Financial Education and Household Financial Decisions During the Pandemic

Lee, Donghoon; Mangrum, Daniel; Van der Klaauw, Wilbert; Wang, Crystal

doi:10.59576/sr.1131

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Financial Education and Household Financial Decisions During the Pandemic

Abstract: We examine the impact of financial education on credit decisions during COVID-19. The pandemic presented economic challenges, but policy responses provided opportunities for savvy borrowers. Using variation in state-mandated financial education during high school, we find that mandated borrowers reduced revolving credit card balances by larger amounts after stimulus checks were distributed and were more likely to buy homes and refinance mortgages during times of low interest rates. Paused student loan borrowers bound by mandates originated more auto loans and mortgages while reducing growth in credit card balances. Our findings underscore the importance of financial education for economic resilience.

JEL Classification: D14; G51; G53;

https://doi.org/10.59576/sr.1131