II 

112TH CONGRESS 

1ST SESSION S. 1260 

To require financial literacy and economic education counseling for student 

borrowers, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 22, 2011 

Mr. AKAKA introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To require financial literacy and economic education 

counseling for student borrowers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘College Literacy in 

5 Finance and Economics Act of 2011’’ or the ‘‘College 

6 LIFE Act’’. 

7 SEC. 2. FINDINGS. 

8 Congress finds the following: 

9 (1) Student borrowing is widespread in higher 

10 education, and more than $100,000,000,000 in FedVerDate Mar 15 2010 04:13 Jun 28, 2011 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1260.IS S1260

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1 eral education loans are originated each year. In 

2 2008, 62 percent of recipients of a baccalaureate de3 gree graduated with student debt. 

4 (2) Forty-eight percent of students at 4-year 

5 public institutions of higher education borrow money 

6 to pay for college, as do 57 percent of students at 

7 4-year private institutions of higher education, and 

8 96 percent of students at for-profit institutions of 

9 higher education. 

10 (3) In 2008, 92 percent of Black students, 85 

11 percent of Hispanic students, 85 percent of Amer12 ican Indian/Alaska Native students, 82 percent of 

13 multi-racial students, 80 percent of Native Hawai14 ian/Pacific Islander students, 77 percent of White 

15 students, and 68 percent of Asian students received 

16 financial aid. 

17 (4) Students depart from institutions of higher 

18 education with significant debt. In 2008, the average 

19 student loan debt among graduates of institutions of 

20 higher education was $23,186, and 1 in 10 recipi21 ents of a baccalaureate degree graduated at least 

22 $40,000 in debt. In 2008, 57 percent of recipients 

23 of a baccalaureate degree from a for-profit institu24 tion of higher education owed more than $30,000, 

25 and the median amount of debt was $32,700. Since 


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1 2003, the average cumulative debt among students 

2 at institutions of higher education has increased by 

3 5.6 percent each year. 

4 (5) Students enrolled in for-profit institutions 

5 of higher education account for 47 percent of all stu6 dent loan defaults, despite representing approxi7 mately 10 percent of all students enrolled in institu8 tions of higher education. Since 2003, the national 

9 cohort default rate has increased from 4.5 percent to 

10 7 percent. 

11 (6) Students rely on access to credit. Fifty-six 

12 percent of dependent students at institutions of 

13 higher education had a credit card in their own 

14 name in 2004. The average credit card balance 

15 among such students who were carrying a balance 

16 on their cards was $2,000. 

17 (7) According to the National Foundation for 

18 Credit Counseling, the majority of adults (56 per19 cent of adults in the United States, or 127,000,000 

20 people) do not have a budget or keep close track of 

21 expenses or spending. 

22 (8) According to a 2009 National Bankruptcy 

23 Research Center study, consumers who received fi24 nancial education through pre-bankruptcy counseling 

25 had 27.5 percent fewer delinquent accounts and reVerDate Mar 15 2010 04:13 Jun 28, 2011 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1260.IS S1260

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1 mained current on their accounts for 29 percent 

2 longer. 

3 (9) According to the Financial Industry Regu4 latory Authority Investor Education Foundation, 

5 less than one-third of young adults (ages 18 to 29) 

6 set aside emergency savings to weather unexpected 

7 financial challenges. 

8 (10) According to a Jump$tart Coalition for 

9 Personal Financial Literacy survey, 62 percent of 

10 high school students cannot pass a basic personal fi11 nance exam, and financial literacy scores among fu12 ture higher education students are low. 

13 (11) According to research by the National En14 dowment for Financial Education and the University 

15 of Arizona, schools are the institutions that students 

16 trust most to help increase their knowledge of per17 sonal finance. 

18 SEC. 3. FINANCIAL LITERACY COUNSELING. 

19 Section 485 of the Higher Education Act of 1965 (20 

20 U.S.C. 1092) is amended by adding at the end the fol21 lowing: 

22 ‘‘(n) FINANCIAL LITERACY COUNSELING.— 

23 ‘‘(1) IN GENERAL.—Each eligible institution 

24 shall provide financial literacy counseling to student 


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1 borrowers in accordance with the requirements of 

2 this subsection, through— 

3 ‘‘(A) financial aid offices; 

4 ‘‘(B) an employee or group of employees 

5 designated under subsection (c); or 

6 ‘‘(C) a partnership with a nonprofit orga7 nization that has substantial experience devel8 oping or administering financial literacy and 

9 economic education curricula, which may in10 clude an organization that has received grant 

11 funding under the Excellence in Economic Edu12 cation Act of 2001 (20 U.S.C. 7267 et seq.). 

13 ‘‘(2) ENTRANCE AND EXIT COUNSELING RE14 QUIRED.— 

15 ‘‘(A) IN GENERAL.—Financial literacy 

16 counseling, as required under this subsection, 

17 shall be provided to student borrowers on the 

18 following 2 occasions: 

19 ‘‘(i) ENTRANCE COUNSELING.—Such 

20 counseling shall be provided not later than 

21 45 days after the first disbursement of a 

22 borrower’s first loan that is made, insured, 

23 or guaranteed under part B, made under 

24 part D, or made under part E. Financial 

25 literacy counseling on this occasion may be 


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1 provided in conjunction with the entrance 

2 counseling described in subsection (l), if 

3 the financial literacy counseling component 

4 is provided in accordance with the require5 ments of subparagraph (C). 

6 ‘‘(ii) EXIT COUNSELING.—Such finan7 cial literacy counseling shall be provided, in 

8 addition to the financial literacy counseling 

9 provided under clause (i), prior to the com10 pletion of the course of study for which the 

11 borrower enrolled at the institution or at 

12 the time of departure from such institu13 tion, to each borrower of a loan that is 

14 made, insured, or guaranteed under part 

15 B, made under part D, or made under part 

16 E. Financial literacy counseling on this oc17 casion may be provided in conjunction with 

18 the exit counseling described in subsection 

19 (b), if the financial literacy counseling 

20 component is provided in accordance with 

21 the requirements of subparagraph (C). 

22 ‘‘(B) EXCEPTIONS.—The requirements of 

23 subparagraph (A) shall not apply to borrowers 

24 of— 


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1 ‘‘(i) a loan made, insured, or guaran2 teed pursuant to section 428C; 

3 ‘‘(ii) a loan made, insured, or guaran4 teed on behalf of a student pursuant to 

5 section 428B; or 

6 ‘‘(iii) a loan made under part D that 

7 is a Federal Direct Consolidation Loan or 

8 a Federal Direct PLUS loan made on be9 half of a student. 

10 ‘‘(C) MINIMUM COUNSELING REQUIRE11 MENTS.—Such financial literacy counseling 

12 shall include a total of not less than 4 hours of 

13 counseling on the occasion described in sub14 paragraph (A)(i), and an additional period of 

15 not less than 4 hours of counseling on the occa16 sion described in subparagraph (A)(ii). A total 

17 of not more than 2 hours of counseling for each 

18 of the occasions described in subparagraph (A) 

19 shall be provided electronically. 

20 ‘‘(D) EARLY DEPARTURE.—Notwith21 standing subparagraph (C), if a borrower leaves 

22 an eligible institution without the prior knowl23 edge of such institution, the institution shall at24 tempt to provide the information required under 

25 this subsection to the student in writing. 


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1 ‘‘(3) INFORMATION TO BE PROVIDED.—Finan2 cial literacy counseling, as required under this sub3 section, shall include information on the Financial 

4 Education Core Competencies as determined by the 

5 Financial Literacy and Education Commission es6 tablished under title V of the Fair and Accurate 

7 Credit Transactions Act of 2003 (20 U.S.C. 9701 et 

8 seq.). 

9 ‘‘(4) USE OF INTERACTIVE PROGRAMS.—The 

10 Secretary may encourage institutions to carry out 

11 the requirements of this subsection through the use 

12 of interactive programs that test the borrower’s un13 derstanding of the financial literacy information pro14 vided through counseling under this subsection, 

15 using simple and understandable language and clear 

16 formatting. 

17 ‘‘(5) MODEL FINANCIAL LITERACY COUNSELING

18 CURRICULUM.—Not later than 1 year after the date 

19 of enactment of the College Literacy in Finance and 

20 Economics Act of 2011, the Secretary shall develop 

21 a curriculum in accordance with the requirements of 

22 paragraph (3), which eligible institutions may use to 

23 fulfill the requirements of this subsection. In devel24 oping such curriculum, the Secretary may consult 


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1 with members of the Financial Literacy and Edu2 cation Commission.’’. 

Æ 


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