[Congressional Record Volume 160, Number 117 (Thursday, July 24, 2014)]
[House]
[Pages H6758-H6767]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EMPOWERING STUDENTS THROUGH ENHANCED FINANCIAL COUNSELING ACT
General Leave
Mr. KLINE. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days in which to revise and extend their remarks and
include extraneous material on H.R. 4984.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Minnesota?
There was no objection.
The SPEAKER pro tempore. Pursuant to House Resolution 677 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the state of the Union for the consideration of the bill, H.R. 4984.
The Chair appoints the gentlewoman from Tennessee (Mrs. Black) to
preside over the Committee of the Whole.
{time} 1240
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the state of the Union for the consideration of the bill
(H.R. 4984) to amend the loan counseling requirements under the Higher
Education Act of 1965, and for other purposes, with Mrs. Black in the
chair.
The Clerk read the title of the bill.
The CHAIR. Pursuant to the rule, the bill is considered read the
first time.
The gentleman from Minnesota (Mr. Kline) and the gentlewoman from
Oregon (Ms. Bonamici) each will control 30 minutes.
The Chair recognizes the gentleman from Minnesota.
Mr. KLINE. Madam Chair, I rise today in strong support of the
Empowering Students Through Enhanced Financial Counseling Act, and I
yield myself such time as I may consume.
Madam Chair, every family knows the cost of pursuing a higher
education is out of control. It is felt intensely each and every day by
countless Americans, by parents who worry how they will put their kids
through college, by students who fear they will be left with a pile of
debt and no job prospects, and by working men and women who hope a
degree will let them reach the next rung on the economic ladder.
We know that solutions to the college cost problem must ultimately
come from States and institutions, but there are things Congress can do
right now to keep the dream of a postsecondary education within reach.
Helping students find the right institution is one way we can make a
difference. Yesterday, the House passed, with strong bipartisan
support, the Strengthening Transparency in Higher Education Act. The
legislation will arm students with the best information available in a
format that is easy to understand, information that includes key facts
such as an institution's costs, completion rates, and student loan
debt.
Students and families currently face a tsunami of information that is
the
[[Page H6759]]
mostly confusing, conflicting, and unnecessary. The bill streamlines
the information and how it is delivered, enabling students to be smart
shoppers in the college marketplace.
However, picking an institution is only half the challenge. Families
then have to figure out how to pay for it, and far too many are
unprepared to make those tough decisions. Some students choose loans
and debt when other assistance in the form of grants and scholarships
are readily available. And those that do opt for student loans often
have no real concept of what they are getting into or what it means for
their future.
Clearly, current policies promoting financial literacy are coming up
short. That is why I am pleased to support the Empowering Students
Through Enhanced Financial Counseling Act. This bipartisan legislation
includes a series of reforms that will help students and families make
wise financial decisions about their postsecondary education.
For example, the bill ensures borrowers--both students and parents--
receive annual counseling that reflects their personal situations and
requires consent each year before receiving a Federal loan. The
legislation also makes sure low-income individuals who rely on Pell
grants are informed about the terms and conditions of their grant.
The bill also delivers more robust counseling upon graduation,
requiring that information on a borrower's loan balance and anticipated
monthly payments be provided. Finally, the legislation directs the
Secretary of Education to maintain a consumer-tested, online counseling
tool that will help institutions put this important information into
the hands of those who need it.
Madam Chairman, this legislation is part of a broader effort to
strengthen our Nation's higher education. Neither this bill nor the
bills passed earlier this week are a silver bullet to challenges we
face. However, by working together, we can begin to make a difference
in the lives of students and families, and that is precisely what the
House is doing.
Madam Chairman, I want to thank the bipartisan authors of the
legislation, Representatives Brett Guthrie, Richard Hudson, and Suzanne
Bonamici.
I urge my colleagues to support the bill and reserve the balance of
my time.
{time} 1245
Ms. BONAMICI. Madam Chair, I yield myself such time as I may consume,
and I rise today in support of the Empowering Students Through Enhanced
Financial Counseling Act.
I would like to start by thanking Chairman Kline, Ranking Member
Miller, and Congressman Guthrie for their leadership on this bill,
which will improve the financial counseling that millions of student
loan borrowers receive. I am pleased that Members are coming together
to take a meaningful step toward protecting student loan borrowers. I
also want to thank the Committee on Education and Workforce staff on
both sides of the aisle for their hard work to include Members' shared
priorities in a bill that has earned tremendous bipartisan support.
The need for enhanced financial counseling for students is clear.
More than 40 million Americans are carrying more than $1.2 trillion in
student loan debt, and default rates are climbing. At the same time
there is evidence that student loan debt is a drag on the broader
economy. Borrowers struggling with debt may delay purchasing a new car,
a home, or new appliances. They may be unable to access capital to
start a business, or they may put off saving for retirement.
Of course, the solution to the mounting burden of student loan debt
will require a number of changes. We will need to address rising
tuition, and we will need to do a better job of granting existing
borrowers access to affordable repayment plans. But we also must help
current and future students understand their rights and obligations as
borrowers. And we need to help them forecast their obligations in the
years after college so they can make informed decisions now and for the
future.
One of the frustrations I hear frequently from former students is
that they didn't understand the jumble of terms and products in the
student loan market when they were borrowing. Many didn't ask questions
until after they left college. What kind of loans did they borrow? When
will they need to begin repayment? What will their monthly payments be,
and what repayment plans will be available?
That is why I am especially pleased that H.R. 4984 goes beyond
entrance counseling for new borrowers and requires annual counseling
for all student loan borrowers.
Under this bill, students, whether they are sophomores or seniors,
will have information about how much they have borrowed, what they are
expected to borrow to complete their education, how their loans will
accrue interest, and what they can expect their monthly payments to be
when they leave college. They will be better able to see their road to
repayment.
Importantly, providing annual counseling means that borrowers who
don't graduate will still receive information about what to expect when
they leave school and enter repayment. Borrowers will have more clarity
on their monthly payments under two repayment plans: income-based
repayment and the standard 10-year option. Streamlining this
information will simplify the repayment process.
Borrowers will be reminded each year that they don't have to borrow
the full amount made available, and they should consider grants, work
study, and Federal loans before turning to private lenders. Unlike
current practice, borrowers will receive financial counseling before
signing their master promissory note, and they will be reminded that
they can repay interest before it capitalizes.
H.R. 4984 will provide for the first time important disclosures to
parents who borrow for their children. Parent borrowers of student
loans will be given virtually the same information about their loans as
students receive. And the bill will extend counseling to Pell grant
recipients so that they understand the limits on eligibility for Pell
grants, and the circumstances in which they would be asked to repay
their grants.
Finally, this bill delivers enhanced student loan information in
consumer-tested formats to check for student understanding. It will
ensure that we provide personalized borrower information that the
borrowers understand.
Madam Chair, there is another reason why this bill is so important
right now. Recent consumer complaints suggest that some debt settlement
companies are using predatory practices to target student loan
borrowers. These firms target low-income and minority borrowers, but
also Americans giving back through public service careers, like
firefighting, teaching, and law enforcement. These firms are reportedly
charging thousands of dollars to enroll borrowers in Federal income-
based repayment programs, a program that borrowers can enroll in for
free.
Until we can address these predatory practices directly, this bill
will go a long way to ensuring that students fully understand their
eligibility for income-based repayment. In short, the Empowering
Students Through Enhanced Financial Counseling Act will help Pell grant
recipients and student loan borrowers. It will help the borrowers
anticipate their monthly payments and plan their road to repayment.
This will make a real positive difference, and I ask my colleagues to
join me in supporting H.R. 4984.
I reserve the balance of my time.
Mr. KLINE. Madam Chair, I am now pleased to yield 3 minutes to the
gentleman from Kentucky (Mr. Guthrie), a key member of the committee.
Mr. GUTHRIE. Madam Chair, I rise today in support of H.R. 4984, the
Empowering Students Through Enhanced Financial Counseling Act.
But first, I want to say thanks to my friend from Oregon,
Congresswoman Bonamici, for putting together a coalition of both sides
where we can come together to address a problem that faces so many of
the people who sent us here to represent them. And to the chairman, we
are going to pass three or four bills this week in a bipartisan manner.
The President signed a bill that passed this committee this week as
well. It shows that he is putting together where we can find common
ground to solve problems that really affect the people who sent us here
to represent them. We appreciate him for that.
[[Page H6760]]
But to address this bill: with the rising costs of attaining a
college degree, many students need financial assistance to make that
dream a reality. This bill will increase financial literacy by
reforming the current guidelines to require annual counseling for
student borrowers. In doing so, students will be empowered with the
knowledge necessary to understand what they are borrowing, which
financial options to draw from first, and the implication of their
future debt load in repayment scenarios.
A June 2014 report from the Federal Reserve Bank of New York reported
that less than 50 percent of survey respondents with student debt have
what they consider a high loan literacy.
Current Federal law only requires colleges and universities to
provide financial counseling to student borrowers at the beginning of
their studies. In short, these students get a quick snapshot of their
loan obligations after they have already committed to the first year's
loans, and then again once they have accrued their entire loan burden.
Making matters worse, these counseling sessions tend to be broad and
not based on information specific to the borrower. Many of today's
students do not have a clear picture of what their financial obligation
will look like upon graduation, and aren't necessarily given any
opportunity to make decisions to alter that course. So will this bill
make a difference?
Well, we have an example. Indiana University--being from Kentucky, I
have to admit, Indiana University has begun a process of educating
students annually prior to accepting their aid package for the
following year, similar to our efforts in this bill. IU found that
Federal undergraduate Stafford loan disbursements dropped by $31
million, or 11 percent, from the previous year. That is five times the
decline in the national average. And they still were served in college.
They just didn't take out too much excess debt.
Through this bill, we hope to expand upon what institutions like
Indiana University are doing and reform the current guidelines to
require annual counseling for student borrowers, and ensure that
students are empowered with the information they need to take control
of their financial futures.
I encourage my colleagues, and I appreciate the bipartisan support,
and particularly my friend from Oregon, for working together, and I
encourage my colleagues to support this meaningful legislation so we
can arm students with the financial knowledge needed and help lower
their debt burdens.
Ms. BONAMICI. Madam Chair, I am pleased to yield 3 minutes to the
gentlewoman from Arizona (Ms. Sinema), a champion for access to higher
education.
Ms. SINEMA. Madam Chair, I thank Chairman Kline, Ranking Member
Miller, and Representative Bonamici for working together to find common
ground on this bipartisan legislation, and I rise in support of H.R.
4984.
This legislation enacts commonsense safeguards and reforms to make
financial counseling more effective for students and their families.
Specifically, this legislation ensures that student loan recipients
receive comprehensive information on an annual basis, detailing the
terms and conditions, as well as the individual responsibilities
throughout the life of their loans.
As an adjunct professor at Arizona State University, I frequently
hear from my students about how difficult it is to effectively manage
their student loans. One year ago, I brought stories from my own
Arizona State University students to the House floor to demonstrate how
student debt impacts their futures and our community.
One former student in my district, Brandy, faces over $100,000 in
student debt. While this legislation will make it easier for her to
understand the terms of her loan, we shouldn't fool ourselves, because
this legislation will not make repaying her loan any easier, it won't
provide relief from rising interest rates, and it doesn't take
meaningful steps to address the skyrocketing cost of higher education.
So together, we must do more here in Congress to create quality, higher
education opportunities for America's students.
So while this legislation is no substitute for a full reauthorization
of the Higher Education Act, it is a good step forward. It doesn't yet
provide a meaningful solution that addresses the rising cost of
college, but it is very important that we stand today and make the
important start to ensure students are fully informed about their loans
and student debt.
I relied on Pell grants, academic scholarships, and Federal loans all
through my schooling, just like my Arizona State University students do
today. I know that students need guidance and assistance to manage
their student debt.
I talk to young people who are excited to share their ideas and
thoughts with me about how to solve some of our world's biggest
problems, but it concerns me when I see these same young students are
daunted by the prospect of an expensive education that they want but
fear they can't afford.
Rising college costs are putting higher education and the American
dream out of reach for too many hardworking American families.
Education is the key to economic growth, job creation, and for many, a
clear pathway out of poverty. I know this because education was the key
to my own path from poverty to the middle class. So I urge my
colleagues to pass this legislation and continue working together to
make college affordable for Arizona students.
I thank the gentlewoman from Oregon (Ms. Bonamici) for yielding and
for her hard work.
Mr. KLINE. I reserve the balance of my time.
Ms. BONAMICI. Madam Chair, I am pleased to yield 2 minutes to the
gentleman from New York (Mr. Bishop), a colleague from the Education
and the Workforce Committee.
Mr. BISHOP of New York. Madam Chair, I thank my colleague for
yielding.
I rise in support of H.R. 4984, and I want to commend Congressman
Guthrie and Congresswoman Bonamici for their efforts in bringing this
bill first to our committee and now to the floor, and I particularly
want to commend the bipartisan nature with which this legislation has
been developed. Hopefully it will pass today with the same support that
it passed out of the Education Committee.
My other hope is that we can take this same bipartisan spirit that
attends this legislation and apply it to the really, really important
work that we have before us with respect to higher education and
reauthorizing the Higher Ed Act, and that is specifically seeing to it
that collectively we work together to see to it that the student
financial aid programs embodied in title IV of the Higher Ed Act are
reauthorized and, in fact, strengthened, and that they remain as robust
as they need to be to ensure that students continue to have access to
the educational institutions of their choice.
Frankly, title IV is in peril. I hope we can work on that. And let me
be specific about at least one program in title IV, and that is the
Perkins Loan Program. We have had the Perkins Loan Program since 1958.
It was passed in the wake of America's shock that we were beaten into
space by the Russians, and so there was an effort to make it easier for
the young men and women of this country to pursue higher education.
That goal, by the way, and that need that existed in 1958 still exists
today. And yet under current law, if we do not act, the 2015-2016
academic year will be the last year that the Perkins loan will be in
existence.
Our students across the country borrow $1.4 billion a year.
The CHAIR. The time of the gentleman has expired.
Ms. BONAMICI. I yield an additional 1 minute to the gentleman from
New York (Mr. Bishop).
Mr. BISHOP of New York. I thank the gentlelady for yielding.
So $1.4 billion a year will be taken out of the student aid portfolio
at a time when students can least afford for that to happen. Given
declining incomes and rising colleges costs, students are caught in a
squeeze where they are unable to meet the expenses that a higher
education demands. We simply cannot let this happen, and I very much
hope that again on a bipartisan basis we can renew not just this
program, but we can also overcome what appears to be a policy directive
of our friends on the other side to squeeze the student financial aid
programs.
{time} 1300
The budget resolution that passed the House of Representatives
freezes
[[Page H6761]]
Pell grants at $5,700 for the next 10 years. That means, 10 years from
now, if that were to ever take on the force of law, the buying power of
the Pell grant will be severely diminished.
That same budget resolution essentially eliminates the SEOG program
and puts enormous restrictions on the college workstudy program. These
are programs that are absolutely essential to a student's ability to
finance their education. I very much hope we can work together to see
to it that they remain as robust as they need to be.
Mr. KLINE. Madam Chair, we have no further speakers on this side, and
I am prepared to close, so I reserve the balance of my time.
Ms. BONAMICI. Madam Chair, H.R. 4984, the Empowering Students Through
Enhanced Financial Counseling Act, will give student loan borrowers a
much better understanding of their road to repayment. It does this by
helping students track the amount they borrowed, predict monthly
payments, and access affordable repayment plans.
As I mentioned, this bill is not a cure-all for the problems student
loan borrowers face, which include rising tuition and opaque servicing
contracts, but the bill serves a very important purpose, and it is
especially important because of the cost of college and the challenges
of managing student debt.
Greater transparency about what it means to borrow student loans will
help students anticipate their obligations and advocate for their
rights as borrowers, and perhaps greater transparency will elevate the
conversation about the underlying need to address college costs.
Again, I want to thank Chairman Kline, Ranking Member Miller, and
Representative Guthrie for their bipartisan effort on this important
bill. It has been delightful to work with them. I look forward to more
bipartisanship in the Education and the Workforce Committee.
I ask all of my colleagues to join me in supporting H.R. 4984, and I
yield back the balance of my time.
Mr. KLINE. Madam Chair, I yield myself such time as I may consume.
Again, I want to thank my colleagues from the committee, the
principal authors of this bill--Ms. Bonamici, Mr. Hudson, and Mr.
Guthrie--for their fine work here and for the spirit of enthusiasm and
bipartisanship which they have brought to this effort.
I would remind all of my colleagues, as we move forward towards
reauthorizing the Higher Education Act, this is absolutely not the
whole thing, but it is another important step down that road.
I urge my colleagues to support this important legislation, and I
yield back the balance of my time.
The CHAIR. All time for general debate has expired.
Pursuant to the rule, the bill shall be considered for amendment
under the 5-minute rule.
In lieu of the amendment in the nature of a substitute recommended by
the Committee on Education and the Workforce, printed in the bill, it
shall be in order to consider as an original bill for the purpose of
the amendment under the 5-minute rule an amendment in the nature of a
substitute consisting of the text of the Rules Committee Print 113-53.
That amendment in the nature of a substitute shall be considered as
read.
The text of the amendment in the nature of a substitute is as
follows:
H.R. 4984
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 borrower 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 student, 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 student 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)).
``(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 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 loans, an explanation that Federal student loans
typically offer better terms and conditions than private
loans, 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)(6) of the Truth in Lending Act; 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.
``(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, the anticipated monthly
payment amount under, at minimum, a standard repayment plan
and, using the 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 based on--
[[Page H6762]]
``(i) a range of levels of indebtedness of--
``(I) borrowers of Federal Direct Stafford Loans or Federal
Direct Unsubsidized Stafford Loans; and
``(II) as appropriate, graduate borrowers of Federal Direct
PLUS Loans or Federal Direct Unsubsidized Stafford Loans; or
``(ii) the average cumulative indebtedness at graduation
for students who borrowed loans made under part D and 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,
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, sample
monthly repayment amounts under the standard repayment plan
based on--
``(i) a range of levels of indebtedness of borrowers of
Federal Direct PLUS Loans made on behalf of a dependent
student; or
``(ii) 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 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 (x), as so redesignated, by striking
``consolidation loan under section 428C or a'';
(F) in clauses (xi) and (xii), as so redesignated, by
striking ``and'' at the end; and
(G) 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 section
485(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. 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
[[Page H6763]]
Act to carry out this Act or the amendments made by this Act.
The CHAIR. No amendment to that amendment in the nature of a
substitute shall be in order except those printed in part B of House
Report 113-546. Each such amendment may be offered only in the order
printed in the report, by a Member designated in the report, shall be
considered as read, shall be debatable for the time specified in the
report equally divided and controlled by the proponent and an opponent,
shall not be subject to amendment, and shall not be subject to a demand
for division of the question.
Amendment No. 1 Offered by Mr. Kline
The CHAIR. It is now in order to consider amendment No. 1 printed in
part B of House Report 113-546.
Mr. KLINE. Madam Chair, I have an amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 2, line 7, strike ``borrower'' and insert
``individual''.
Beginning page 7, line 12, amend subparagraph (L) to read
as follows:
``(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.''.
Page 11, beginning line 7, amend subparagraph (C) to read
as follows:
``(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.''.
Page 13, line 17, insert ``after receiving the applicable
counseling under paragraphs (2), (4), and (5) for the loan''
after ``ensure that''.
Page 19, beginning line 1, redesignate section 5 as section
6.
Page 18, after line 24, insert the following:
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.
The CHAIR. Pursuant to House Resolution 677, the gentleman from
Minnesota (Mr. Kline) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Minnesota.
Mr. KLINE. Madam Chair, I rise in support of the manager's amendment.
This amendment is brought forth in close cooperation with the ranking
member of the committee, my friend George Miller.
This amendment will improve the information provided to first-time
student loan borrowers and clarify that borrowers must accept their
loans annually after they have completed their counseling.
The amendment will also require the Director of the Institute of
Education Sciences to collect a study of the impact and effectiveness
of the student loan counseling required under this act.
This amendment ensures borrowers are getting the information they
need prior to making their final decisions on how to pay for their
college education. It also ensures policymakers have information on how
well financial aid counseling is working to prevent overborrowing and
what can be improved to make it even more effective.
The underlying bill, which received unanimous support coming out of
the committee, will deliver students and parents the tools and
information they need to borrow and repay their student loans in a
responsible way. This amendment improves the bill.
I urge my colleagues to support this amendment, and I reserve the
balance of my time.
Ms. BONAMICI. Madam Chair, I rise in opposition to this amendment,
but I do not oppose the amendment.
The CHAIR. Without objection, the gentlewoman from Oregon is
recognized for 5 minutes.
There was no objection.
Ms. BONAMICI. Madam Chair, the manager's amendment, which I support
and encourage my colleagues to support, helps bolster counseling for
first-time borrowers, so that they are fully aware of the financing
they may be required to use over their entire college education.
The manager's amendment also ensures that students needing to borrow
a student loan receive counseling before they sign the master
promissory note.
I am also pleased that this manager's amendment includes my proposal
for the Department of Education to do a comprehensive, longitudinal
study on the impact and effectiveness of current student loan
counseling practices, so we know what actually works.
We owe it to student loan borrowers and higher education institutions
to find out if the counseling requirements affect borrowers'
understanding and their decisions.
In particular, we need to know if the programs we create in Congress
improve outcomes for students. Will enhanced financial counseling help
more students earn degrees, borrow less, and successfully enter
repayment? We need to know if these outcomes benefit equally students
of different races, ethnicities, genders, and income levels.
I urge my colleagues to vote ``yes'' on this bipartisan manager's
amendment, so that students can have more and better and high-quality
information about their student loans.
Madam Chair, I yield back the balance of my time.
Mr. KLINE. Madam Chair, I thank the gentlewoman from Oregon for her
support of this amendment. She is a principal author of the underlying
legislation and her support of this amendment is very, very helpful.
I urge all my colleagues to support this amendment and the underlying
bill, and I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from Minnesota (Mr. Kline).
The amendment was agreed to.
Amendment No. 2 Offered by Mr. Kilmer
The CHAIR. It is now in order to consider amendment No. 2 printed in
part B of House Report 113-546.
Mr. KILMER. Madam Chair, I have an amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 3, after line 11, insert the following:
``(C) An introduction to the financial management resources
provided by the Financial Literacy and Education Commission.
The CHAIR. Pursuant to House Resolution 677, the gentleman from
Washington (Mr. Kilmer) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Washington.
[[Page H6764]]
Mr. KILMER. Madam Chair, I yield myself such time as I may consume.
I rise today as someone who went to college with the help of grants
and loans and the support of a family and a community that had my back.
It is in that spirit that I rise today to offer an amendment designed
to help students and borrowers get access to more information about
sound financial practices.
We know that financial literacy is important. It helps provide people
with a roadmap for making sound financial decisions, to avoid or get
out of debt, to prepare for emergencies, and to save for a brighter
future.
Studies have found that 20-somethings have an average debt of
$45,000, primarily from student loans, but also from car loans,
mortgages, and credit card debt. When the Organization for Economic
Cooperation and Development provided an international financial
literacy test, American students ranked below average.
We need to do more to promote financial literacy, and it is
particularly important that students who are getting federally-
supported loans are getting the tools that they need to keep their
finances on track.
We need to support resources that teach students financial literacy
and provide them with the tools that they need to improve
decisionmaking and strengthen their household budgets. Helping more
students shore up their financial management skills also has a direct
impact on the economic and financial stability of our country.
Congress took a critical step forward in providing these resources by
creating the Financial Literacy and Education Commission as part of the
Fair and Accurate Credit Transaction Act of 2003, legislation that
passed the House with overwhelmingly bipartisan support and was signed
into law by President George W. Bush.
The Financial Literacy and Education Commission developed resources
that help consumers better understand financial products. It offers
guidance on how to financially prepare for and respond to major life
events, and it gives tips on savings and borrowing and deterring fraud.
The amendment that I offer today would direct universities and the
Department of Education to provide students with information about the
financial management resources provided by the Financial Literacy and
Education Commission.
For many students, a student loan is the first loan of their lives.
As students consider the financial assistance that they need to get a
decent education, it is critically important that they have the
information they need to responsibly manage their finances.
I particularly want to applaud the ongoing work and leadership in
promoting financial literacy by the cochairs of the House Financial and
Economic Literacy Caucus, including Representative Hinojosa, who has
been a strong advocate of financial literacy initiatives and played a
critical role in creating this commission.
I am also pleased to be joined by my colleague from Alabama (Mr.
Bachus), who sponsored this legislation that helped create this
commission.
I reserve the balance of my time.
Mr. BACHUS. Madam Chair, I claim the time in opposition, although I
am not opposed.
The CHAIR. Without objection, the gentleman from Alabama is
recognized for 5 minutes.
There was no objection.
Mr. BACHUS. Madam Chair, I want to commend the gentleman from
Washington (Mr. Kilmer) for what I consider a straightforward,
commonsense amendment.
This is an amendment to the Fair and Accurate Credit Transaction Act,
what we commonly call the FACT Act. The FACT Act is known for a free
credit report and the requirement on the three main credit reporting
agencies to amend their records.
If you notify one of an error, they have to make an examination and
then correct it. Financial literacy was also an important part of the
FACT Act because you have your credit report, but if you don't have
good financial literacy, it is not going to be a good credit report.
In 2003, the subcommittee--which I chaired at that time--passed this
in the full committee, and we had bipartisan support. Judy Biggert--who
is no longer with us--from Illinois, I think, was one of the leaders on
our side, but there were many on both sides.
A commission was formed without almost any cost to the people, and it
did a lot of good research on financial literacy, how to avoid bad
financial decisions, debt load, what different financial products were
there, where to turn in case of an emergency. It is called mymoney.gov.
It is an excellent resource.
What we found--and Mr. Kilmer did a lot of work on this and Mr.
Hinojosa and others--is that people are not utilizing that and that
colleges and universities, when students apply for loans, they are not
directing them to that site, which can actually save them money
upfront. So what this does is it engages the colleges and universities
and simply encourages them to have their students take advantage of
them.
Particularly, there is an urgency today because we often hear that
students are leaving school with high debt loads, and hopefully, as a
result of this amendment and other steps that are being taken in this
important legislation overall, students in the future can avoid some of
the mistakes and not graduate with such a heavy debt load.
It is refreshing to have a bipartisan measure, and I reserve the
balance of my time.
Mr. KILMER. Madam Chair, I yield 1 minute to the gentlewoman from
Oregon (Ms. Bonamici).
Ms. BONAMICI. Madam Chair, I thank Mr. Kilmer for yielding.
I rise in support of the Kilmer-Hinojosa-Bachus-Petri-Tsongas
amendment. This amendment will ensure that students are aware of
important consumer information tools of the Financial Literacy and
Education Commission created by the Treasury.
{time} 1315
We know that students often lack basic financial literacy, which
makes it hard for them to make thoughtful decisions on complex
financial products. Financial institutions may be providing information
that is designed to steer young people into accounts that may not be
best for them.
Providing important consumer information in an unbiased way can
increase financial literacy of students and may help reduce college
costs. That is exactly what this amendment accomplishes.
I urge my colleagues to vote ``yes'' on this amendment so students
can be equipped with better and more comprehensive financial literacy
tools.
Mr. BACHUS. Madam Chair, I would simply recognize Mr. Petri's and Ms.
Tsongas' contributions in helping Mr. Kilmer with this amendment--and
there may be others.
I want to express to the full committee chair our appreciation for
supporting this amendment, and I yield back the balance of my time.
Mr. KILMER. Madam Chair, I just want to close by thanking Mr. Bachus
not just for his support of this amendment, but for his career of work
on behalf of financial literacy, and not just working on behalf of our
students, but all of our families.
I also want to thank the rest of my fellow cosponsors of the
underlying bill, as well as the chairman and the ranking member and
their staffs for working with me on this amendment.
As someone who couldn't have gone to college without the assistance
of financial aid, I am hopeful that this will take a meaningful step
toward providing young people with tools that they need to live
financially responsible lives.
With that, I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from Washington (Mr. Kilmer).
The question was taken; and the Chair announced that the ayes
appeared to have it.
Mr. KILMER. Madam Chair, I demand a recorded vote.
The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on
the amendment offered by the gentleman from Washington will be
postponed.
Amendment No. 3 Offered by Mr. Murphy of Florida
The CHAIR. It is now in order to consider amendment No. 3 printed in
part B of House Report 113-546.
Mr. MURPHY of Florida. Madam Chair, I have an amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
[[Page H6765]]
The text of the amendment is as follows:
Page 3, after line 11, insert the following:
``(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 borrower for
persons 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.
The CHAIR. Pursuant to House Resolution 677, the gentleman from
Florida (Mr. Murphy) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Florida.
Mr. MURPHY of Florida. Madam Chair, I rise today to support giving
students and families the resources needed to make informed decisions
about both their education and their finances.
I want to congratulate the gentleman from Kentucky (Mr. Guthrie) for
his great work on this bill. I also want to thank the chairman, Mr.
Kline, and Ranking Member Miller for working in a truly bipartisan
process on this legislation to provide students with commonsense,
personalized financial counseling about one of the greatest investments
a student can make: their investment in their own education.
I strongly support the underlying legislation and offer this
amendment as a complement to better inform students about not only the
costs, but the benefits of completing their education.
With tuition rates quickly outpacing grants and scholarships,
American students and their families increasingly rely on student loans
to access higher education. Coupled with increased enrollment, student
loan debt has ballooned to more than $1.2 trillion--greater than credit
card debt, for the first time in history.
Last summer, we came together to pass bipartisan legislation which
decoupled student loan interest rates from the whims of Washington and
provided students and families the certainty needed to make long-term
plans for the future. The bill before us today continues that mission
by giving students the information they need to understand the rights
and responsibilities that come along with investing in their higher
education.
For many students, these loans are their first and often most costly
experience as a borrower. Failing to provide students with the
information they need to make responsible decisions and manage their
debt does not just impact the delinquent borrower, but also the
taxpayers.
Similarly, having students understand both their monthly and lifetime
costs of debt they are accruing will enlist students in the fight to
get student loan debt under control.
That said, despite mounting debt, a college degree is still generally
one of the best investments students can make. For example, the average
income for young adults with a bachelor's degree is just over $50,000,
with only 4.9 percent unemployment. The dropoff for individuals who do
not finish is steep, around $13,000 per year of income and a much
higher unemployment rate of 7 percent.
We do not want students failing to complete their degree simply
because they fear taking out additional loans. That is why I am putting
forward this reasonable amendment to improve the underlying legislation
by simply adding the inclusion of income and employment data for
different levels of educational attainment. This information would
strengthen the counseling required by improving students' perspectives
as they take charge of their future and their finances.
Madam Chair, this major potential earnings reduction, combined with
hefty student loans in repayment, is a recipe for financial disaster.
That is why it is so important that students and families have the full
picture when making decisions regarding investments in higher
education, as the underlying bill offers.
I urge my colleagues to support this simple yet important amendment
to make sure students can make the best decision possible while
understanding the full impact of student loans they take out.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from Florida (Mr. Murphy).
The amendment was agreed to.
Amendment No. 4 Offered by Ms. Loretta Sanchez of California
The CHAIR. It is now in order to consider amendment No. 4 printed in
part B of House Report 113-546.
Ms. LORETTA SANCHEZ of California. Madam Chairman, I have an
amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 4, line 4, strike ``(E)'' and insert ``(F)''.
Page 4, after line 3, insert the following:
``(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.''.
The CHAIR. Pursuant to House Resolution 677, the gentlewoman from
California (Ms. Loretta Sanchez) and a Member opposed each will control
5 minutes.
The Chair recognizes the gentlewoman from California.
Ms. LORETTA SANCHEZ of California. Madam Chair, I yield myself such
time as I may consume.
Madam Chair, we all know that higher education is a key to the ladder
of success in the United States. It is one of the most important things
that we can invest in. We just recently saw a study that showed that
if, in fact, you have a 4-year degree, you are going to make
significantly more than if you just graduated from high school. You can
imagine that in today's world--at least where I live in California, the
innovation State--a master's or a doctorate is really what you need to
have.
The value of a degree is very, very important, but we also see, of
course, the student debt increasing. Students get out with their
bachelor's degree, have a mound of debt, and then they are trying to
get a master's, a Ph.D., or a profession. It is very, very difficult.
One of the most vital programs that we have in the United States is
the Pell grant program to help them. But let's face it, it is very
difficult to understand all the ins and outs of how to get a Pell
grant, how you use it, the purpose, how many units you can take, what
you can't take, how long it can take you, et cetera, et cetera. So it
is another burden that we are putting on the students and the families
when they don't really get the good picture of how to use that program.
My amendment would help spell out for students and families how that
Pell grant would be used. It would simply require institutions to
better counsel transfer students on their maximum Pell grant
eligibility and the effect that it may have as a result of credits in
courses that don't transfer to another institution.
I know that, at least in California, when we look to go to the
university, we usually say let's do the first year at the least
expensive place to do it, and that would be our community college--
which, by the way, they are the gems of our community. They are doing
incredible work.
But sometimes when students using the Pell grant get there, they
might have, for example, some remedial classes. They might have to
brush up on their English or their math. In doing that, the Pell grant
is being used up, and then those units don't transfer to that 4-year
university they go to. So the student ends up miscalculating what it is
really going to cost them to finish off their diploma.
This amendment simply looks to make these types of obstacles obvious
and transparent to possible transfer students so as to have the
clearest view of their degree timelines and the impact on their
financial aid.
Let's ensure that students have the clearest information, that they
get it upfront, and that they understand how they are going to get this
done. In fact, a lot of these students are sometimes first-timers in
their families who are trying to achieve a diploma from a university.
We are still miles away from getting that achievement gap closed in
many of our communities. I know we have been working on it for a long
time now in Orange County, California, but this will be a little piece
of trying to get that.
[[Page H6766]]
While I am at it, I would like to thank Congressman Guthrie,
Congressman Hudson, and Congresswoman Bonamici, who have, in good
faith, championed the work on this bill. I still wish we could get to
the Higher Education Act, but if we can't do that, this is a good first
step.
I reserve the balance of my time.
Mr. KLINE. Madam Chair, I claim the time in opposition to the
amendment, although I do not oppose the amendment.
The CHAIR. Without objection, the gentleman from Minnesota is
recognized for 5 minutes.
There was no objection.
Mr. KLINE. Madam Chair, I want to make the point that I am supporting
all of the amendments offered today, but I wanted to take this
opportunity with this particular amendment to thank the gentlewoman
from California, because this amendment makes sure that these students
in this confusing world that we are trying to help sort out get a clear
explanation that their Pell grant eligibility is limited to 12
semesters and it will not reset if they transfer.
That is just an example of the kind of confusion that is out there,
and it is one of the reasons that we insisted on putting counseling for
Pell grant recipients, not just loan recipients, in the base bill. But
her language brings absolute clarity to this issue. I thank her for
that.
I support this amendment and the other amendments, and I yield back
the balance of my time.
Ms. LORETTA SANCHEZ of California. Madam Chair, I ask my colleagues
to vote for this amendment, and I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Linda Sanchez).
The amendment was agreed to.
Amendment No. 5 Offered by Mr. Cohen
The CHAIR. It is now in order to consider amendment No. 5 printed in
part B of House Report 113-546.
Mr. COHEN. Madam Chair, I have an amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 5, line 10, insert at the end the following: ``an
explanation of treatment of loans made under part D and
private education loans in bankruptcy,''.
The CHAIR. Pursuant to House Resolution 677, the gentleman from
Tennessee (Mr. Cohen) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Tennessee.
Mr. COHEN. Madam Chair, this amendment is very simple. It would add
an explanation of how Federal and private student loans are treated in
bankruptcy to the list of the disclosures contained in the underlying
bill.
Unfortunately, too many students lack basic financial literacy, and
if they don't have a proper understanding of their rights and
responsibilities when it comes to student loans, it can lead to serious
consequences for their financial future.
That is why I am pleased to support this legislation that Mr. Kline
has offered--he has done such a good job bringing a bipartisan bill
here--and the important financial counseling it requires.
However, one area that is not included is an explanation of the
stringent requirements we have placed when it comes to erasing your
student loans in bankruptcy.
While bankruptcy is never something to be taken lightly, our system
does allow an honest but unfortunate debtor the opportunity for a fresh
start if their financial situation is desperate enough. Most people
assume that their student loans can be discharged along with their
other consumer debts during bankruptcy proceedings, but that is not the
case.
{time} 1330
Under current law, borrowers must show that continuing to back their
loans would impose an ``undue hardship'' on them and their dependents,
a standard that, in practice, is nearly insurmountable. Bankruptcy law
exempts very few types of debt from elimination through the bankruptcy
process, but there are certain exceptions. For example, for principled
policy reasons, we exempt child support, taxes, criminal fines, and
intentional torts. In 1978, Congress added Federal student loans to
this list.
This protects Federal student loan programs--and the taxpayer dollars
that fund them--from fraud and abuse by borrowers. This also makes
sense because Federal loans offer certain protections to ease the
burden on debtors, like fixed interest rates and opportunities for
deferments, income-based repayments and forbearance; but in 2005, the
Bankruptcy Protection Act was passed, and the bankruptcy protection was
extended to private loans, which are not required to have and often do
not have such consumer protections. In fact, private lenders often
market directly to students, luring them into unaffordable loans that
saddle them with debts for decades to come.
That is why I have introduced legislation to remove the exemption for
private student loans and why the Consumer Financial Protection Bureau
has called for a study on whether bankruptcy rules for student loans
should be modified. That, however, is not the issue here. The fact
remains that this is the law, and students should be aware that their
loans, both Federal and private, can only be discharged in bankruptcy
in exceptional circumstances. That is why I propose this small
refinement to the underlying legislation--to ensure that borrowers
understand the hurdles they may face in wiping the slate clean.
I thank Mr. Kline for allowing this and the Rules Committee for
allowing this amendment to be made in order, and I urge my colleagues
to support it.
I reserve the balance of my time.
Mr. KLINE. Madam Chair, I rise in opposition to the amendment,
although I do not oppose the amendment.
The CHAIR. Without objection, the gentleman from Minnesota is
recognized for 5 minutes.
There was no objection.
Mr. KLINE. Madam Chair, I think, again, this amendment is
underscoring the many issues that students and their parents and
families are facing as they go into this postsecondary education
adventure. Some of them, really, are coming off of jobs. The last thing
they are thinking about is bankruptcy or the size of their loans. Most
of them don't even know what bankruptcy is--or many of them don't know.
Maybe they are a lot smarter than I was at that time.
This amendment makes it clear that they understand the difference
between the rules under a student loan--if they don't pay it or can't
pay it--and under other loans. Without this sort of explanation, they
wouldn't have any idea that their loans were not dischargeable in
bankruptcy except, as the gentleman says, in some unusual
circumstances.
Again, that is why this sort of financial counseling early and often
is going to be very careful, because this isn't a simple matter of
taking out--we will use a car loan as an example with a set amount, a
set interest--a set amount that you pay back for a set number of years.
Folks understand how that works. But in having student loans merged
with all sorts of other programs--workstudy programs and Pell grants
and so forth--it is no wonder that students are graduating, stepping
out and--oh, by the way--they can't find jobs because the economy is in
so much trouble. They had such high expectations when they stepped into
their college experiences or their postsecondary experiences, and then
they came out and found out that the jobs weren't available, and they
have this confusing mess that they have to deal with, and the last
thing that they ever gave any thought to was this whole notion of
bankruptcy.
I thank the gentleman for his amendment, and I reserve the balance of
my time.
Mr. COHEN. Madam Chair, I thank Mr. Kline for his explanation and his
support. He is upriver from us, but that is where the Mississippi River
starts before it becomes so beautiful on the bluffs of the city of
Memphis.
I yield back the balance of my time.
Mr. KLINE. Now I can't pass it up.
Madam Chair, there is quite a bit of difference in the Mississippi
River between the gentleman's district and Minnesota. In fact, you can
step across the Mississippi River in Minnesota, and I don't think that
is true--in fact, I am absolutely positive that it is not true--
anywhere else. It is always interesting when we have guests come to our
great
[[Page H6767]]
State. When we ask them if they would like to step across the river,
they are disbelieving until we take them up there to Itasca. Literally,
it is no wider than this desk.
I wish that trying to figure out one's student loans and grants and
workstudies were as easy as getting across the Mississippi River.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from Tennessee (Mr. Cohen).
The amendment was agreed to.
Amendment No. 6 Offered by Ms. Hahn
The CHAIR. It is now in order to consider amendment No. 6 printed in
part B of House Report 113-546.
Ms. HAHN. Madam Chairwoman, I have an amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 10, line 5, strike ``and the'' and insert ``the most
recent national average cohort default rate, and the''.
The CHAIR. Pursuant to House Resolution 677, the gentlewoman from
California (Ms. Hahn) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentlewoman from California.
Ms. HAHN. Madam Chairwoman, I yield myself such time as I may
consume.
I am proud to support the legislation that we are considering today,
and I applaud my colleagues on both sides of the aisle for coming
together to work on this important bill.
As we have been hearing, it is critical that we provide our Nation's
students with the information they need to make informed decisions
about what colleges they should attend and how they should pay for
them.
I think the authors of this bill did a great service by including a
provision to provide students with information about the student loan
default rate for the schools they plan to attend. However, I believe
that this legislation does not provide the students with the national
student loan default rate across all schools, making it harder for them
to have an accurate understanding of where their prospective schools
stand nationally.
I have introduced a simple amendment to provide student loan
borrowers with the latest national average default rate for all
schools. If this amendment passes, all students, as they are applying
for their student loans, will know what the default rate for student
loans is at the schools they are choosing to attend versus the national
default rate for student loans. I believe that this will allow students
to better determine whether an institution has a record of delivering a
quality education that is right for them. By providing students with
more tools in their pursuits of education, students will be able to
make more informed choices and save taxpayers the cost of more Federal
student loans going into default.
Students in my district and around the country know the burden of
student loan debt all too well. Giving our students all of the
information will give them a better chance of being able to repay their
loans and build successful futures.
Mr. Chairman and my colleague, Ms. Bonamici, I applaud you on your
work on this strong and important piece of legislation, and I urge all
of my colleagues to vote ``yes'' on my amendment.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Hahn).
The amendment was agreed to.
Amendment No. 7 Offered by Mr. Peters of Michigan
The CHAIR. It is now in order to consider amendment No. 7 printed in
part B of House Report 113-546.
Mr. PETERS of Michigan. Madam Chairman, I have an amendment at the
desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 15, after line 16, insert the following new
subparagraph, and redesignate the succeeding subparagraphs
accordingly:
(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,'';
The CHAIR. Pursuant to House Resolution 677, the gentleman from
Michigan (Mr. Peters) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Michigan.
Mr. PETERS of Michigan. Madam Chair, I rise today to offer an
amendment that builds upon the existing language in this bill to
strengthen protections for American students. My amendment ensures
students have the information that they need to make important
financial decisions that could impact their lives long after
graduation.
As you may be aware, combined student loan debt in our Nation has
topped $1 trillion, and the unfortunate reality is that many of those
students do not know the enormous harm that defaulting on that debt can
cause to them. Nearly 15 percent of the student loan borrowers default
within 3 years of graduation, and this can have serious consequences on
their ability to rent an apartment, to purchase a car or a house, or to
even obtain future employment.
Madam Chair, I applaud the spirit of this bipartisan legislation to
provide enhanced financial counseling services to our Nation's
students, and I look forward to voting in favor of it. My amendment
will make a very simple adjustment to ensure the full effectiveness,
however, of the bill.
My amendment will simply require that all student borrowers receive
an explanation of the impact of a delinquency or of a default on loans
to their credit scores, including the borrower's future ability to find
employment or to purchase a home or a car. It is important for students
to have this information when they first receive the loans. For many
recent graduates, the idea of a credit report or a credit score may
seem very abstract. My amendment ensures that the impact of
delinquencies or defaults are explained in very concrete terms.
Recent graduates are the top in their fields but, all too often, fall
behind when it comes to financial literacy, which can have a lasting
impact on their lives, and it can also take a toll on our economy. For
more than 20 years, I worked as a financial adviser, helping families
plan for their futures. It is important that all of our graduates
understand how the decisions they make today will affect them and their
families down the road when they are finding a job, buying a car, or
renting or trying to own a home. We need to promote financial literacy
when it can do the most good--before a borrower gets in trouble.
As we continue working to make college more affordable for our
students, I believe this legislation and my amendment to it are both
commonsense steps in the right direction that we can act on
immediately. I look forward to a strong bipartisan vote on this bill,
and I hope the Senate takes up this important legislation in a timely
manner. I urge my colleagues to join me in the support of this
amendment.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from Michigan (Mr. Peters).
The amendment was agreed to.
Mr. KLINE. Madam Chair, I move that the Committee do now rise.
The motion was agreed to.
Accordingly, the Committee rose; and the Speaker pro tempore (Ms.
Foxx) having assumed the chair, Mrs. Black, Chair of the Committee of
the Whole House on the state of the Union, reported that that
Committee, having had under consideration the bill (H.R. 4984) to amend
the loan counseling requirements under the Higher Education Act of
1965, and for other purposes, had come to no resolution thereon.
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