Julie Jason's Your Money column sig

It’s always a challenge to comment on pending legislation in Congress before it becomes law because, until it is enacted, changes can be made during the legislative process. What exists in one form might not be present when the bill reaches the finish line.

That being said, something recently caught my eye that appeals to my efforts to promote financial literacy.

The bill is H.R. 5779, the Financial Fitness Act (tinyurl.com/bfbdvb6e). It was introduced in the House of Representatives on Oct. 28 by Rep. Teresa Leger Fernandez, a Democrat from New Mexico, and co-sponsored by Rep. Victoria Spartz, a Republican from Indiana.

The main focus of the bill is: “To amend the Higher Education Act of 1965 to require the Secretary of Education to create a personal finance education portal on a centralized website of the Department of Education pertaining to Federal financial aid.”

In other words, this bill would make available a financial education program for those receiving federal student financial aid. What makes it even more interesting to me is that concepts related to saving for retirement will be among the topics in the program, something I believe is sorely needed.

In Section 2 of the bill, titled “Findings,” it states that “Nearly 43,000,000 people owe an average of $36,406 in Federal student loans, and student loan debt in the United States totals $1,730,000,000,000, growing 6 times faster than the Nation’s economy.” Those numbers represent a huge financial impact for 43 million people, which only adds to the need to have financial literacy be an important part of the discussion.

There are other points in the Findings section that relate to the issue of retirement planning. Paragraph six notes that student debt has increased for older adults — people who are closing in on retirement — as many of them are financing higher education for their children and grandchildren.

Also, according to the Findings section, “Just over 2 in 10 non-retirees under age 45 have retirement savings that meet their age-specific thresholds. 42 percent of Americans age 18-29 have no retirement savings; 26 percent of those age 30-44; 17 percent of those age 45-59; and 13 percent of those over age 60.”

That’s a problem with long-term repercussions, especially since saving for retirement early in one’s working life means you are taking advantage of the math of compound growth, a key element in building up retirement funds.

In Section 3, the bill calls for the education secretary to create a personal finance education portal within three years of the bill’s passage. The portal would be “on a centralized and publicly available website of the Department pertaining to Federal financial aid for the voluntary use by recipients of aid awarded under this title.” I’d be inclined to replace “voluntary” with “mandatory,” considering the importance of financial knowledge and planning.

And where does retirement planning fit in when it comes to the portal? According to the bill, the portal should include “the concept of compound growth as it applies to savings and retirement savings, with information about the different types of retirement savings accounts.” Also, under the section for “Managing student loan repayment,” the bill lists “the interaction between savings and retirement decisions and Federal student loan repayment plans.”

Financial literacy education is a must, especially if you are graduating from college and heading into a career field while dragging along a load of student debt and trying to plan for the future. At that point, when you need financial knowledge the most, you might be behind — according to the bill, “less than half of States make personal finance a core part of basic education.”

It would be nice if all states were offering financial education at younger ages. In the meantime, a bill like this could make a difference for young and old — provided it is enacted, of course.

Julie Jason, JD, LLM, is a personal money manager with Jackson, Grant Investment Advisers Inc. of Stamford, Conn., and an award-winning author. Send questions and comments to readers@juliejason.com.