[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1260 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1260

  To require financial literacy and economic education counseling for 
               student borrowers, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 22, 2011

   Mr. Akaka introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
  To require financial literacy and economic education counseling for 
               student borrowers, 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 ``College Literacy in Finance and 
Economics Act of 2011'' or the ``College LIFE Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Student borrowing is widespread in higher education, 
        and more than $100,000,000,000 in Federal education loans are 
        originated each year. In 2008, 62 percent of recipients of a 
        baccalaureate degree graduated with student debt.
            (2) Forty-eight percent of students at 4-year public 
        institutions of higher education borrow money to pay for 
        college, as do 57 percent of students at 4-year private 
        institutions of higher education, and 96 percent of students at 
        for-profit institutions of higher education.
            (3) In 2008, 92 percent of Black students, 85 percent of 
        Hispanic students, 85 percent of American Indian/Alaska Native 
        students, 82 percent of multi-racial students, 80 percent of 
        Native Hawaiian/Pacific Islander students, 77 percent of White 
        students, and 68 percent of Asian students received financial 
        aid.
            (4) Students depart from institutions of higher education 
        with significant debt. In 2008, the average student loan debt 
        among graduates of institutions of higher education was 
        $23,186, and 1 in 10 recipients of a baccalaureate degree 
        graduated at least $40,000 in debt. In 2008, 57 percent of 
        recipients of a baccalaureate degree from a for-profit 
        institution of higher education owed more than $30,000, and the 
        median amount of debt was $32,700. Since 2003, the average 
        cumulative debt among students at institutions of higher 
        education has increased by 5.6 percent each year.
            (5) Students enrolled in for-profit institutions of higher 
        education account for 47 percent of all student loan defaults, 
        despite representing approximately 10 percent of all students 
        enrolled in institutions of higher education. Since 2003, the 
        national cohort default rate has increased from 4.5 percent to 
        7 percent.
            (6) Students rely on access to credit. Fifty-six percent of 
        dependent students at institutions of higher education had a 
        credit card in their own name in 2004. The average credit card 
        balance among such students who were carrying a balance on 
        their cards was $2,000.
            (7) According to the National Foundation for Credit 
        Counseling, the majority of adults (56 percent of adults in the 
        United States, or 127,000,000 people) do not have a budget or 
        keep close track of expenses or spending.
            (8) According to a 2009 National Bankruptcy Research Center 
        study, consumers who received financial education through pre-
        bankruptcy counseling had 27.5 percent fewer delinquent 
        accounts and remained current on their accounts for 29 percent 
        longer.
            (9) According to the Financial Industry Regulatory 
        Authority Investor Education Foundation, less than one-third of 
        young adults (ages 18 to 29) set aside emergency savings to 
        weather unexpected financial challenges.
            (10) According to a Jump$tart Coalition for Personal 
        Financial Literacy survey, 62 percent of high school students 
        cannot pass a basic personal finance exam, and financial 
        literacy scores among future higher education students are low.
            (11) According to research by the National Endowment for 
        Financial Education and the University of Arizona, schools are 
        the institutions that students trust most to help increase 
        their knowledge of personal finance.

SEC. 3. FINANCIAL LITERACY COUNSELING.

    Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is 
amended by adding at the end the following:
    ``(n) Financial Literacy Counseling.--
            ``(1) In general.--Each eligible institution shall provide 
        financial literacy counseling to student borrowers in 
        accordance with the requirements of this subsection, through--
                    ``(A) financial aid offices;
                    ``(B) an employee or group of employees designated 
                under subsection (c); or
                    ``(C) a partnership with a nonprofit organization 
                that has substantial experience developing or 
                administering financial literacy and economic education 
                curricula, which may include an organization that has 
                received grant funding under the Excellence in Economic 
                Education Act of 2001 (20 U.S.C. 7267 et seq.).
            ``(2) Entrance and exit counseling required.--
                    ``(A) In general.--Financial literacy counseling, 
                as required under this subsection, shall be provided to 
                student borrowers on the following 2 occasions:
                            ``(i) Entrance counseling.--Such counseling 
                        shall be provided not later than 45 days after 
                        the first disbursement of a borrower's first 
                        loan that is made, insured, or guaranteed under 
                        part B, made under part D, or made under part 
                        E. Financial literacy counseling on this 
                        occasion may be provided in conjunction with 
                        the entrance counseling described in subsection 
                        (l), if the financial literacy counseling 
                        component is provided in accordance with the 
                        requirements of subparagraph (C).
                            ``(ii) Exit counseling.--Such financial 
                        literacy counseling shall be provided, in 
                        addition to the financial literacy counseling 
                        provided under clause (i), prior to the 
                        completion of the course of study for which the 
                        borrower enrolled at the institution or at the 
                        time of departure from such institution, to 
                        each borrower of a loan that is made, insured, 
                        or guaranteed under part B, made under part D, 
                        or made under part E. Financial literacy 
                        counseling on this occasion may be provided in 
                        conjunction with the exit counseling described 
                        in subsection (b), if the financial literacy 
                        counseling component is provided in accordance 
                        with the requirements of subparagraph (C).
                    ``(B) Exceptions.--The requirements of subparagraph 
                (A) shall not apply to borrowers of--
                            ``(i) a loan made, insured, or guaranteed 
                        pursuant to section 428C;
                            ``(ii) a loan made, insured, or guaranteed 
                        on behalf of a student pursuant to section 
                        428B; or
                            ``(iii) a loan made under part D that is a 
                        Federal Direct Consolidation Loan or a Federal 
                        Direct PLUS loan made on behalf of a student.
                    ``(C) Minimum counseling requirements.--Such 
                financial literacy counseling shall include a total of 
                not less than 4 hours of counseling on the occasion 
                described in subparagraph (A)(i), and an additional 
                period of not less than 4 hours of counseling on the 
                occasion described in subparagraph (A)(ii). A total of 
                not more than 2 hours of counseling for each of the 
                occasions described in subparagraph (A) shall be 
                provided electronically.
                    ``(D) Early departure.--Notwithstanding 
                subparagraph (C), if a borrower leaves an eligible 
                institution without the prior knowledge of such 
                institution, the institution shall attempt to provide 
                the information required under this subsection to the 
                student in writing.
            ``(3) Information to be provided.--Financial literacy 
        counseling, as required under this subsection, shall include 
        information on the Financial Education Core Competencies as 
        determined by the Financial Literacy and Education Commission 
        established under title V of the Fair and Accurate Credit 
        Transactions Act of 2003 (20 U.S.C. 9701 et seq.).
            ``(4) Use of interactive programs.--The Secretary may 
        encourage institutions to carry out the requirements of this 
        subsection through the use of interactive programs that test 
        the borrower's understanding of the financial literacy 
        information provided through counseling under this subsection, 
        using simple and understandable language and clear formatting.
            ``(5) Model financial literacy counseling curriculum.--Not 
        later than 1 year after the date of enactment of the College 
        Literacy in Finance and Economics Act of 2011, the Secretary 
        shall develop a curriculum in accordance with the requirements 
        of paragraph (3), which eligible institutions may use to 
        fulfill the requirements of this subsection. In developing such 
        curriculum, the Secretary may consult with members of the 
        Financial Literacy and Education Commission.''.
                                 <all>