Older adults and people with disabilities are often prone to financial distress, and they may require more resources to better understand their circumstances and options, according to a new report from the Government Accountability Office (GAO).
Among a series of 24 examples of federal financial literacy programs for these groups, the U.S. Department of Housing and Urban Development (HUD)’s Home Equity Conversion Mortgage (HECM) counseling program was cited as an example.
“This program provides counseling to all applicants of the federally insured reverse mortgage program, the Home Equity Conversion Mortgage program,” the report stated. “The Home Equity Conversion Mortgage allows adults age 62 or older to withdraw a portion of their home’s equity to use for home maintenance, repairs, or general living expenses.”
Since the HECM program deals exclusively with the senior demographic, the HECM counseling program is specifically designed to cater to the needs of older Americans, which can sometimes be wildly different based on health and socioeconomic status, the report noted.
“Agency officials said the counseling is customized to the applicants and can help them understand the specific requirements of the reverse mortgage,” the report explained. “Applicants must complete this counseling before receiving a reverse mortgage.”
But data from the full array of financial literacy programs for older adults was thin, according to GAO’s findings. The Financial Literacy and Education Improvement Act, signed into law by President George W. Bush in 2008, established the Financial Literacy and Education Commission. This group “comprises the heads of 24 federal agencies and entities to improve financial literacy and education through coordinated federal efforts,” GAO explained.
The commission has released annual reports as long as it’s been in existence, but the data from these reports identified a problem, the report stated.
“Of the 24 financial literacy programs GAO identified that serve older adults and people with disabilities, the Commission’s five annual reports from fiscal years 2015 to 2022 included program outcome data for one,” the report’s findings read. “The reports contain similarly limited outcome information for other financial literacy programs.”
The commission’s national strategy emphasizes the importance of “collecting data on the outcomes of financial education activities to assess their impacts and inform data-driven improvements,” GAO said, but “enhanced focus on outcome reporting for federal financial literacy efforts could provide the Commission and Congress with more robust information to facilitate oversight of federal financial literacy efforts.”
Ultimately, the report recommends that the U.S. Department of the Treasury and the Consumer Financial Protection Bureau (CFPB) “coordinate with each other and with Commission agencies to encourage the ongoing collection of data on financial literacy program outcomes and include these data in the Commission’s annual report to Congress,” recommendations that both the CFPB and Treasury agreed with.