114TH CONGRESS 

2D SESSION H. R. 3179 

AN ACT 

To amend the loan counseling requirements under the Higher 

Education Act of 1965, 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, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Empowering Students 

3 Through Enhanced Financial Counseling Act’’. 

4 SEC. 2. ANNUAL COUNSELING. 

5 Section 485(l) of the Higher Education Act of 1965 

6 (20 U.S.C. 1092(l)) is amended to read as follows: 

7 ‘‘(l) ANNUAL FINANCIAL AID COUNSELING.— 

8 ‘‘(1) ANNUAL DISCLOSURE REQUIRED.— 

9 ‘‘(A) IN GENERAL.—Each eligible institu10 tion shall ensure that each individual who re11 ceives a Federal Pell Grant or a loan made 

12 under part D (other than a Federal Direct Con13 solidation Loan) receives comprehensive infor14 mation on the terms and conditions of such 

15 Federal Pell Grant or loan and the responsibil16 ities the individual has with respect to such 

17 Federal Pell Grant or loan. Such information 

18 shall be provided, for each award year for which 

19 the individual receives such Federal Pell Grant 

20 or loan, in a simple and understandable man21 ner— 

22 ‘‘(i) during a counseling session con23 ducted in person; 

24 ‘‘(ii) online, with the individual ac25 knowledging receipt of the information; or 
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1 ‘‘(iii) through the use of the online 

2 counseling tool described in subsection 

3 (n)(1)(B). 

4 ‘‘(B) USE OF INTERACTIVE PROGRAMS.— 

5 In the case of institutions not using the online 

6 counseling tool described in subsection 

7 (n)(1)(B), the Secretary shall require such in8 stitutions to carry out the requirements of sub9 paragraph (A) through the use of interactive 

10 programs, during an annual counseling session 

11 that is in-person or online, that test the individ12 ual’s understanding of the terms and conditions 

13 of the Federal Pell Grant or loan awarded to 

14 the individual, using simple and understandable 

15 language and clear formatting. 

16 ‘‘(2) ALL INDIVIDUALS.—The information to be 

17 provided under paragraph (1)(A) to each individual 

18 receiving counseling under this subsection shall in19 clude the following: 

20 ‘‘(A) An explanation of how the individual 

21 may budget for typical educational expenses 

22 and a sample budget based on the cost of at23 tendance for the institution. 

24 ‘‘(B) An explanation that an individual has 

25 a right to annually request a disclosure of infor-
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1 mation collected by a consumer reporting agen2 cy pursuant to section 612(a) of the Fair Credit 

3 Reporting Act (15 U.S.C. 1681j(a)). 

4 ‘‘(C) Based on the most recent data avail5 able from the American Community Survey 

6 available from the Department of Commerce, 

7 the estimated average income and percentage of 

8 employment in the State of domicile of the indi9 vidual for individuals with— 

10 ‘‘(i) a high school diploma or equiva11 lent; 

12 ‘‘(ii) some post-secondary education 

13 without completion of a degree or certifi14 cate; and 

15 ‘‘(iii) a bachelor’s degree. 

16 ‘‘(D) An introduction to the financial man17 agement resources provided by the Financial 

18 Literacy and Education Commission. 

19 ‘‘(3) STUDENTS RECEIVING FEDERAL PELL

20 GRANTS.—The information to be provided under 

21 paragraph (1)(A) to each student receiving a Fed22 eral Pell Grant shall include the following: 

23 ‘‘(A) An explanation of the terms and con24 ditions of the Federal Pell Grant. 
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1 ‘‘(B) An explanation of approved edu2 cational expenses for which the student may use 

3 the Federal Pell Grant. 

4 ‘‘(C) An explanation of why the student 

5 may have to repay the Federal Pell Grant. 

6 ‘‘(D) An explanation of the maximum 

7 number of semesters or equivalent for which the 

8 student may be eligible to receive a Federal Pell 

9 Grant, and a statement of the amount of time 

10 remaining for which the student may be eligible 

11 to receive a Federal Pell Grant. 

12 ‘‘(E) An explanation that if the student 

13 transfers to another institution not all of the 

14 student’s courses may be acceptable in transfer 

15 toward meeting specific degree or program re16 quirements at such institution, but the amount 

17 of time remaining for which a student may be 

18 eligible to receive a Federal Pell Grant, as pro19 vided under subparagraph (D), will not change. 

20 ‘‘(F) An explanation of how the student 

21 may seek additional financial assistance from 

22 the institution’s financial aid office due to a 

23 change in the student’s financial circumstances, 

24 and the contact information for such office. 
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1 ‘‘(4) BORROWERS RECEIVING LOANS MADE

2 UNDER PART D (OTHER THAN PARENT PLUS

3 LOANS).—The information to be provided under 

4 paragraph (1)(A) to a borrower of a loan made 

5 under part D (other than a Federal Direct PLUS 

6 Loan made on behalf of a dependent student) shall 

7 include the following: 

8 ‘‘(A) To the extent practicable, the effect 

9 of accepting the loan to be disbursed on the eli10 gibility of the borrower for other forms of stu11 dent financial assistance. 

12 ‘‘(B) An explanation of the use of the mas13 ter promissory note. 

14 ‘‘(C) An explanation that the borrower is 

15 not required to accept the full amount of the 

16 loan offered to the borrower. 

17 ‘‘(D) An explanation that the borrower 

18 should consider accepting any grant, scholar19 ship, or State or Federal work-study jobs for 

20 which the borrower is eligible prior to accepting 

21 Federal student loans. 

22 ‘‘(E) A recommendation to the borrower to 

23 exhaust the borrower’s Federal student loan op24 tions prior to taking out private education 

25 loans, an explanation that Federal student 
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1 loans typically offer better terms and conditions 

2 than private education loans, an explanation of 

3 treatment of loans made under part D and pri4 vate education loans in bankruptcy, and an ex5 planation that if a borrower decides to take out 

6 a private education loan— 

7 ‘‘(i) the borrower has the ability to se8 lect a private educational lender of the bor9 rower’s choice; 

10 ‘‘(ii) the proposed private education 

11 loan may impact the borrower’s potential 

12 eligibility for other financial assistance, in13 cluding Federal financial assistance under 

14 this title; and 

15 ‘‘(iii) the borrower has a right— 

16 ‘‘(I) to accept the terms of the 

17 private education loan within 30 cal18 endar days following the date on 

19 which the application for such loan is 

20 approved and the borrower receives 

21 the required disclosure documents, 

22 pursuant to section 128(e) of the 

23 Truth in Lending Act (15 U.S.C. 

24 1638(e)); and 
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1 ‘‘(II) to cancel such loan within 3 

2 business days of the date on which the 

3 loan is consummated, pursuant to sec4 tion 128(e)(7) of such Act (15 U.S.C. 

5 1638(e)(7)). 

6 ‘‘(F) An explanation of the approved edu7 cational expenses for which the borrower may 

8 use a loan made under part D. 

9 ‘‘(G) Information on the annual and aggre10 gate loan limits for Federal Direct Stafford 

11 Loans and Federal Direct Unsubsidized Staf12 ford Loans. 

13 ‘‘(H) Information on how interest accrues 

14 and is capitalized during periods when the in15 terest is not paid by either the borrower or the 

16 Secretary. 

17 ‘‘(I) In the case of a Federal Direct PLUS 

18 Loan or a Federal Direct Unsubsidized Staf19 ford Loan, the option of the borrower to pay 

20 the interest while the borrower is in school. 

21 ‘‘(J) The definition of half-time enrollment 

22 at the institution, during regular terms and 

23 summer school, if applicable, and the con24 sequences of not maintaining at least half-time 

25 enrollment. 
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1 ‘‘(K) An explanation of the importance of 

2 contacting the appropriate offices at the institu3 tion of higher education if the borrower with4 draws prior to completing the borrower’s pro5 gram of study so that the institution can pro6 vide exit counseling, including information re7 garding the borrower’s repayment options and 

8 loan consolidation. 

9 ‘‘(L) For a first-time borrower— 

10 ‘‘(i) a statement of the anticipated 

11 balance on the loan for which the borrower 

12 is receiving counseling under this sub13 section; 

14 ‘‘(ii) based on such anticipated bal15 ance, the anticipated monthly payment 

16 amount under, at minimum— 

17 ‘‘(I) the standard repayment 

18 plan; and 

19 ‘‘(II) an income-based repayment 

20 plan under section 493C, as deter21 mined using regionally available data 

22 from the Bureau of Labor Statistics 

23 of the average starting salary for the 

24 occupation in which the borrower has 
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1 an interest in or intends to be em2 ployed; and 

3 ‘‘(iii) an estimate of the projected 

4 monthly payment amount under each re5 payment plan described in clause (ii), 

6 based on the average cumulative indebted7 ness at graduation for borrowers of loans 

8 made under part D who are in the same 

9 program of study as the borrower. 

10 ‘‘(M) For a borrower with an outstanding 

11 balance of principal or interest due on a loan 

12 made under this title— 

13 ‘‘(i) a current statement of the 

14 amount of such outstanding balance and 

15 interest accrued; 

16 ‘‘(ii) based on such outstanding bal17 ance, the anticipated monthly payment 

18 amount under, at minimum, the standard 

19 repayment plan and, using regionally avail20 able data from the Bureau of Labor Sta21 tistics of the average starting salary for 

22 the occupation the borrower intends to be 

23 employed, an income-based repayment plan 

24 under section 493C; and 
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1 ‘‘(iii) an estimate of the projected 

2 monthly payment amount under each re3 payment plan described in clause (ii), 

4 based on— 

5 ‘‘(I) the outstanding balance de6 scribed in clause (i); 

7 ‘‘(II) the anticipated outstanding 

8 balance on the loan for which the stu9 dent is receiving counseling under this 

10 subsection; and 

11 ‘‘(III) a projection for any other 

12 loans made under part D that the 

13 borrower is reasonably expected to ac14 cept during the borrower’s program of 

15 study based on at least the expected 

16 increase in the cost of attendance of 

17 such program. 

18 ‘‘(N) The obligation of the borrower to 

19 repay the full amount of the loan, regardless of 

20 whether the borrower completes or does not 

21 complete the program in which the borrower is 

22 enrolled within the regular time for program 

23 completion. 

24 ‘‘(O) The likely consequences of default on 

25 the loan, including adverse credit reports, delin-
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1 quent debt collection procedures under Federal 

2 law, and litigation, and a notice of the institu3 tion’s most recent cohort default rate (defined 

4 in section 435(m)), an explanation of the cohort 

5 default rate, the most recent national average 

6 cohort default rate, and the most recent na7 tional average cohort default rate for the cat8 egory of institution described in section 

9 435(m)(4) to which the institution belongs. 

10 ‘‘(P) Information on the National Student 

11 Loan Data System and how the borrower can 

12 access the borrower’s records. 

13 ‘‘(Q) The contact information for the insti14 tution’s financial aid office or other appropriate 

15 office at the institution the borrower may con16 tact if the borrower has any questions about the 

17 borrower’s rights and responsibilities or the 

18 terms and conditions of the loan. 

19 ‘‘(5) BORROWERS RECEIVING PARENT PLUS

20 LOANS FOR DEPENDENT STUDENTS.—The informa21 tion to be provided under paragraph (1)(A) to a bor22 rower of a Federal Direct PLUS Loan made on be23 half of a dependent student shall include the fol24 lowing: 
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1 ‘‘(A) The information described in sub2 paragraphs (A) through (C) and (N) through 

3 (Q) of paragraph (4). 

4 ‘‘(B) The option of the borrower to pay the 

5 interest on the loan while the loan is in 

6 deferment. 

7 ‘‘(C) For a first-time borrower of such 

8 loan— 

9 ‘‘(i) a statement of the anticipated 

10 balance on the loan for which the borrower 

11 is receiving counseling under this sub12 section; 

13 ‘‘(ii) based on such anticipated bal14 ance, the anticipated monthly payment 

15 amount under the standard repayment 

16 plan; and 

17 ‘‘(iii) an estimate of the projected 

18 monthly payment amount under the stand19 ard repayment plan, based on the average 

20 cumulative indebtedness of other borrowers 

21 of Federal Direct PLUS Loans made on 

22 behalf of dependent students who are in 

23 the same program of study as the student 

24 on whose behalf the borrower borrowed the 

25 loan. 
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1 ‘‘(D) For a borrower with an outstanding 

2 balance of principal or interest due on such 

3 loan— 

4 ‘‘(i) a statement of the amount of 

5 such outstanding balance; 

6 ‘‘(ii) based on such outstanding bal7 ance, the anticipated monthly payment 

8 amount under the standard repayment 

9 plan; and 

10 ‘‘(iii) an estimate of the projected 

11 monthly payment amount under the stand12 ard repayment plan, based on— 

13 ‘‘(I) the outstanding balance de14 scribed in clause (i); 

15 ‘‘(II) the anticipated outstanding 

16 balance on the loan for which the bor17 rower is receiving counseling under 

18 this subsection; and 

19 ‘‘(III) a projection for any other 

20 Federal Direct PLUS Loan made on 

21 behalf of the dependent student that 

22 the borrower is reasonably expected to 

23 accept during the program of study of 

24 such student based on at least the ex-
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1 pected increase in the cost of attend2 ance of such program. 

3 ‘‘(E) Debt management strategies that are 

4 designed to facilitate the repayment of such in5 debtedness. 

6 ‘‘(F) An explanation that the borrower has 

7 the options to prepay each loan, pay each loan 

8 on a shorter schedule, and change repayment 

9 plans. 

10 ‘‘(G) For each Federal Direct PLUS Loan 

11 made on behalf of a dependent student for 

12 which the borrower is receiving counseling 

13 under this subsection, the contact information 

14 for the loan servicer of the loan and a link to 

15 such servicer’s Website. 

16 ‘‘(6) ANNUAL LOAN ACCEPTANCE.—Prior to 

17 making the first disbursement of a loan made under 

18 part D (other than a Federal Direct Consolidation 

19 Loan) to a borrower for an award year, an eligible 

20 institution, shall, as part of carrying out the coun21 seling requirements of this subsection for the loan, 

22 ensure that after receiving the applicable counseling 

23 under paragraphs (2), (4), and (5) for the loan the 

24 borrower accepts the loan for such award year by— 
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1 ‘‘(A) signing the master promissory note 

2 for the loan; 

3 ‘‘(B) signing and returning to the institu4 tion a separate written statement that affirma5 tively states that the borrower accepts the loan; 

6 or 

7 ‘‘(C) electronically signing an electronic 

8 version of the statement described in subpara9 graph (B).’’. 

10 SEC. 3. EXIT COUNSELING. 

11 Section 485(b) of the Higher Education Act of 1965 

12 (20 U.S.C. 1092(b)) is amended— 

13 (1) in paragraph (1)(A)— 

14 (A) in the matter preceding clause (i), by 

15 striking ‘‘through financial aid offices or other16 wise’’ and inserting ‘‘through the use of an 

17 interactive program, during an exit counseling 

18 session that is in-person or online, or through 

19 the use of the online counseling tool described 

20 in subsection (n)(1)(A)’’; 

21 (B) by redesignating clauses (i) through 

22 (ix) as clauses (iv) through (xii), respectively; 

23 (C) by inserting before clause (iv), as so 

24 redesignated, the following: 
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1 ‘‘(i) a summary of the outstanding balance of 

2 principal and interest due on the loans made to the 

3 borrower under part B, D, or E; 

4 ‘‘(ii) an explanation of the grace period pre5 ceding repayment and the expected date that the 

6 borrower will enter repayment; 

7 ‘‘(iii) an explanation that the borrower has the 

8 option to pay any interest that has accrued while the 

9 borrower was in school or that may accrue during 

10 the grace period preceding repayment or during an 

11 authorized period of deferment or forbearance, prior 

12 to the capitalization of the interest;’’; 

13 (D) in clause (iv), as so redesignated— 

14 (i) by striking ‘‘sample information 

15 showing the average’’ and inserting ‘‘infor16 mation, based on the borrower’s out17 standing balance described in clause (i), 

18 showing the borrower’s’’; and 

19 (ii) by striking ‘‘of each plan’’ and in20 serting ‘‘of at least the standard repay21 ment plan and the income-based repay22 ment plan under section 493C’’; 

23 (E) in clause (ix), as so redesignated— 

24 (i) by inserting ‘‘decreased credit 

25 score,’’ after ‘‘credit reports,’’; and 
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1 (ii) by inserting ‘‘reduced ability to 

2 rent or purchase a home or car, potential 

3 difficulty in securing employment,’’ after 

4 ‘‘Federal law,’’; 

5 (F) in clause (x), as so redesignated, by 

6 striking ‘‘consolidation loan under section 428C 

7 or a’’; 

8 (G) in clauses (xi) and (xii), as so redesig9 nated, by striking ‘‘and’’ at the end; and 

10 (H) by adding at the end the following: 

11 ‘‘(xiii) for each of the borrower’s loans made 

12 under part B, D, or E for which the borrower is re13 ceiving counseling under this subsection, the contact 

14 information for the loan servicer of the loan and a 

15 link to such servicer’s Website; and 

16 ‘‘(xiv) an explanation that an individual has a 

17 right to annually request a disclosure of information 

18 collected by a consumer reporting agency pursuant 

19 to section 612(a) of the Fair Credit Reporting Act 

20 (15 U.S.C. 1681j(a)).’’; 

21 (2) in paragraph (1)(B)— 

22 (A) by inserting ‘‘online or’’ before ‘‘in 

23 writing’’; and 

24 (B) by adding before the period at the end 

25 the following: ‘‘, except that in the case of an 
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1 institution using the online counseling tool de2 scribed in subsection (n)(1)(A), the Secretary 

3 shall attempt to provide such information to the 

4 student in the manner described in subsection 

5 (n)(3)(C)’’; and 

6 (3) in paragraph (2)(C), by inserting ‘‘, such as 

7 the online counseling tool described in subsection 

8 (n)(1)(A),’’ after ‘‘electronic means’’. 

9 SEC. 4. ONLINE COUNSELING TOOLS. 

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

11 U.S.C. 1092) is further amended by adding at the end 

12 the following: 

13 ‘‘(n) ONLINE COUNSELING TOOLS.— 

14 ‘‘(1) IN GENERAL.—Beginning not later than 1 

15 year after the date of enactment of the Empowering 

16 Students Through Enhanced Financial Counseling 

17 Act, the Secretary shall maintain— 

18 ‘‘(A) an online counseling tool that pro19 vides the exit counseling required under sub20 section (b) and meets the applicable require21 ments of this subsection; and 

22 ‘‘(B) an online counseling tool that pro23 vides the annual counseling required under sub24 section (l) and meets the applicable require25 ments of this subsection. 
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1 ‘‘(2) REQUIREMENTS OF TOOLS.—In maintain2 ing the online counseling tools described in para3 graph (1), the Secretary shall ensure that each such 

4 tool is— 

5 ‘‘(A) consumer tested, in consultation with 

6 other relevant Federal agencies, to ensure that 

7 the tool is effective in helping individuals under8 stand their rights and obligations with respect 

9 to borrowing a loan made under part D or re10 ceiving a Federal Pell Grant; 

11 ‘‘(B) understandable to students receiving 

12 Federal Pell Grants and borrowers of loans 

13 made under part D; and 

14 ‘‘(C) freely available to all eligible institu15 tions. 

16 ‘‘(3) RECORD OF COUNSELING COMPLETION.— 

17 The Secretary shall— 

18 ‘‘(A) use each online counseling tool de19 scribed in paragraph (1) to keep a record of 

20 which individuals have received counseling using 

21 the tool, and notify the applicable institutions 

22 of the individual’s completion of such coun23 seling; 

24 ‘‘(B) in the case of a borrower who re25 ceives annual counseling for a loan made under 
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1 part D using the tool described in paragraph 

2 (1)(B), notify the borrower by when the bor3 rower should accept, in a manner described in 

4 subsection (l)(6), the loan for which the bor5 rower has received such counseling; and 

6 ‘‘(C) in the case of a borrower described in 

7 subsection (b)(1)(B) at an institution that uses 

8 the online counseling tool described in para9 graph (1)(A) of this subsection, the Secretary 

10 shall attempt to provide the information de11 scribed in subsection (b)(1)(A) to the borrower 

12 through such tool.’’. 

13 SEC. 5. LONGITUDINAL STUDY ON THE EFFECTIVENESS OF 

14 STUDENT LOAN COUNSELING. 

15 (a) IN GENERAL.—Not later than 1 year after the 

16 date of enactment of this Act, the Secretary of Education, 

17 acting through the Director of the Institute of Education 

18 Sciences, shall begin conducting a rigorous, longitudinal 

19 study of the impact and effectiveness of the student loan 

20 counseling— 

21 (1) provided under subsections (b), (l), and (n) 

22 of section 485 of the Higher Education Act of 1965 

23 (20 U.S.C. 1092), as amended by this Act; and 

24 (2) provided through such other means as the 

25 Secretary of Education may determine. 
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1 (b) CONTENTS.— 

2 (1) BORROWER INFORMATION.—The longitu3 dinal study carried out under subsection (a) shall in4 clude borrower information, in the aggregate and 

5 disaggregated by race, ethnicity, gender, income, and 

6 status as an individual with a disability, on— 

7 (A) student persistence; 

8 (B) degree attainment; 

9 (C) program completion; 

10 (D) successful entry into student loan re11 payment; 

12 (E) cumulative borrowing levels; and 

13 (F) such other factors as the Secretary of 

14 Education may determine. 

15 (2) EXCEPTION.—The disaggregation under 

16 paragraph (1) shall not be required in a case in 

17 which the number of borrowers in a category is in18 sufficient to yield statistically reliable information or 

19 the results would reveal personally identifiable infor20 mation about an individual borrower. 

21 (c) INTERIM REPORTS.—Not later than 18 months 

22 after the commencement of the study under subsection 

23 (a), and annually thereafter, the Secretary of Education 

24 shall evaluate the progress of the study and report any 
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1 short-term findings to the appropriate committees of Con2 gress. 

3 SEC. 6. AVAILABILITY OF FUNDS. 

4 (a) USE OF EXISTING FUNDS.—Of the amount au5 thorized to be appropriated for maintaining the Depart6 ment of Education’s Financial Awareness Counseling 

7 Tool, $2,000,000 shall be available to carry out this Act 

8 and the amendments made by this Act. 

9 (b) NO ADDITIONAL FUNDS AUTHORIZED.—No 

10 funds are authorized to be appropriated by this Act to 

11 carry out this Act or the amendments made by this Act. 

Passed the House of Representatives July 11, 2016. 

Attest: 

Clerk. 
114TH CONGRESS 

2D SESSION H. R. 3179 

AN ACT 

To amend the loan counseling requirements under 

purposes. the Higher Education Act of 1965, and for other