Empowering Students Through Enhanced Financial Counseling Act

I 116TH CONGRESS 1ST SESSION H. R. 2129 To amend the loan counseling requirements under the Higher Education Act of 1965, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 8, 2019 Mr. GUTHRIE (for himself and Ms. BONAMICI) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To amend the loan counseling requirements under the Higher Education Act of 1965, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Empowering Students 4 Through Enhanced Financial Counseling Act’’. 5 SEC. 2. ANNUAL COUNSELING. 6 Section 485(l) of the Higher Education Act of 1965 7 (20 U.S.C. 1092(l)) is amended to read as follows: 8 ‘‘(l) ANNUAL FINANCIAL AID COUNSELING.— 9 ‘‘(1) ANNUAL DISCLOSURE REQUIRED.— 10 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 2 •HR 2129 IH ‘‘(A) IN GENERAL.—Each eligible institu- 1 tion shall ensure that each individual who re- 2 ceives a Federal Pell Grant or a loan made 3 under part D (other than a Federal Direct Con- 4 solidation Loan) receives comprehensive infor- 5 mation on the terms and conditions of such 6 Federal Pell Grant or loan and the responsibil- 7 ities the individual has with respect to such 8 Federal Pell Grant or loan. Such information 9 shall be provided, for each award year for which 10 the individual receives such Federal Pell Grant 11 or loan, in a simple and understandable man- 12 ner— 13 ‘‘(i) during a counseling session con- 14 ducted in-person; 15 ‘‘(ii) online, with the individual ac- 16 knowledging receipt of the information; or 17 ‘‘(iii) through the use of the online 18 counseling tool described in subsection 19 (n)(1)(B). 20 ‘‘(B) USE OF INTERACTIVE PROGRAMS.— 21 In the case of institutions not using the online 22 counseling tool described in subsection 23 (n)(1)(B), the Secretary shall require such in- 24 stitutions to carry out the requirements of sub- 25 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 3 •HR 2129 IH paragraph (A) through the use of interactive 1 programs, during an annual counseling session 2 that is in-person or online, that test the individ- 3 ual’s understanding of the terms and conditions 4 of the Federal Pell Grant or loan awarded to 5 the individual, using simple and understandable 6 language and clear formatting. 7 ‘‘(2) ALL INDIVIDUALS.—The information to be 8 provided under paragraph (1)(A) to each individual 9 receiving counseling under this subsection shall in- 10 clude the following: 11 ‘‘(A) An explanation of how the individual 12 may budget for typical educational expenses 13 and a sample budget based on the cost of at- 14 tendance for the institution. 15 ‘‘(B) An explanation that an individual has 16 a right to annually request a disclosure of infor- 17 mation collected by a consumer reporting agen- 18 cy pursuant to section 612(a) of the Fair Credit 19 Reporting Act (15 U.S.C. 1681j(a)). 20 ‘‘(C) Based on the most recent data avail- 21 able from the American Community Survey 22 available from the Department of Commerce, 23 the estimated average income and percentage of 24 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 4 •HR 2129 IH employment in the State of domicile of the indi- 1 vidual for individuals with— 2 ‘‘(i) a high school diploma or equiva- 3 lent; 4 ‘‘(ii) some post-secondary education 5 without completion of a degree or certifi- 6 cate; and 7 ‘‘(iii) a bachelor’s degree. 8 ‘‘(D) An introduction to the financial man- 9 agement resources provided by the Financial 10 Literacy and Education Commission. 11 ‘‘(E) An explanation of how the student 12 may seek additional financial assistance from 13 the institution’s financial aid office due to a 14 change in the student’s financial circumstances, 15 and the contact information for such office. 16 ‘‘(3) STUDENTS RECEIVING FEDERAL PELL 17 GRANTS.—The information to be provided under 18 paragraph (1)(A) to each student receiving a Fed- 19 eral Pell Grant shall include the following: 20 ‘‘(A) An explanation of the terms and con- 21 ditions of the Federal Pell Grant. 22 ‘‘(B) An explanation of approved edu- 23 cational expenses for which the student may use 24 the Federal Pell Grant. 25 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 5 •HR 2129 IH ‘‘(C) An explanation of why the student 1 may have to repay the Federal Pell Grant. 2 ‘‘(D) An explanation of the maximum 3 number of semesters or equivalent for which the 4 student may be eligible to receive a Federal Pell 5 Grant, and a statement of the amount of time 6 remaining for which the student may be eligible 7 to receive a Federal Pell Grant. 8 ‘‘(E) An explanation that, in the case of a 9 student who transfers to another institution, 10 the amount of time remaining for which a stu- 11 dent may be eligible to receive a Federal Pell 12 Grant, as provided under subparagraph (D), 13 will not change, regardless of whether all of the 14 courses completed by such student are accepted 15 for purposes of meeting specific degree or pro- 16 gram requirements by the institution to which 17 such student transfers. 18 ‘‘(4) BORROWERS RECEIVING LOANS MADE 19 UNDER PART D (OTHER THAN PARENT PLUS 20 LOANS).—The information to be provided under 21 paragraph (1)(A) to a borrower of a loan made 22 under part D (other than a Federal Direct PLUS 23 Loan made on behalf of a dependent student) shall 24 include the following: 25 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 6 •HR 2129 IH ‘‘(A) To the extent practicable, the effect 1 of accepting the loan to be disbursed on the eli- 2 gibility of the borrower for other forms of stu- 3 dent financial assistance. 4 ‘‘(B) An explanation of the use of the mas- 5 ter promissory note. 6 ‘‘(C) An explanation that the borrower is 7 not required to accept the full amount of the 8 loan offered to the borrower. 9 ‘‘(D) An explanation that the borrower 10 should consider accepting any grant, scholar- 11 ship, or State or Federal work-study jobs for 12 which the borrower is eligible prior to accepting 13 Federal student loans. 14 ‘‘(E) A recommendation to the borrower to 15 exhaust the borrower’s Federal student loan op- 16 tions prior to taking out private education 17 loans, an explanation that Federal student 18 loans typically offer better terms and conditions 19 than private education loans, an explanation of 20 treatment of loans made under part D and pri- 21 vate education loans in bankruptcy, and an ex- 22 planation that if a borrower decides to take out 23 a private education loan— 24 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 7 •HR 2129 IH ‘‘(i) the borrower has the ability to se- 1 lect a private educational lender of the bor- 2 rower’s choice; 3 ‘‘(ii) the proposed private education 4 loan may impact the borrower’s potential 5 eligibility for other financial assistance, in- 6 cluding Federal financial assistance under 7 this title; and 8 ‘‘(iii) the borrower has a right— 9 ‘‘(I) to accept the terms of the 10 private education loan within 30 cal- 11 endar days following the date on 12 which the application for such loan is 13 approved and the borrower receives 14 the required disclosure documents, 15 pursuant to section 128(e) of the 16 Truth in Lending Act (15 U.S.C. 17 1638(e)); and 18 ‘‘(II) to cancel such loan within 3 19 business days of the date on which the 20 loan is consummated, pursuant to sec- 21 tion 128(e)(7) of such Act (15 U.S.C. 22 1638(e)(7)). 23 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 8 •HR 2129 IH ‘‘(F) An explanation of the approved edu- 1 cational expenses for which the borrower may 2 use a loan made under part D. 3 ‘‘(G) Information on the annual and aggre- 4 gate loan limits for Federal Direct Stafford 5 Loans and Federal Direct Unsubsidized Staf- 6 ford Loans. 7 ‘‘(H) An explanation that, in the case of a 8 student who transfers to another institution, 9 the loan amounts such student received before 10 such transfer shall be used in determining the 11 aggregate loan amount of the student, regard- 12 less of whether all of the courses completed by 13 such student are accepted for purposes of meet- 14 ing specific degree or program requirements by 15 the institution to which such student transfers. 16 ‘‘(I) Information on how interest accrues 17 and is capitalized during periods when the in- 18 terest is not paid by either the borrower or the 19 Secretary. 20 ‘‘(J) In the case of a Federal Direct PLUS 21 Loan or a Federal Direct Unsubsidized Staf- 22 ford Loan, the option of the borrower to pay 23 the interest while the borrower is in school. 24 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 9 •HR 2129 IH ‘‘(K) The definition of half-time enrollment 1 at the institution, during regular terms and 2 summer school, if applicable, and the con- 3 sequences of not maintaining at least half-time 4 enrollment. 5 ‘‘(L) An explanation of the importance of 6 contacting the appropriate offices at the institu- 7 tion of higher education if the borrower with- 8 draws prior to completing the borrower’s pro- 9 gram of study so that the institution can pro- 10 vide exit counseling, including information re- 11 garding the borrower’s repayment options and 12 loan consolidation. 13 ‘‘(M) For a first-time borrower— 14 ‘‘(i) a statement of the anticipated 15 balance on the loan for which the borrower 16 is receiving counseling under this sub- 17 section; 18 ‘‘(ii) based on such anticipated bal- 19 ance, the anticipated monthly payment 20 amount under, at minimum— 21 ‘‘(I) the standard repayment 22 plan; and 23 ‘‘(II) the income-driven repay- 24 ment plans the borrower is eligible 25 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 10 •HR 2129 IH for, as determined using regionally 1 available data from the Bureau of 2 Labor Statistics of the average start- 3 ing salary for the occupation in which 4 the borrower has an interest in or in- 5 tends to be employed; and 6 ‘‘(iii) an estimate of the projected 7 monthly payment amount under each re- 8 payment plan described in clause (ii), 9 based on the average cumulative indebted- 10 ness at graduation for borrowers of loans 11 made under part D who are in the same 12 program of study as the borrower. 13 ‘‘(N) For a borrower with an outstanding 14 balance of principal or interest due on a loan 15 made under this title— 16 ‘‘(i) a current statement of the 17 amount of such outstanding balance and 18 interest accrued; 19 ‘‘(ii) based on such outstanding bal- 20 ance, the anticipated monthly payment 21 amount under, at minimum, the standard 22 repayment plan and, using regionally avail- 23 able data from the Bureau of Labor Sta- 24 tistics of the average starting salary for 25 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 11 •HR 2129 IH the occupation the borrower intends to be 1 employed, the income-driven repayment 2 plans the borrower is eligible for; and 3 ‘‘(iii) an estimate of the projected 4 monthly payment amount under each re- 5 payment plan described in clause (ii), 6 based on— 7 ‘‘(I) the outstanding balance de- 8 scribed in clause (i); 9 ‘‘(II) the anticipated outstanding 10 balance on the loan for which the stu- 11 dent is receiving counseling under this 12 subsection; and 13 ‘‘(III) a projection for any other 14 loans made under part D that the 15 borrower is reasonably expected to ac- 16 cept during the borrower’s program of 17 study based on at least the expected 18 increase in the cost of attendance of 19 such program. 20 ‘‘(O) The obligation of the borrower to 21 repay the full amount of the loan, regardless of 22 whether the borrower completes or does not 23 complete the program in which the borrower is 24 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 12 •HR 2129 IH enrolled within the regular time for program 1 completion. 2 ‘‘(P) The likely consequences of default on 3 the loan, including adverse credit reports, delin- 4 quent debt collection procedures under Federal 5 law, and litigation, and a notice of the institu- 6 tion’s most recent cohort default rate (defined 7 in section 435(m)), an explanation of the cohort 8 default rate, the most recent national average 9 cohort default rate, and the most recent na- 10 tional average cohort default rate for the cat- 11 egory of institution described in section 12 435(m)(4) to which the institution belongs. 13 ‘‘(Q) Information on the National Student 14 Loan Data System and how the borrower can 15 access the borrower’s records. 16 ‘‘(R) The contact information for the insti- 17 tution’s financial aid office or other appropriate 18 office at the institution the borrower may con- 19 tact if the borrower has any questions about the 20 borrower’s rights and responsibilities or the 21 terms and conditions of the loan. 22 ‘‘(5) BORROWERS RECEIVING PARENT PLUS 23 LOANS FOR DEPENDENT STUDENTS.—The informa- 24 tion to be provided under paragraph (1)(A) to a bor- 25 VerDate Sep 11 2014 02:44 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H2129.IH H2129 kjohnson on DSK79L0C42 with BILLS 13 •HR 2129 IH rower of a Federal Direct PLUS Loan made on be- 1 half of a dependent student shall include the fol- 2 lowing: 3 ‘‘(A) The information described in sub- 4 paragraphs (A) through (C) and (O) through 5 (R) of paragraph (4). 6 ‘‘(B) A notification that some students 7 may qualify for other financial aid and an ex- 8 planation that the student for whom the bor- 9 rower is taking out the loan should consider ac- 10 cepting any grant, scholarship, or State or Fed- 11 eral work-study jobs for which such student is 12 eligible prior to borrowing Parent PLUS Loans. 13 ‘‘(C) F [Text truncated for display. 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