[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3179 Referred in Senate (RFS)]
<DOC>
114th CONGRESS
2d Session
H. R. 3179
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 12, 2016
Received; read twice and referred to the Committee on Health,
Education, Labor, and Pensions
_______________________________________________________________________
AN ACT
To amend the loan counseling requirements under the Higher Education
Act of 1965, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Empowering Students Through Enhanced
Financial Counseling Act''.
SEC. 2. ANNUAL COUNSELING.
Section 485(l) of the Higher Education Act of 1965 (20 U.S.C.
1092(l)) is amended to read as follows:
``(l) Annual Financial Aid Counseling.--
``(1) Annual disclosure required.--
``(A) In general.--Each eligible institution shall
ensure that each individual who receives a Federal Pell
Grant or a loan made under part D (other than a Federal
Direct Consolidation Loan) receives comprehensive
information on the terms and conditions of such Federal
Pell Grant or loan and the responsibilities the
individual has with respect to such Federal Pell Grant
or loan. Such information shall be provided, for each
award year for which the individual receives such
Federal Pell Grant or loan, in a simple and
understandable manner--
``(i) during a counseling session conducted
in person;
``(ii) online, with the individual
acknowledging receipt of the information; or
``(iii) through the use of the online
counseling tool described in subsection
(n)(1)(B).
``(B) Use of interactive programs.--In the case of
institutions not using the online counseling tool
described in subsection (n)(1)(B), the Secretary shall
require such institutions to carry out the requirements
of subparagraph (A) through the use of interactive
programs, during an annual counseling session that is
in-person or online, that test the individual's
understanding of the terms and conditions of the
Federal Pell Grant or loan awarded to the individual,
using simple and understandable language and clear
formatting.
``(2) All individuals.--The information to be provided
under paragraph (1)(A) to each individual receiving counseling
under this subsection shall include the following:
``(A) An explanation of how the individual may
budget for typical educational expenses and a sample
budget based on the cost of attendance for the
institution.
``(B) An explanation that an individual has a right
to annually request a disclosure of information
collected by a consumer reporting agency pursuant to
section 612(a) of the Fair Credit Reporting Act (15
U.S.C. 1681j(a)).
``(C) Based on the most recent data available from
the American Community Survey available from the
Department of Commerce, the estimated average income
and percentage of employment in the State of domicile
of the individual for individuals with--
``(i) a high school diploma or equivalent;
``(ii) some post-secondary education
without completion of a degree or certificate;
and
``(iii) a bachelor's degree.
``(D) An introduction to the financial management
resources provided by the Financial Literacy and
Education Commission.
``(3) Students receiving federal pell grants.--The
information to be provided under paragraph (1)(A) to each
student receiving a Federal Pell Grant shall include the
following:
``(A) An explanation of the terms and conditions of
the Federal Pell Grant.
``(B) An explanation of approved educational
expenses for which the student may use the Federal Pell
Grant.
``(C) An explanation of why the student may have to
repay the Federal Pell Grant.
``(D) An explanation of the maximum number of
semesters or equivalent for which the student may be
eligible to receive a Federal Pell Grant, and a
statement of the amount of time remaining for which the
student may be eligible to receive a Federal Pell
Grant.
``(E) An explanation that if the student transfers
to another institution not all of the student's courses
may be acceptable in transfer toward meeting specific
degree or program requirements at such institution, but
the amount of time remaining for which a student may be
eligible to receive a Federal Pell Grant, as provided
under subparagraph (D), will not change.
``(F) An explanation of how the student may seek
additional financial assistance from the institution's
financial aid office due to a change in the student's
financial circumstances, and the contact information
for such office.
``(4) Borrowers receiving loans made under part d (other
than parent plus loans).--The information to be provided under
paragraph (1)(A) to a borrower of a loan made under part D
(other than a Federal Direct PLUS Loan made on behalf of a
dependent student) shall include the following:
``(A) To the extent practicable, the effect of
accepting the loan to be disbursed on the eligibility
of the borrower for other forms of student financial
assistance.
``(B) An explanation of the use of the master
promissory note.
``(C) An explanation that the borrower is not
required to accept the full amount of the loan offered
to the borrower.
``(D) An explanation that the borrower should
consider accepting any grant, scholarship, or State or
Federal work-study jobs for which the borrower is
eligible prior to accepting Federal student loans.
``(E) A recommendation to the borrower to exhaust
the borrower's Federal student loan options prior to
taking out private education loans, an explanation that
Federal student loans typically offer better terms and
conditions than private education loans, an explanation
of treatment of loans made under part D and private
education loans in bankruptcy, and an explanation that
if a borrower decides to take out a private education
loan--
``(i) the borrower has the ability to
select a private educational lender of the
borrower's choice;
``(ii) the proposed private education loan
may impact the borrower's potential eligibility
for other financial assistance, including
Federal financial assistance under this title;
and
``(iii) the borrower has a right--
``(I) to accept the terms of the
private education loan within 30
calendar days following the date on
which the application for such loan is
approved and the borrower receives the
required disclosure documents, pursuant
to section 128(e) of the Truth in
Lending Act (15 U.S.C. 1638(e)); and
``(II) to cancel such loan within 3
business days of the date on which the
loan is consummated, pursuant to
section 128(e)(7) of such Act (15
U.S.C. 1638(e)(7)).
``(F) An explanation of the approved educational
expenses for which the borrower may use a loan made
under part D.
``(G) Information on the annual and aggregate loan
limits for Federal Direct Stafford Loans and Federal
Direct Unsubsidized Stafford Loans.
``(H) Information on how interest accrues and is
capitalized during periods when the interest is not
paid by either the borrower or the Secretary.
``(I) In the case of a Federal Direct PLUS Loan or
a Federal Direct Unsubsidized Stafford Loan, the option
of the borrower to pay the interest while the borrower
is in school.
``(J) The definition of half-time enrollment at the
institution, during regular terms and summer school, if
applicable, and the consequences of not maintaining at
least half-time enrollment.
``(K) An explanation of the importance of
contacting the appropriate offices at the institution
of higher education if the borrower withdraws prior to
completing the borrower's program of study so that the
institution can provide exit counseling, including
information regarding the borrower's repayment options
and loan consolidation.
``(L) For a first-time borrower--
``(i) a statement of the anticipated
balance on the loan for which the borrower is
receiving counseling under this subsection;
``(ii) based on such anticipated balance,
the anticipated monthly payment amount under,
at minimum--
``(I) the standard repayment plan;
and
``(II) an income-based repayment
plan under section 493C, as determined
using regionally available data from
the Bureau of Labor Statistics of the
average starting salary for the
occupation in which the borrower has an
interest in or intends to be employed;
and
``(iii) an estimate of the projected
monthly payment amount under each repayment
plan described in clause (ii), based on the
average cumulative indebtedness at graduation
for borrowers of loans made under part D who
are in the same program of study as the
borrower.
``(M) For a borrower with an outstanding balance of
principal or interest due on a loan made under this
title--
``(i) a current statement of the amount of
such outstanding balance and interest accrued;
``(ii) based on such outstanding balance,
the anticipated monthly payment amount under,
at minimum, the standard repayment plan and,
using regionally available data from the Bureau
of Labor Statistics of the average starting
salary for the occupation the borrower intends
to be employed, an income-based repayment plan
under section 493C; and
``(iii) an estimate of the projected
monthly payment amount under each repayment
plan described in clause (ii), based on--
``(I) the outstanding balance
described in clause (i);
``(II) the anticipated outstanding
balance on the loan for which the
student is receiving counseling under
this subsection; and
``(III) a projection for any other
loans made under part D that the
borrower is reasonably expected to
accept during the borrower's program of
study based on at least the expected
increase in the cost of attendance of
such program.
``(N) The obligation of the borrower to repay the
full amount of the loan, regardless of whether the
borrower completes or does not complete the program in
which the borrower is enrolled within the regular time
for program completion.
``(O) The likely consequences of default on the
loan, including adverse credit reports, delinquent debt
collection procedures under Federal law, and
litigation, and a notice of the institution's most
recent cohort default rate (defined in section 435(m)),
an explanation of the cohort default rate, the most
recent national average cohort default rate, and the
most recent national average cohort default rate for
the category of institution described in section
435(m)(4) to which the institution belongs.
``(P) Information on the National Student Loan Data
System and how the borrower can access the borrower's
records.
``(Q) The contact information for the institution's
financial aid office or other appropriate office at the
institution the borrower may contact if the borrower
has any questions about the borrower's rights and
responsibilities or the terms and conditions of the
loan.
``(5) Borrowers receiving parent plus loans for dependent
students.--The information to be provided under paragraph
(1)(A) to a borrower of a Federal Direct PLUS Loan made on
behalf of a dependent student shall include the following:
``(A) The information described in subparagraphs
(A) through (C) and (N) through (Q) of paragraph (4).
``(B) The option of the borrower to pay the
interest on the loan while the loan is in deferment.
``(C) For a first-time borrower of such loan--
``(i) a statement of the anticipated
balance on the loan for which the borrower is
receiving counseling under this subsection;
``(ii) based on such anticipated balance,
the anticipated monthly payment amount under
the standard repayment plan; and
``(iii) an estimate of the projected
monthly payment amount under the standard
repayment plan, based on the average cumulative
indebtedness of other borrowers of Federal
Direct PLUS Loans made on behalf of dependent
students who are in the same program of study
as the student on whose behalf the borrower
borrowed the loan.
``(D) For a borrower with an outstanding balance of
principal or interest due on such loan--
``(i) a statement of the amount of such
outstanding balance;
``(ii) based on such outstanding balance,
the anticipated monthly payment amount under
the standard repayment plan; and
``(iii) an estimate of the projected
monthly payment amount under the standard
repayment plan, based on--
``(I) the outstanding balance
described in clause (i);
``(II) the anticipated outstanding
balance on the loan for which the
borrower is receiving counseling under
this subsection; and
``(III) a projection for any other
Federal Direct PLUS Loan made on behalf
of the dependent student that the
borrower is reasonably expected to
accept during the program of study of
such student based on at least the
expected increase in the cost of
attendance of such program.
``(E) Debt management strategies that are designed
to facilitate the repayment of such indebtedness.
``(F) An explanation that the borrower has the
options to prepay each loan, pay each loan on a shorter
schedule, and change repayment plans.
``(G) For each Federal Direct PLUS Loan made on
behalf of a dependent student for which the borrower is
receiving counseling under this subsection, the contact
information for the loan servicer of the loan and a
link to such servicer's Website.
``(6) Annual loan acceptance.--Prior to making the first
disbursement of a loan made under part D (other than a Federal
Direct Consolidation Loan) to a borrower for an award year, an
eligible institution, shall, as part of carrying out the
counseling requirements of this subsection for the loan, ensure
that after receiving the applicable counseling under paragraphs
(2), (4), and (5) for the loan the borrower accepts the loan
for such award year by--
``(A) signing the master promissory note for the
loan;
``(B) signing and returning to the institution a
separate written statement that affirmatively states
that the borrower accepts the loan; or
``(C) electronically signing an electronic version
of the statement described in subparagraph (B).''.
SEC. 3. EXIT COUNSELING.
Section 485(b) of the Higher Education Act of 1965 (20 U.S.C.
1092(b)) is amended--
(1) in paragraph (1)(A)--
(A) in the matter preceding clause (i), by striking
``through financial aid offices or otherwise'' and
inserting ``through the use of an interactive program,
during an exit counseling session that is in-person or
online, or through the use of the online counseling
tool described in subsection (n)(1)(A)'';
(B) by redesignating clauses (i) through (ix) as
clauses (iv) through (xii), respectively;
(C) by inserting before clause (iv), as so
redesignated, the following:
``(i) a summary of the outstanding balance of principal and
interest due on the loans made to the borrower under part B, D,
or E;
``(ii) an explanation of the grace period preceding
repayment and the expected date that the borrower will enter
repayment;
``(iii) an explanation that the borrower has the option to
pay any interest that has accrued while the borrower was in
school or that may accrue during the grace period preceding
repayment or during an authorized period of deferment or
forbearance, prior to the capitalization of the interest;'';
(D) in clause (iv), as so redesignated--
(i) by striking ``sample information
showing the average'' and inserting
``information, based on the borrower's
outstanding balance described in clause (i),
showing the borrower's''; and
(ii) by striking ``of each plan'' and
inserting ``of at least the standard repayment
plan and the income-based repayment plan under
section 493C'';
(E) in clause (ix), as so redesignated--
(i) by inserting ``decreased credit
score,'' after ``credit reports,''; and
(ii) by inserting ``reduced ability to rent
or purchase a home or car, potential difficulty
in securing employment,'' after ``Federal
law,'';
(F) in clause (x), as so redesignated, by striking
``consolidation loan under section 428C or a'';
(G) in clauses (xi) and (xii), as so redesignated,
by striking ``and'' at the end; and
(H) by adding at the end the following:
``(xiii) for each of the borrower's loans made under part
B, D, or E for which the borrower is receiving counseling under
this subsection, the contact information for the loan servicer
of the loan and a link to such servicer's Website; and
``(xiv) an explanation that an individual has a right to
annually request a disclosure of information collected by a
consumer reporting agency pursuant to section 612(a) of the
Fair Credit Reporting Act (15 U.S.C. 1681j(a)).'';
(2) in paragraph (1)(B)--
(A) by inserting ``online or'' before ``in
writing''; and
(B) by adding before the period at the end the
following: ``, except that in the case of an
institution using the online counseling tool described
in subsection (n)(1)(A), the Secretary shall attempt to
provide such information to the student in the manner
described in subsection (n)(3)(C)''; and
(3) in paragraph (2)(C), by inserting ``, such as the
online counseling tool described in subsection (n)(1)(A),''
after ``electronic means''.
SEC. 4. ONLINE COUNSELING TOOLS.
Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is
further amended by adding at the end the following:
``(n) Online Counseling Tools.--
``(1) In general.--Beginning not later than 1 year after
the date of enactment of the Empowering Students Through
Enhanced Financial Counseling Act, the Secretary shall
maintain--
``(A) an online counseling tool that provides the
exit counseling required under subsection (b) and meets
the applicable requirements of this subsection; and
``(B) an online counseling tool that provides the
annual counseling required under subsection (l) and
meets the applicable requirements of this subsection.
``(2) Requirements of tools.--In maintaining the online
counseling tools described in paragraph (1), the Secretary
shall ensure that each such tool is--
``(A) consumer tested, in consultation with other
relevant Federal agencies, to ensure that the tool is
effective in helping individuals understand their
rights and obligations with respect to borrowing a loan
made under part D or receiving a Federal Pell Grant;
``(B) understandable to students receiving Federal
Pell Grants and borrowers of loans made under part D;
and
``(C) freely available to all eligible
institutions.
``(3) Record of counseling completion.--The Secretary
shall--
``(A) use each online counseling tool described in
paragraph (1) to keep a record of which individuals
have received counseling using the tool, and notify the
applicable institutions of the individual's completion
of such counseling;
``(B) in the case of a borrower who receives annual
counseling for a loan made under part D using the tool
described in paragraph (1)(B), notify the borrower by
when the borrower should accept, in a manner described
in subsection (l)(6), the loan for which the borrower
has received such counseling; and
``(C) in the case of a borrower described in
subsection (b)(1)(B) at an institution that uses the
online counseling tool described in paragraph (1)(A) of
this subsection, the Secretary shall attempt to provide
the information described in subsection (b)(1)(A) to
the borrower through such tool.''.
SEC. 5. LONGITUDINAL STUDY ON THE EFFECTIVENESS OF STUDENT LOAN
COUNSELING.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Secretary of Education, acting through the Director of
the Institute of Education Sciences, shall begin conducting a rigorous,
longitudinal study of the impact and effectiveness of the student loan
counseling--
(1) provided under subsections (b), (l), and (n) of section
485 of the Higher Education Act of 1965 (20 U.S.C. 1092), as
amended by this Act; and
(2) provided through such other means as the Secretary of
Education may determine.
(b) Contents.--
(1) Borrower information.--The longitudinal study carried
out under subsection (a) shall include borrower information, in
the aggregate and disaggregated by race, ethnicity, gender,
income, and status as an individual with a disability, on--
(A) student persistence;
(B) degree attainment;
(C) program completion;
(D) successful entry into student loan repayment;
(E) cumulative borrowing levels; and
(F) such other factors as the Secretary of
Education may determine.
(2) Exception.--The disaggregation under paragraph (1)
shall not be required in a case in which the number of
borrowers in a category is insufficient to yield statistically
reliable information or the results would reveal personally
identifiable information about an individual borrower.
(c) Interim Reports.--Not later than 18 months after the
commencement of the study under subsection (a), and annually
thereafter, the Secretary of Education shall evaluate the progress of
the study and report any short-term findings to the appropriate
committees of Congress.
SEC. 6. AVAILABILITY OF FUNDS.
(a) Use of Existing Funds.--Of the amount authorized to be
appropriated for maintaining the Department of Education's Financial
Awareness Counseling Tool, $2,000,000 shall be available to carry out
this Act and the amendments made by this Act.
(b) No Additional Funds Authorized.--No funds are authorized to be
appropriated by this Act to carry out this Act or the amendments made
by this Act.
Passed the House of Representatives July 11, 2016.
Attest:
KAREN L. HAAS,
Clerk.