Empowering Students Through Enhanced Financial Counseling Act

II 116TH CONGRESS 1ST SESSION S. 1496 To amend the loan counseling requirements under the Higher Education Act of 1965, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 15, 2019 Mr. WARNER (for himself, Mr. GARDNER, Mr. KAINE, and Mr. SCOTT of South Carolina) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 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 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 2 •S 1496 IS ‘‘(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 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 3 •S 1496 IS 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 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 4 •S 1496 IS employment in the State of domicile of the indi- 1 vidual for persons with— 2 ‘‘(i) a high school diploma or equiva- 3 lent; 4 ‘‘(ii) some postsecondary 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 ‘‘(3) STUDENTS RECEIVING FEDERAL PELL 12 GRANTS.—The information to be provided under 13 paragraph (1)(A) to each student receiving a Fed- 14 eral Pell Grant shall include the following: 15 ‘‘(A) An explanation of the terms and con- 16 ditions of the Federal Pell Grant. 17 ‘‘(B) An explanation of approved edu- 18 cational expenses for which the student may use 19 the Federal Pell Grant. 20 ‘‘(C) An explanation of why the student 21 may have to repay the Federal Pell Grant. 22 ‘‘(D) An explanation of the maximum 23 number of semesters or equivalent for which the 24 student may be eligible to receive a Federal Pell 25 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 5 •S 1496 IS Grant, and a statement of the amount of time 1 remaining for which the student may be eligible 2 to receive a Federal Pell Grant. 3 ‘‘(E) An explanation that if the student 4 transfers to another institution not all of the 5 student’s courses may be acceptable in transfer 6 toward meeting specific degree or program re- 7 quirements at such institution, but the amount 8 of time remaining for which a student may be 9 eligible to receive a Federal Pell Grant, as pro- 10 vided under subparagraph (D), will not change. 11 ‘‘(F) 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 ‘‘(4) BORROWERS RECEIVING LOANS MADE 17 UNDER PART D (OTHER THAN PARENT PLUS 18 LOANS).—The information to be provided under 19 paragraph (1)(A) to a borrower of a loan made 20 under part D (other than a Federal Direct PLUS 21 Loan made on behalf of a dependent student) shall 22 include the following: 23 ‘‘(A) To the extent practicable, the effect 24 of accepting the loan to be disbursed on the eli- 25 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 6 •S 1496 IS gibility of the borrower for other forms of stu- 1 dent financial assistance. 2 ‘‘(B) An explanation of the use of the mas- 3 ter promissory note. 4 ‘‘(C) An explanation that the borrower is 5 not required to accept the full amount of the 6 loan offered to the borrower. 7 ‘‘(D) An explanation that the borrower 8 should consider accepting any grant, scholar- 9 ship, or State or Federal work-study jobs for 10 which the borrower is eligible prior to accepting 11 Federal student loans. 12 ‘‘(E) A recommendation to the borrower to 13 exhaust the borrower’s Federal student loan op- 14 tions prior to taking out private loans, an expla- 15 nation that Federal student loans typically offer 16 better terms and conditions than private loans, 17 an explanation of treatment of loans made 18 under part D and private education loans in 19 bankruptcy, and an explanation that if a bor- 20 rower decides to take out a private education 21 loan— 22 ‘‘(i) the borrower has the ability to se- 23 lect a private educational lender of the bor- 24 rower’s choice; 25 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 7 •S 1496 IS ‘‘(ii) the proposed private education 1 loan may impact the borrower’s potential 2 eligibility for other financial assistance, in- 3 cluding Federal financial assistance under 4 this title; and 5 ‘‘(iii) the borrower has a right— 6 ‘‘(I) to accept the terms of the 7 private education loan within 30 cal- 8 endar days following the date on 9 which the application for such loan is 10 approved and the borrower receives 11 the required disclosure documents, 12 pursuant to section 128(e)(6) of the 13 Truth in Lending Act (15 U.S.C. 14 1638(e)(6)); and 15 ‘‘(II) to cancel such loan within 3 16 business days of the date on which the 17 loan is consummated, pursuant to sec- 18 tion 128(e)(7) of such Act. 19 ‘‘(F) An explanation of the approved edu- 20 cational expenses for which the borrower may 21 use a loan made under part D. 22 ‘‘(G) Information on the annual and aggre- 23 gate loan limits for Federal Direct Stafford 24 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 8 •S 1496 IS Loans and Federal Direct Unsubsidized Staf- 1 ford Loans. 2 ‘‘(H) Information on how interest accrues 3 and is capitalized during periods when the in- 4 terest is not paid by either the borrower or the 5 Secretary. 6 ‘‘(I) In the case of a Federal Direct PLUS 7 Loan or a Federal Direct Unsubsidized Staf- 8 ford Loan, the option of the borrower to pay 9 the interest while the borrower is in school. 10 ‘‘(J) The definition of half-time enrollment 11 at the institution, during regular terms and 12 summer school, if applicable, and the con- 13 sequences of not maintaining at least half-time 14 enrollment. 15 ‘‘(K) An explanation of the importance of 16 contacting the appropriate offices at the institu- 17 tion of higher education if the borrower with- 18 draws prior to completing the borrower’s pro- 19 gram of study so that the institution can pro- 20 vide exit counseling, including information re- 21 garding the borrower’s repayment options and 22 loan consolidation. 23 ‘‘(L) For a first-time borrower— 24 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 9 •S 1496 IS ‘‘(i) a statement of the anticipated 1 balance on the loan for which the borrower 2 is receiving counseling under this sub- 3 section; 4 ‘‘(ii) based on such anticipated bal- 5 ance, the anticipated monthly payment 6 amount under, at minimum— 7 ‘‘(I) the standard repayment 8 plan; and 9 ‘‘(II) an income-based repayment 10 plan under section 493C, as deter- 11 mined using regionally available data 12 from the Bureau of Labor Statistics 13 of the average starting salary for the 14 occupation in which the borrower has 15 an interest in or intends to be em- 16 ployed; and 17 ‘‘(iii) an estimate of the projected 18 monthly payment amount under each re- 19 payment plan described in clause (ii), 20 based on the average cumulative indebted- 21 ness at graduation for borrowers of loans 22 made under part D who are in the same 23 program of study as the borrower. 24 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 10 •S 1496 IS ‘‘(M) For a borrower with an outstanding 1 balance of principal or interest due on a loan 2 made under this title— 3 ‘‘(i) a current statement of the 4 amount of such outstanding balance and 5 interest accrued; 6 ‘‘(ii) based on such outstanding bal- 7 ance, the anticipated monthly payment 8 amount under, at minimum, the standard 9 repayment plan and, using regionally avail- 10 able data from the Bureau of Labor Sta- 11 tistics of the average starting salary for 12 the occupation the borrower intends to be 13 employed, an income-based repayment plan 14 under section 493C; and 15 ‘‘(iii) an estimate of the projected 16 monthly payment amount under each re- 17 payment plan described in clause (ii), 18 based on— 19 ‘‘(I) the outstanding balance de- 20 scribed in clause (i); 21 ‘‘(II) the anticipated outstanding 22 balance on the loan for which the stu- 23 dent is receiving counseling under this 24 subsection; and 25 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 11 •S 1496 IS ‘‘(III) a projection for any other 1 loans made under part D that the 2 borrower is reasonably expected to ac- 3 cept during the borrower’s program of 4 study based on at least the expected 5 increase in the cost of attendance of 6 such program. 7 ‘‘(N) The obligation of the borrower to 8 repay the full amount of the loan, regardless of 9 whether the borrower completes or does not 10 complete the program in which the borrower is 11 enrolled within the regular time for program 12 completion. 13 ‘‘(O) The likely consequences of default on 14 the loan, including adverse credit reports, delin- 15 quent debt collection procedures under Federal 16 law, and litigation, and a notice of the institu- 17 tion’s most recent cohort default rate (defined 18 in section 435(m)), an explanation of the cohort 19 default rate, the most recent national average 20 cohort default rate, and the most recent na- 21 tional average cohort default rate for the cat- 22 egory of institution described in section 23 435(m)(4) to which the institution belongs. 24 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 12 •S 1496 IS ‘‘(P) Information on the National Student 1 Loan Data System and how the borrower can 2 access the borrower’s records. 3 ‘‘(Q) The contact information for the insti- 4 tution’s financial aid office or other appropriate 5 office at the institution the borrower may con- 6 tact if the borrower has any questions about the 7 borrower’s rights and responsibilities or the 8 terms and conditions of the loan. 9 ‘‘(5) BORROWERS RECEIVING PARENT PLUS 10 LOANS FOR DEPENDENT STUDENTS.—The informa- 11 tion to be provided under paragraph (1)(A) to a bor- 12 rower of a Federal Direct PLUS Loan made on be- 13 half of a dependent student shall include the fol- 14 lowing: 15 ‘‘(A) The information described in sub- 16 paragraphs (A) through (C) and (N) through 17 (Q) of paragraph (4). 18 ‘‘(B) The option of the borrower to pay the 19 interest on the loan while the loan is in 20 deferment. 21 ‘‘(C) For a first-time borrower of such 22 loan— 23 ‘‘(i) a statement of the anticipated 24 balance on the loan for which the borrower 25 VerDate Sep 11 2014 02:26 May 25, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1496.IS S1496 kjohnson on DSK79L0C42 with BILLS 13 •S 1496 IS is receiving counseling under this sub- 1 section; 2 ‘‘(ii) based on such anticipated bal- 3 ance, the anticipated monthly payment 4 amount under the standard repayment 5 plan; and 6 ‘‘(iii) an estimate of the projected 7 monthly payment amount under the stand- 8 ard repayment plan, based on the average 9 cumulative indebtedness of other borrowers 10 of Federal Direct PLUS Loans made on 11 behalf of dependent students who are in 12 the same program of study as the student 13 on whose behalf the borrower borrowed the 14 loan. 15 ‘‘(D) For a borrower with an outstanding 16 balance of principal or interest due on such [Text truncated for display. 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