[Congressional Record Volume 151, Number 20 (Monday, February 28, 2005)]
[Senate]
[Pages S1796-S1797]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. AKAKA (for himself, Mr. Sarbanes, and Mr. Corzine):
  S. 468. A bill to amend the Higher Education Act of 1965 to enhance 
the literacy in finance and economics, and for other purposes; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. AKAKA. Mr. President, I rise to reintroduce comprehensive 
legislation aimed at addressing the issue of economic and financial 
illiteracy on college campuses. I am referring to the worrisome 
problems of skyrocketing debt levels, low rates of saving, and the 
proliferation of unchecked predatory practices by unscrupulous 
financial institutions among young adults who hold our country's future 
in their hands. Entitled the College LIFE or College Literacy In 
Finance and Economics Act, this bill has the support of Senators 
Sarbanes and Corzine. I thank my colleagues from Maryland and New 
Jersey for joining me as original cosponsors of this measure. I also 
thank Senator Enzi, the Chairman of the Health, Education, Labor, and 
Pensions Committee, for working with me on financial literacy as it 
affects all constituencies, including college students.
  The problem we are working to address with the College LIFE Act is 
simple. Our college students are many of America's best and the 
brightest and will go on to become leaders--in business, education, 
politics, the military, the community--any area you can name. I find it 
wonderful that many young people are fulfilling their dreams of higher 
education in numbers that I did not imagine when I was in college. In 
fact, as reported by the Census Bureau, college enrollment was 
estimated at 15.9 million for the current school year, compared to 5.7 
million in 1965 when the Higher Education Act was enacted. However, I 
am gravely concerned, both as a member of this body and particularly as 
a grandparent and great-grandparent, that our young people are entering 
college without proper direction or good skills for money management or 
economic decisionmaking.
  As we work on increasing access to higher education, we must give 
students access to tools needed to make sound economic and financial 
decisions once they are on campus; however, the lack of personal 
finance and economics standards or implementation of existing standards 
in elementary and secondary education in a number of States results in 
many students arriving at college with little understanding of economic 
concepts like supply and demand or benefits versus costs, or personal 
finance concepts such as household money management or the importance 
of maintaining good credit history. Without this basic understanding, 
college students are not effectively evaluating credit alternatives, 
managing their debt, and preparing for long-term financial goals, such 
as saving for a home or retirement.
  Imagine life from the point of view of a college student. A young 
adult leaves his home and travels many miles--thousands of miles in the 
case of Hawaii students attending mainland colleges--to the campus that 
holds his hopes and dreams. Perhaps he is not being mindful of how much 
money he needs for textbooks, school supplies, or student fees. He 
visits the campus bookstore and walks out with a bag that includes a 
preapproved credit card application, which he immediately completes and 
sends. Months later, he has joined other credit card-holding college 
students who, on average, have credit card balances above $3,000. 
Sophomore year rolls around and, instead of conferring with his parents 
about the details of his renewal FAFSA for student financial aid or 
master promissory note, he is saddled with another $20,000 loan. 
According to the Census Bureau, average college tuition, room, and 
board have increased to $29,119 for a four-year private institution and 
to $9,953 for a four-year public institution. The same scenario repeats 
itself in junior and senior year. Finally, after completing all 
coursework, he graduates, finds an entry-level job, and realizes that, 
after servicing his debt, he has little left to spend on basics such as 
food, transportation, and rent, much less career clothing or a new 
briefcase. His lack of knowledge about how to properly use credit has 
led him to anxiety-causing financial missteps. With appropriate 
financial and economic literacy, he may have known what debt load to 
anticipate and made wiser financing and spending decisions while in 
school.
  Instead, she may be on the road to true financial trouble. A U.S. 
Public Interest Research Group and Consumer Federation of America 
analysis of Federal Reserve data indicates that the average household 
with debt carries approximately $10,000 to $12,000 in total revolving 
debt and has nine credit cards. From January through September of 2004, 
approximately 1.2 million consumers filed for bankruptcy, keeping pace 
with last year's record level, which is almost half of the number of 
college diplomas expected to be conferred this year at 2.5 million. 
Furthermore, the Federal Reserve Board reports that Americans currently 
pay more than 13 percent of after-tax income to service their debts. We 
must ensure that our youth make the right decisions to follow a better 
financial path. This is especially in light of a report cited by Dan 
Iannicola, Jr., Deputy Assistant Secretary of the Treasury for 
Financial Education, at a House hearing last Congress, noting that 
youths spent more than $172 billion in a recent year, and figures from 
MarketResearch.com noting that typical 8- to 14-year-olds spend--from 
allowances, jobs, and gifts--nearly $1,300 a year or $25 a week.
  The College LIFE Act represents a comprehensive approach to assist 
upcoming generations of Americans. It proposes four new grant programs 
that provide resources to encourage experimentation with delivery 
systems--innovative methods used in or out of the classroom to increase 
college students'

[[Page S1797]]

financial literacy. Another grant would allow higher education 
institutions to share best practices about or create personal finance 
courses where none exist. A third grant would assist efforts that are 
looking at the best ways to integrate personal finance and economic 
education into basic educational subjects, which is especially 
important as schools are facing challenges under the No Child Left 
Behind Act and are tempted to focus on subjects being tested for 
Adequate Yearly Progress. The final grant would train teachers and high 
school counselors toward increasing financial and economic literacy in 
grades K-12 so that our college students are prepared when they arrive 
at college campuses.
  The bill also 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. It 
promotes greater collaboration with and support from Federal agencies 
in the form of the Financial Literacy and Education Commission. 
Finally, the measure 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.
  Furthermore, I intend the reach of this bill to be beyond the 
traditional college student. Our returning college students are a vital 
part of society--many who are already community leaders and 
breadwinners for their families who have already gained valuable work 
experience that they may use as they learn a new field or continue 
their undergraduate study in the pursuit of a graduate or doctoral 
degree. In addition, older adults who are entering higher education for 
the first time can also be lauded for their enterprising spirit in 
wanting to better their lives by earning an associates or bachelors 
degree. I anticipate that the assistance provided through the College 
LIFE Act will work to provided needed help to many of these students as 
well.
  I am looking forward to continuing to work with my colleagues to have 
the College LIFE Act passed or included in the upcoming Higher 
Education Act reauthorization. I encourage my colleagues' support for 
this bill.
                                 ______