Abstract

America is experiencing a widening wealth gap between upper-middle income households and middle-income households. A common source of wealth middle income households has used in the past has been owning a home, however with recent fluctuations in the housing market, this mean of wealth holding has proven unsustainable for many households looking to grow their wealth. Could increasing financial literacy help households find more sustainable ways to grow their wealth and experience financial security? This research hypothesizes that households with higher financial literacy have the tools to make more informed housing tenure decisions resulting in lower default rates. Using a difference-in-differences approach, this study analyzes the effect of Virginia State Senate Bill 950, which mandated personal finance courses be required to earn a high school degree, on rates of delinquent mortgages and foreclosures. Contrary to expectations, the outcome of this test shows both rates of delinquent mortgages and foreclosures increasing in Virginia post Senate Bill implementation. While the results of this test reject the hypothesis, the results show evidence of racial disparities in the mortgage and housing markets showing that discriminatory policies such as zoning laws could be limiting the effectiveness of financial education. The results of this study show a need of broader policy interventions aiming to address racial disparities in the housing market.

Advisor

Long, Melanie

Department

Business Economics

Publication Date

2025

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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