US students fail money awareness test

WASHINGTON - American high school seniors continue to struggle with personal finance basics, a financial education survey has found.

The survey, which tested 5775 12th graders in 37 states, found that only 14 per cent felt stocks were likely to have higher returns, just 23 per cent realised that interest on savings accounts may be taxable and only 40 per cent understood that they could lose their health insurance if their parents became jobless.

The average score for the survey was 52.4 per cent - a failing grade in most US schools.

Surveys in 2004, 2002 and 2000 also yielded scores in the 50 per cent range.

"What we are looking at are students who by any ... standards are flunking the test of their financial lives," said Lewis Mandell, a professor of finance at the State University of New York in Buffalo, who conducted the study for the Jump$tart Coalition for Personal Financial Literacy.

The results come despite stepped-up financial education efforts as Congress dismantles boundaries between banks and investment firms and as financial companies offer a broader array of products to consumers.

"It is clear that students don't appear to be learning or retaining those things that are needed for making important financial decisions in their own interest," Mandell said.

- REUTERS