury’s Assessing Financial Capability Outcomes youth pilot. She holds a Ph.D. in finance from Northwestern University in addition to a Bachelor of Science in Applied Mathematics and a Bachelor of Fine Arts in Vocal Performance from Tulane University. She will serve as the Co-Principal

Investigator for My Classroom Economy.