Short title

This Act may be cited as the

Empowering Students Through Enhanced Financial Counseling Act

Annual counseling

Section 485(l) of the Higher Education Act of 1965 (20 U.S.C. 1092(l)) is amended— (1)in the subsection heading, by striking

Entrance

and inserting

Annual

; (2)in paragraph (1)— (A)in the paragraph heading, by striking

disbursement

and inserting

acceptance

; (B)in subparagraph (A)— (i)in the matter preceding clause (i)— (I)by striking at or prior to and inserting prior to or in conjunction with; and (II)by striking a disbursement to a first-time borrower of a loan made, insured, or guaranteed under part B (other than a loan made pursuant to section 428C or a loan made on behalf of a student pursuant to section 428B) or and inserting acceptance (in a manner described in subparagraph (A), (B), or (C) of paragraph (4)) by a borrower of a loan; and (ii)in clause (ii)— (I)in the matter preceding subclause (I)— (aa)by striking may and inserting shall; and (bb)by inserting , for each award year for which the borrower receives a loan made under part D after provided; (II)in subclause (I), by striking an entrance counseling session conduction in person and inserting a counseling session conducted in person; (III)by striking subclause (II); (IV)by redesignating subclause (III) as subclause (II); (V)in subclause (II), as so redesignated, by striking the period at the end and inserting ; or; and (VI)by adding at the end the following:

(III)through the use of the online counseling tool described in subsection (o)(1)(B).

; and

(C)in subparagraph (B)— (i)by striking The Secretary and inserting In the case of institutions not using the online counseling tool described in subsection (o)(1)(B), the Secretary; (ii)by striking encourage institutions and inserting require such institutions; (iii)by inserting , during an annual counseling session that is in-person or online, after the use; and (iv)by striking B or; (3)in paragraph (2)— (A)by redesignating subparagraphs (C) through (G) and subparagraphs (H) through (K), as subparagraphs (H) through (L), respectively, and subparagraphs (N) through (Q), respectively; and (B)by inserting after subparagraph (B), the following:

(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 loans and a warning that private loans may not offer the same benefits and repayment options as Federal student loans. (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.

;

(C)in subparagraph (I), as so redesignated— (i)by striking a loan made under section 428B or 428H,; and (ii)by striking , or a and inserting or a; (D)in subparagraph (L), as so redesignated— (i)in the matter preceding clause (i), by striking Sample and inserting For a first-time borrower, sample; (ii)in clause (i)(I), by striking loans under section 428 or 428H and inserting Federal Direct Stafford Loans or Federal Direct Unsubsidized Stafford Loans; and (iii)in clause (i)(II), by striking loans under section 428, 428B, or 428H and inserting Federal Direct PLUS Loans or Federal Direct Unsubsidized Stafford Loans; (E)by inserting after subparagraph (L), as so redesignated and amended, the following:

(M)For a borrower with an outstanding balance of principal or interest due on a loan made under this title— (i)a statement of the amount of such outstanding balance; (ii)based on such outstanding balance, the anticipated monthly payment amount under each repayment plan that may be available to the borrower; and (iii)based on such outstanding balance plus the anticipated outstanding balance on the loan for which the student is receiving counseling under this subsection and on any other Federal student loans that the borrower may accept during the borrower’s course of study for which the borrower enrolled at the institution, an estimate of the projected monthly payment amount under each such repayment plan.

; and

(F)in subparagraph (Q), as so redesignated— (i)by striking name of and; and (ii)by striking individual and inserting institution’s financial aid office or other appropriate office at the institution; and (4)by adding at the end the following:

(3)

Annual loan acceptance

Prior to making the first disbursement of a loan made under part D (other than a Federal Direct Consolidation Loan or a Federal Direct PLUS loan made on behalf of a student) 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 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).

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)— (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 (o)(1)(A); (ii)by redesignating clauses (i) through (ix) as clauses (iv) through (xii), respectively; (iii)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;

;

(iv)in clause (iv), as so redesignated, 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; (v)in clause (x), as so redesignated, by striking consolidation loan under section 428C or a; and (vi)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.

;

(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 (o)(1)(A), the Secretary shall attempt to provide such information to the student in the manner described in subsection (o)(3)(C); and (3)in paragraph (2)(C), by inserting , such as the online counseling tool described in subsection (o)(1)(A), after electronic means.

Annual counseling for Federal Pell Grant recipients

Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is amended by adding at the end the following:

(n)

Annual counseling for Federal Pell Grant recipients

(1)

Disclosure required prior to disbursement of Federal Pell Grant

(A)

In general

Each eligible institution shall, prior to the first payment of a Federal Pell Grant to a student for an award year, ensure that the student receives comprehensive information on the terms and conditions of the Federal Pell Grant in accordance with paragraph (2). Such information— (i)shall be provided in a simple and understandable manner; and (ii)shall be provided, for each award year for which the student receives a Federal Pell Grant— (I)during a counseling session conducted in person; (II)online, with the student acknowledging receipt of the information; or (III)through the use of the online counseling tool described in subsection (o)(1)(C). (B)

Use of interactive programs; joint counseling permitted

In the case of institutions not using the online counseling tool described in subsection (o)(1)(C)— (i)the Secretary shall require such institutions to carry out the requirements of subparagraph (A) through the use, during an annual counseling session that is in-person or online, of interactive programs that test the student’s understanding of the terms and conditions of the Federal Pell Grant paid to the student, using simple and understandable language and clear formatting; and (ii)an annual counseling session described in subclause (I) or (II) of subparagraph (A)(ii) for a student may be conducted in conjunction with an annual counseling session described in subclause (I) or (II) of subsection (l)(1)(A)(ii) for such student. (2)

Information to be provided

The information to be provided to the student under paragraph (1)(A) shall include the following: (A)An explanation of a Federal Pell Grant. (B)An explanation of approved educational expenses for which the student may use a Federal Pell Grant. (C)An explanation of why a 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 of how the student may budget for typical educational expenses and a sample budget based on the cost of attendance for the institution. (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.

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:

(o)

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; (B)an online counseling tool that provides the annual counseling required under subsection (l) and meets the applicable requirements of this subsection; and (C)an online counseling tool that provides the Federal Pell Grant counseling required under subsection (n) 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— (A)in the case of the online counseling tools described in subparagraphs (A) and (B) of paragraph (1), each such tool is consumer tested to ensure that the tool is effective in helping students understand their rights and obligations with respect to borrowing a loan made under part D; (B)in the case of the online tool described in paragraph (1)(C), the tool is consumer tested to ensure that such tool is effective in helping students understand their rights and obligations with respect to receiving a Federal Pell Grant; and (C)each such tool is understandable to students and 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 students have received counseling using the tool, and notify the applicable institutions of the students’ completion of such counseling; (B)in the case of a student who receives annual counseling using the tool described in paragraph (1)(B), notify the student by when the student should accept, in a manner described in section 485(l)(3), the loan for which the student has received such counseling; and (C)in the case of a student 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 student through such tool.