To require financial literacy and economic education counseling for student borrowers, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``College Literacy in Finance and 
Economics Act of 2011'' or the ``College LIFE Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Student borrowing is widespread in higher education, 
        and more than $100,000,000,000 in Federal education loans are 
        originated each year. In 2008, 62 percent of recipients of a 
        baccalaureate degree graduated with student debt.
            (2) Forty-eight percent of students at 4-year public 
        institutions of higher education borrow money to pay for 
        college, as do 57 percent of students at 4-year private 
        institutions of higher education, and 96 percent of students at 
        for-profit institutions of higher education.
            (3) In 2008, 92 percent of Black students, 85 percent of 
        Hispanic students, 85 percent of American Indian/Alaska Native 
        students, 82 percent of multi-racial students, 80 percent of 
        Native Hawaiian/Pacific Islander students, 77 percent of White 
        students, and 68 percent of Asian students received financial 
        aid.
            (4) Students depart from institutions of higher education 
        with significant debt. In 2008, the average student loan debt 
        among graduates of institutions of higher education was 
        $23,186, and 1 in 10 recipients of a baccalaureate degree 
        graduated with at least $40,000 in debt. In 2008, 57 percent of 
        recipients of a baccalaureate degree from a for-profit 
        institution of higher education owed more than $30,000, and the 
        median amount of debt was $32,700. Since 2003, the average 
        cumulative debt among students at institutions of higher 
        education has increased by 5.6 percent each year.
            (5) Students enrolled in for-profit institutions of higher 
        education account for 47 percent of all student loan defaults, 
        despite representing approximately 10 percent of all students 
        enrolled in institutions of higher education. Since 2003, the 
        national cohort default rate has increased from 4.5 percent to 
        7 percent.
            (6) Students rely on access to credit. Fifty-six percent of 
        dependent students at institutions of higher education had a 
        credit card in their own name in 2004. The average credit card 
        balance among such students who were carrying a balance on 
        their cards was $2,000.
            (7) According to the National Foundation for Credit 
        Counseling, the majority of adults (56 percent of adults in the 
        United States, or 127,000,000 people) do not have a budget or 
        keep close track of expenses or spending.
            (8) According to a 2009 National Bankruptcy Research Center 
        study, consumers who received financial education through pre-
        bankruptcy counseling had 27.5 percent fewer delinquent 
        accounts and remained current on their accounts for 29 percent 
        longer than consumers who did not receive such counseling.
            (9) According to the Financial Industry Regulatory 
        Authority Investor Education Foundation, less than \1/3\ of 
        young adults (ages 18 to 29) set aside emergency savings to 
        weather unexpected financial challenges.
            (10) According to a Jump$tart Coalition for Personal 
        Financial Literacy survey, 62 percent of high school students 
        cannot pass a basic personal finance exam, and financial 
        literacy scores among future higher education students are low.
            (11) According to research by the National Endowment for 
        Financial Education and the University of Arizona, schools are 
        the institutions that students trust most to help increase 
        their knowledge of personal finance.

SEC. 3. FINANCIAL LITERACY COUNSELING.

    Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is 
amended by adding at the end the following:
    ``(n) Financial Literacy Counseling.--
            ``(1) In general.--Each eligible institution shall provide 
        financial literacy counseling to borrowers in accordance with 
        the requirements of this subsection, through--
                    ``(A) financial aid offices;
                    ``(B) an employee or group of employees designated 
                under subsection (c); or
                    ``(C) a contract or partnership with a nonprofit 
                organization that has substantial experience developing 
                or administering financial literacy and economic 
                education curricula, which may include an organization 
                that has received grant funding under the Excellence in 
                Economic Education Act of 2001 (20 U.S.C. 7267 et 
                seq.).
            ``(2) Entrance and exit counseling required.--
                    ``(A) In general.--Financial literacy counseling, 
                as required under this subsection, shall be provided to 
                borrowers on the following 2 occasions:
                            ``(i) Entrance counseling.--Such counseling 
                        shall be provided not later than 45 days after 
                        the first disbursement of a borrower's first 
                        loan that is made, insured, or guaranteed under 
                        part B, made under part D, or made under part 
                        E.
                            ``(ii) Exit counseling.--Such counseling 
                        shall be provided, in addition to the 
                        counseling provided under clause (i), prior to 
                        the completion of the course of study for which 
                        the borrower enrolled at the institution or at 
                        the time of departure from such institution, to 
                        each borrower of a loan that is made, insured, 
                        or guaranteed under part B, made under part D, 
                        or made under part E.
                    ``(B) Exceptions.--The requirements of subparagraph 
                (A) shall not apply to borrowers of--
                            ``(i) a loan made, insured, or guaranteed 
                        pursuant to section 428C;
                            ``(ii) a loan made, insured, or guaranteed 
                        on behalf of a student pursuant to section 
                        428B; or
                            ``(iii) a loan made under part D that is a 
                        Federal Direct Consolidation Loan or a Federal 
                        Direct PLUS loan made on behalf of a student.
                    ``(C) Minimum counseling requirements.--Such 
                financial literacy counseling shall include a total of 
                not less than 4 hours of counseling on the occasion 
                described in subparagraph (A)(i), and an additional 
                period of not less than 4 hours of counseling on the 
                occasion described in subparagraph (A)(ii). A total of 
                not more than 2 hours of counseling for each of the 
                occasions described in subparagraph (A) shall be 
                provided electronically.
                    ``(D) Early departure.--Notwithstanding 
                subparagraph (C), if a borrower leaves an eligible 
                institution without the prior knowledge of such 
                institution, the institution shall attempt to provide 
                the information required under this subsection to the 
                student in writing.
            ``(3) Information to be provided.--Financial literacy 
        counseling, as required under this subsection, shall include 
        information on the following:
                    ``(A) Student financial aid, including--
                            ``(i) general information about educational 
                        loans, grants, tax credits, and scholarships;
                            ``(ii) the difference between grants, 
                        scholarships, and loans, the difference between 
                        Federal loans under this title and private 
                        educational loans, and the difference between 
                        loans under this title and other loan products; 
                        and
                            ``(iii) information about educational loan 
                        management, including repayment, deferment, 
                        consolidation, cancellation, discharge, and 
                        defaults.
                    ``(B) Banking basics, including--
                            ``(i) the types of financial institutions;
                            ``(ii) the roles, purposes, and uses of 
                        mainstream financial institutions; and
                            ``(iii) the fundamentals of opening, using, 
                        and managing basic savings and checking 
                        accounts, including common rates, fees, and 
                        borrower pitfalls.
                    ``(C) Budgeting and saving, including--
                            ``(i) the main components of a budget;
                            ``(ii) designating and prioritizing income, 
                        expenses, and personal expenditures; and
                            ``(iii) developing and maintaining matching 
                        goals and savings plans.
                    ``(D) Credit and debt management, including 
                responsible use of credit and the pitfalls of credit 
                card debt.
                    ``(E) Credit cards and other common credit products 
                (such as debit cards, student loan debit and refund 
                cards, charge cards, pre-paid cards, and secured cards 
                linked to checking accounts), including--
                            ``(i) features, terms, and conditions of 
                        credit agreements;
                            ``(ii) responsible use of such cards and 
                        products;
                            ``(iii) repayment; and
                            ``(iv) the consequences of making only 
                        required minimum payments.
                    ``(F) Investing, including--
                            ``(i) common investment products;
                            ``(ii) establishing investment goals (such 
                        as education, homeownership, wealth building, 
                        and retirement);
                            ``(iii) risks and benefits of investing; 
                        and
                            ``(iv) assessing and establishing risk 
                        tolerance.
                    ``(G) Credit scores, including--
                            ``(i) functions and uses of credit scores;
                            ``(ii) calculation of credit scores;
                            ``(iii) factors that may improve or worsen 
                        credit scores; and
                            ``(iv) how to build a strong credit 
                        history.
                    ``(H) Housing, including information on--
                            ``(i) renting;
                            ``(ii) pre-homeownership education (such as 
                        assessing homeownership readiness and 
                        capability); and
                            ``(iii) the basics of mortgage borrowing 
                        (such as common mortgage products and 
                        qualifying for and obtaining a mortgage).
                    ``(I) Taxes, including--
                            ``(i) tax filing and planning; and
                            ``(ii) the tax consequences of financial 
                        decisions (such as placing an investment or 
                        purchasing a home).
                    ``(J) Responsible financial decision making, 
                including identifying and analyzing costs, benefits, 
                economic incentives, and alternatives.
            ``(4) Use of interactive programs.--The Secretary may 
        encourage institutions to carry out the requirements of this 
        subsection through the use of interactive programs that test 
        the borrower's understanding of the financial literacy 
        information provided through counseling under this subsection, 
        using simple and understandable language and clear formatting.
            ``(5) Model financial literacy counseling curriculum.--Not 
        later than 1 year after the date of enactment of the College 
        Literacy in Finance and Economics Act of 2011, the Secretary 
        shall develop a curriculum in accordance with the requirements 
        of paragraph (3), which eligible institutions may use to 
        fulfill the requirements of this subsection. In developing such 
        curriculum, the Secretary may consult with members of the 
        Financial Literacy and Education Commission.''.

Summary: College Literacy in Finance and Economics Act of 2011 or College LIFE Act - Amends title IV of the Higher Education Act of 1965 to require institutions of higher education (IHEs) to provide student borrowers under the Federal Family Education Loan, Direct Loan, and Perkins Loan programs with financial literacy counseling within 45 days of their first receipt of such a loan and prior to the completion of their studies or when they leave school. Requires student borrowers to receive at least four hours of counseling on each occasion. Makes such counseling requirements inapplicable to borrowers of consolidation loans. Requires financial literacy counseling to include information on student financial aid, banking, budgeting and saving, credit and debt management, credit cards and products, investing, credit scores, housing, taxes, and responsible financial decision making. Directs the Secretary of Education to develop a curriculum that IHEs may use to fulfill this Act's requirements.