[Congressional Record Volume 149, Number 174 (Tuesday, November 25, 2003)]
[Senate]
[Pages S16011-S16013]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ENZI (for himself, Mr. Akaka, Mr. Corzine, and Mr. 
        Sarbanes):
  S. 1968. A bill to amend the Higher Education Act of 1965 to enhance 
literacy in finance and economics, and for other purposes; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. ENZI. Mr. President, it wasn't all that long ago that a good 
education consisted of providing our children with a strong background 
in reading, writing and arithmetic skills, mixed with an understanding 
of history and a good hard look at civics and how our government works. 
We thought, if our sons and daughters had taken courses in those 
subjects and mastered them, they were as prepared as they could be to 
face the real world, get good jobs, and one day, live happily ever 
after. Unfortunately, we left one vital skill out of the mix.
  As an accountant, I have become increasingly concerned about the lack 
of knowledge we have as a society, and especially, the lack of insight 
we share with our children about money and how to properly handle it, 
budget it, and use it to plan for their retirement. The numbers are 
quite startling when you take a close look at how many of our children 
are leaving college already saddled with credit card debt and school 
loans that need to be repaid. It wasn't like that when many of us were 
in college. School didn't seem to cost nearly as much as it does now, 
and the scourge of a strong economy, easily available credit, hadn't 
reached the ranks of our schools yet.
  This is a problem at the present time, but if we don't act quickly to 
make sure our Nation's young people receive the advice and education 
they need on handling money and planning their finances for the future, 
we will have a disaster on our hands. Young men and women, in their 
prime earning years, are facing a mountain of personal debt at high 
interest rates, with little hope of paying it off anytime soon. 
Clearly, that is something we must take every action to help future 
generations of students avoid.
  That is why I am introducing the Financial Literacy in Higher 
Education Act with my colleague, Senator Akaka. Senator Akaka and I 
share many of the same ideas with respect to the importance of 
financial literacy and ensuring our children have a grasp of the 
implications of their actions when they use the credit they have been 
extended by banks eager to make quick loans at high interest rates. 
Senator Akaka and I worked together on language included in the No 
Child Left Behind Act to ensure elementary and secondary students would 
have more access to financial literacy training that we hope will make 
our children wiser and better users of consumer credit.
  This bill builds on the activities we helped authorize in No Child 
Left Behind. It emphasizes financial literacy for students enrolled in 
institutions of higher education, or students who will soon be 
enrolled. With the training and real life advice they will receive in 
these courses we will be able to reduce the number of our children who 
leave high school and head out into the world on their own with little 
or no preparation for the demands that will be placed on their limited 
incomes.
  Our legislation would include financial literacy and personal finance 
in the list of permissible activities of several programs authorized 
under the Higher Education Act. These programs are set up to support 
students, and I believe financial literacy should be an important 
aspect of the support process. Attending college is a necessary step 
that must be taken if our young adults are to succeed in the work 
force, and learning how to make a personal budget and meet individual 
financial obligations should be a priority in that process.
  Our bill would also emphasize financial literacy in exit counseling 
for college students receiving federal student financial assistance. 
Today's undergraduate students are leaving school with an average of 
nearly $17,000 in student loan obligations. This can be a large burden 
to bear, but it becomes impossible to address if a young man or woman 
is unable to successfully manage their own finances.
  The answer to this challenge is to start educating students before 
they experience financial difficulty. Students who are faced with the 
possibility of accruing larger and larger levels of debt must be taught 
the full meaning and significance of concepts as simple as compound 
interest, credit scores, and minimum payments. That way, when they 
leave school with their lives before them, they will be able to plan 
how to pay back their student loans, and keep credit card debt to a 
minimum. Taking the initiative while these students are in school will 
help them avoid some of the serious problems that can develop when 
someone has little or poor financial skills. These problems can 
literally have lifelong implications for those who overextend their 
resources or fail to learn to live within the limits of a budget.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1968

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

[[Page S16012]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Financial Literacy in Higher 
     Education Act''.

     SEC. 2. AREAS OF EMPHASIS.

       Part B of title I of the Higher Education Act of 1965 (20 
     U.S.C. 1011 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 123. AREAS OF EMPHASIS.

       ``In carrying out activities under this Act related to 
     improving financial and economic literacy, education, and 
     counseling, the Secretary shall emphasize, among other 
     elements, basic personal income and household money 
     management and financial planning skills, and basic economic 
     decision making skills, including how to--
       ``(1) create household budgets, initiate savings plans, and 
     make strategic investment decisions for education, 
     employment, retirement, home ownership, wealth building, or 
     other savings goals;
       ``(2) manage credit and debt effectively, including student 
     financial aid and credit card debt, and understand the merits 
     of establishing and maintaining excellent credit history;
       ``(3) understand, evaluate, and compare fair and favorable 
     financial products, services, and opportunities, and avoid 
     abusive, predatory, or deceptive financial products, 
     services, and opportunities;
       ``(4) complete tax returns and understand tax consequences 
     when making certain financial decisions, such as placing an 
     investment or purchasing a home;
       ``(5) identify economic problems, alternatives, benefits, 
     and costs;
       ``(6) analyze the incentives at work in an economic 
     situation;
       ``(7) examine the consequences of changes in economic 
     conditions and public policies;
       ``(8) collect and organize economic evidence, including 
     understanding, evaluating, and making strategic decisions 
     using economic indicators;
       ``(9) compare benefits with costs; and
       ``(10) improve financial and economic literacy and 
     education through all other related skills.''.

     SEC. 3. COORDINATION.

       In carrying out the financial and economic literacy 
     activities authorized under this Act and the amendments made 
     by this Act, the Secretary of Education, to the greatest 
     extent practicable, shall coordinate such activities with the 
     financial and economic literacy efforts of a Federal 
     commission comprised of the following:
       (1) The Secretary of the Treasury.
       (2) The respective head of each of the following:
       (A) Each of the Federal banking agencies (as defined in 
     section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813)).
       (B) The National Credit Union Administration.
       (C) The Securities and Exchange Commission.
       (D) Each of the Departments of Education, Agriculture, 
     Defense, Health and Human Services, Housing and Urban 
     Development, Labor, and Veterans Affairs.
       (E) The Federal Trade Commission.
       (F) The General Services Administration.
       (G) The Small Business Administration.
       (H) The Social Security Administration.
       (I) The Commodity Futures Trading Commission.
       (J) The Office of Personal Management.
       (3) At the discretion of the President, not more than 5 
     individuals appointed by the President from among the 
     administrative heads of any other Federal agencies, 
     departments, or other Government entities, whom the President 
     determines to be engaged in a serious effort to improve 
     financial literacy and education.

     SEC. 4. ENHANCEMENT OF FINANCIAL LITERACY AND ECONOMIC 
                   LITERACY.

       The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) 
     is amended--
       (1) in section 201(a)(3), by inserting ``personal 
     finance,'' after ``economics,'';
       (2) in section 311(c)--
       (A) by redesignating paragraphs (7) through (12) as 
     paragraphs (8) through (13), respectively; and
       (B) by inserting after paragraph (6) the following:
       ``(7) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (3) in section 316(c)(2)--
       (A) by redesignating subparagraphs (G) through (L) as 
     subparagraphs (H) through (M), respectively;
       (B) by inserting after subparagraph (F) the following:
       ``(G) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in subparagraph (M), as redesignated by subparagraph 
     (A), by striking ``subparagraphs (A) through (K)'' and 
     inserting ``subparagraphs (A) through (L)'';
       (4) in section 317(c)(2)--
       (A) in subparagraph (G), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (H), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(I) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (5) in section 323(a)--
       (A) by redesignating paragraphs (7) through (12) as 
     paragraphs (8) through (13), respectively; and
       (B) by inserting after paragraph (6) the following:
       ``(7) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (6) in section 326(c)--
       (A) by redesignating paragraphs (5) through (7) as 
     paragraphs (6) through (8), respectively; and
       (B) by inserting after paragraph (4) the following:
       ``(5) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;'';
       (7) in section 503(b)--
       (A) by redesignating paragraphs (5) through (14) as 
     paragraphs (6) through (15), respectively; and
       (B) by inserting after paragraph (4) the following:
       ``(5) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (8) in section 402B(b)--
       (A) by redesignating paragraphs (3) through (10) as 
     paragraphs (4) through (11), respectively;
       (B) by inserting after paragraph (2) the following:
       ``(3) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in paragraph (11), as redesignated by subparagraph (A), 
     by striking ``paragraphs (1) through (9)'' and inserting 
     ``paragraphs (1) through (10)'';
       (9) in section 402C--
       (A) in subsection (b)--
       (i) by redesignating paragraphs (2) through (12) as 
     paragraphs (3) through (13), respectively;
       (ii) by inserting after paragraph (1) the following:
       ``(2) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (iii) in paragraph (13), as redesignated by clause (i), by 
     striking ``paragraphs (1) through (11)'' and inserting 
     ``paragraphs (1) through (12)''; and
       (B) in subsection (e), by striking ``subsection (b)(10)'' 
     and inserting ``subsection (b)(11)'';
       (10) in section 402D(b)--
       (A) by redesignating paragraphs (2) through (10) as 
     paragraphs (3) through (11), respectively;
       (B) by inserting after paragraph (1) the following:
       ``(2) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in paragraph (11), as redesignated by subparagraph (A), 
     by striking ``paragraphs (1) through (9)'' and inserting 
     ``paragraphs (1) through (10)'';
       (11) in section 402E(b)--
       (A) by redesignating paragraphs (7) and (8) as paragraphs 
     (8) and (9), respectively; and
       (B) by inserting after paragraph (6) the following:
       ``(7) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;'';
       (12) in section 402F(b)--
       (A) by redesignating paragraphs (4) through (10) as 
     paragraphs (5) through (11), respectively;
       (B) by inserting after paragraph (3) the following:
       ``(4) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in paragraph (11), as redesignated by subparagraph (A), 
     by striking ``paragraphs (1) through (9)'' and inserting 
     ``paragraphs (1) through (10)'';
       (13) in section 404D(b)(2)(A)(ii), by striking ``and 
     academic counseling'' and inserting ``academic counseling, 
     and financial literacy and economic literacy education or 
     counseling'';
       (14) by striking section 418A(c)(1)(B)(i) and inserting the 
     following:
       ``(i) personal, academic, career, and economic education or 
     personal finance counseling as an ongoing part of the 
     program;'';
       (15) in section 428F, by adding at the end the following:
       ``(c) Financial and Economic Literacy.--Where appropriate, 
     each program described under subsection (b) shall include 
     making available financial and economic education materials 
     for the borrower.'';
       (16) in section 432(k)(1), by striking ``and offering'' and 
     all that follows through the period and inserting ``, 
     offering loan repayment matching provisions as part of 
     employee benefit packages, and providing employees with 
     financial and economic education and counseling.'';
       (17) in section 441(c)--
       (A) in paragraph (1), by inserting ``financial literacy and 
     economic literacy,'' after ``social services,''; and
       (B) in paragraph (4)(C), by striking the period at the end 
     and inserting ``and counseling for the purposes of improving 
     financial literacy and economic literacy.'';
       (18) in section 485--

[[Page S16013]]

       (A) in subsection (a)(1)(D), by striking the semicolon at 
     the end and inserting ``, including the merits of taking a 
     personal finance course, if the institution offers such a 
     course, and of the student reviewing the student's personal 
     credit profile not less frequently than once a year;'';
       (B) in subsection (b)--
       (i) in paragraph (1)(A)--

       (I) in clause (i), by striking ``and'' after the semicolon;
       (II) in clause (ii), by striking the period at the end and 
     inserting ``; and''; and
       (III) by adding at the end the following:

       ``(iii) if it is determined during the counseling that the 
     borrower is not connected to a mainstream financial 
     institution, information about low-cost financial services 
     and the benefits of using such services, and where and how 
     the borrower could open a low-cost account in a federally 
     insured credit union or bank.''; and
       (ii) by adding at the end the following:
       ``(3) Pilot program.--
       ``(A) Authorization.--
       ``(i) In general.--The Secretary shall establish a pilot 
     program that awards a total of 5 grants to 5 different 
     institutions of higher education that are located in 
     geographically different parts of the United States to enable 
     the institutions to provide annual personal finance 
     counseling for students enrolled at such institutions.
       ``(ii) Minority serving institutions.--In awarding grants 
     under this paragraph, the Secretary shall award not less than 
     2 of the 5 grants to institutions of higher education that 
     are eligible to receive assistance under title III or title 
     V.
       ``(B) Application.--An institution of higher education that 
     desires to receive a grant under this paragraph shall submit 
     an application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require.
       ``(C) Use of funds.--
       ``(i) Counseling.--

       ``(I) In general.--In addition to making available exit 
     counseling under paragraph (1), an institution of higher 
     education that receives a grant under this paragraph shall 
     through financial aid officers or otherwise, make available 
     counseling to borrowers of loans which are made, insured, or 
     guaranteed under part B (other than loans made pursuant to 
     section 428B) of this title or made under part D or E of this 
     title at the commencement of the borrower's course of study 
     at the institution, not less frequently than once annually 
     while the borrower is enrolled at the institution, and not 
     later than 30 days after completion of the course of study 
     for which the borrower enrolled at the institution or at the 
     time of departure from such institution.
       ``(II) Content.--The counseling required under subclause 
     (I) shall include the average anticipated monthly repayments, 
     a review of the repayment options available, the total amount 
     of interest that would be paid over a range of possible 
     interest rates and the amount of interest in the monthly 
     payments, information on the availability and content of a 
     personal finance course if such course is offered by the 
     institution and if not already completed by the individual, 
     and such debt and management strategies as the institution 
     determines are designed to facilitate the repayment of such 
     indebtedness, which may be implemented in partnership with 
     State or local public, private, and nonprofit entities 
     approved by the local educational agency that serves schools 
     in the area where the institution is located, or a campus 
     committee formed for the purpose of evaluating the 
     qualifications of such entities. If it is determined during 
     the counseling that the borrower is not connected to a 
     mainstream financial institution, the counseling shall 
     include information about low-cost financial services and the 
     benefits of using such services, and where and how the 
     borrower could open a low-cost account in a federally insured 
     credit union or bank.

       ``(ii) Permissive use.--Grant funds received under this 
     paragraph may be used to pay for additional financial aid 
     personnel or for training for existing financial aid 
     personnel.
       ``(iii) Study.--

       ``(I) In general.--An institution of higher education that 
     receives a grant under this paragraph shall conduct a study 
     to evaluate the impacts, if any, of the financial and 
     economic literacy and counseling activities on students' 
     levels of savings and indebtedness, and creditworthiness, and 
     such activities' effectiveness in reducing the incidence of 
     problems with handling credit, including bankruptcy filing 
     and student financial loan default.
       ``(II) Assistance.--An institution of higher education may 
     conduct the study under subclause (I) with the assistance of 
     appropriate Federal agencies or other entities approved by 
     the Secretary.
       ``(III) Report.--Not later than 6 months after completion 
     of the study under subclause (I), the institution of higher 
     education shall report the results of such study to the 
     Secretary, the Secretary of the Treasury, the Committee on 
     Health, Education, Labor, and Pensions of the Senate, the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate, the Committee on Education and the Workforce of the 
     House of Representatives, and the Committee on Financial 
     Services of the House of Representatives.

       ``(D) Duration.--Grants awarded under this paragraph shall 
     be for a period of 3 years.
       ``(E) Amount.--The Secretary shall award grants of not more 
     than $1,000,000 annually to each institution of higher 
     education awarded a grant under this paragraph. The Secretary 
     may determine the grant award amount based on the number of 
     students to be counseled at the institution of higher 
     education.
       ``(F) Report.--Not later than 90 days after the date of 
     completion of the pilot program under this paragraph, the 
     Secretary shall submit a report to Congress on the 
     effectiveness of the program.
       ``(G) Authorization of appropriations.--There is authorized 
     to be appropriated to carry out this paragraph such sums as 
     may be necessary for each of fiscal years 2005 through 
     2009.''; and
       (C) in subsection (c), by adding at the end the following: 
     ``Appropriate Federal agencies shall provide material 
     developed by such agencies for the purpose of financial 
     education, to financial assistance information personnel at 
     institutions of higher education for the use of such 
     personnel in financial aid counseling.''; and
       (19) in section 491(d)(8), by inserting ``, including those 
     related to financial literacy activities,'' after ``resources 
     and services''.

     SEC. 5. EVALUATION.

       Not later than 6 years after the date of enactment of this 
     Act, the Comptroller General of the United States shall 
     submit to the Committee on Health, Education, Labor, and 
     Pensions of the Senate, the Committee on Banking, Housing, 
     and Urban Affairs of the Senate, the Committee on Education 
     and the Workforce of the House of Representatives, and the 
     Committee on Financial Services of the House of 
     Representatives, an evaluation of the range and effectiveness 
     of financial and economic education and financial aid 
     counseling activities of institutions of higher education, 
     lenders, servicers, and guaranty agencies as emphasized by 
     the Secretary of Education pursuant to section 123 of the 
     Higher Education Act of 1965.

  Mr. AKAKA. Mr. President, I am pleased to introduce the Financial 
Literacy in Higher Education Act with Senator Enzi and original 
cosponsors of S. 1800, the College LIFE, Literacy in Finance and 
Economics Act, Senators Sarbanes and Corzine.
  This is truly a bipartisan compromise on the provisions of S. 1800, 
the College LIFE Act, and I appreciate Senator Enzi's willingness to 
collaborate on this matter. As in S. 1800, the Financial Literacy in 
Higher Education Act proposes a pilot program for five higher education 
institutions to encourage students to take a personal finance course 
and participate in preventive annual credit counseling, working in 
conjunction with State or local public, private, and nonprofit entities 
selected by the local education agency or the school, and measuring the 
effectiveness of efforts in any behavioral changes that may result.
  The bill emphasizes the importance of personal finance and economic 
education and counseling by authorizing these activities as allowable 
uses in existing Higher Education Act programs, such as TRIO, GEAR UP, 
and title III and title V Serving Institutions. These are programs that 
have been successful in expanding higher education access to 
populations with unique needs and, therefore, are ideal avenues through 
which we can further the important components of financial and economic 
literacy, such as wise budgeting, saving, debt management, tax 
preparation, and avoiding predatory or abusive practices.
  The bill promotes greater collaboration with and support from Federal 
agencies in the higher education arena with respect to economic and 
financial literacy, including coordination with the Financial Literacy 
and Education Commission, which was created by title V of H.R. 2622, 
the Fair and Accurate Credit Transactions Act of 2003. The conference 
report of H.R. 2622 was adopted recently by this Chamber and the other 
body. For those who may not be familiar with the Commission, the new 
entity will work to improve financial literacy and education in the 
United States through the development of a national strategy.
  I urge my colleagues to support this bipartisan effort to increase 
the financial and economic literacy of our college students. I will 
also work with my colleagues on advancing the grant programs in S. 1800 
that are not in our compromise package, because I feel that those, too, 
are important parts of our overall effort. Students in higher education 
are some of our Nation's best and brightest, and we must work to give 
them the tools that will help them succeed. Not the least among these 
is literacy in personal finance and economics.
                                 ______