I 

114TH CONGRESS 

2D SESSION H. R. 5016 

To amend the Higher Education Act of 1965 to require the Secretary of 

Education to provide student borrowers with instruction in general principles of financial literacy through its online counseling tool, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 20, 2016 

Mr. SALMON introduced the following bill; which was referred to the 

Committee on Education and the Workforce 

A BILL 

To amend the Higher Education Act of 1965 to require 

the Secretary of Education to provide student borrowers 

with instruction in general principles of financial literacy 

through its online counseling tool, 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 ‘‘Financial Literacy for 

5 Financial Aid Act’’. 

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1 SEC. 2. ONLINE COUNSELING TOOLS. 

2 (a) OPTION FOR INSTITUTIONS OF HIGHER EDU3 CATION.—Section 485(l)(1)(A)(ii) of the Higher Edu4 cation Act of 1965 (20 U.S.C. 1092(l)(1)(A)(ii)) is 

5 amended— 

6 (1) in subclause (II), by striking ‘‘or’’ at the 

7 end; 

8 (2) in subclause (III), by striking the period at 

9 the end and inserting ‘‘; or’’; and 

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

11 ‘‘(IV) through the use of the on12 line counseling tool described in sub13 section (n).’’. 

14 (b) REQUIREMENTS FOR SECRETARY OF EDU15 CATION.—Section 485 of the Higher Education Act of 

16 1965 (20 U.S.C. 1092) is further amended by adding at 

17 the end the following: 

18 ‘‘(n) ONLINE COUNSELING TOOLS.— 

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

20 year after the date of the enactment of the Financial 

21 Literacy for Financial Aid Act, the Secretary shall 

22 maintain an online counseling tool that— 

23 ‘‘(A) provides the entrance counseling re24 quired under subsection (l); and 

25 ‘‘(B) meets the applicable requirements of 

26 this subsection. 

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1 ‘‘(2) REQUIREMENTS OF TOOLS.—In maintain2 ing the online counseling tool described in paragraph 

3 (1), the Secretary shall ensure that the tool is— 

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

5 other relevant Federal agencies, to ensure that 

6 the tool is effective in helping individuals under7 stand the information described in subsection 

8 (l)(2); 

9 ‘‘(B) interactive and tests the borrower’s 

10 understanding of the information described in 

11 subsection (l)(2); 

12 ‘‘(C) understandable to borrowers of loans 

13 made under part D; 

14 ‘‘(D) effective in providing instruction in 

15 general financial literacy in accordance with 

16 paragraph (3) of this subsection; and 

17 ‘‘(E) freely available to all eligible institu18 tions. 

19 ‘‘(3) GENERAL PRINCIPLES OF FINANCIAL LIT20 ERACY.—The Secretary shall ensure that the online 

21 counseling tool provides instruction in general prin22 ciples of financial literacy, including the following: 

23 ‘‘(A) PERSONAL INCOME.—An explanation 

24 of— 

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1 ‘‘(i) how to identify various types of 

2 income and expenses; 

3 ‘‘(ii) gross and net pay and how to 

4 read a paycheck stub; and 

5 ‘‘(iii) how to craft financial goals. 

6 ‘‘(B) TAXES.—An explanation of— 

7 ‘‘(i) the history of taxes; 

8 ‘‘(ii) the purpose and uses of taxes; 

9 and 

10 ‘‘(iii) how to differentiate between 

11 types of taxes. 

12 ‘‘(C) RETIREMENT.—An explanation of— 

13 ‘‘(i) the importance of planning for re14 tirement; 

15 ‘‘(ii) retirement strategies to achieve 

16 financial goals; 

17 ‘‘(iii) how to differentiate among the 

18 types of investment vehicles for retirement; 

19 and 

20 ‘‘(iv) how to assess overall financial 

21 situation in determining retirement needs. 

22 ‘‘(D) SPENDING PLANS AND BANKING RE23 SOURCES.—An explanation of— 

24 ‘‘(i) the benefits of transaction and 

25 savings accounts; 

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1 ‘‘(ii) how compound interest helps 

2 saved money grow; and 

3 ‘‘(iii) how to define and create a 

4 spending plan. 

5 ‘‘(E) CREDIT CARDS.—An explanation 

6 of— 

7 ‘‘(i) how to define and calculate the 

8 cost of borrowing; 

9 ‘‘(ii) the difference between good debt 

10 and bad debt; 

11 ‘‘(iii) credit cards and how to evaluate 

12 credit card offers; 

13 ‘‘(iv) consumer credit rights; and 

14 ‘‘(v) credit scores. 

15 ‘‘(F) FINANCIAL RECOVERY AND GIVING

16 BACK.—An explanation of— 

17 ‘‘(i) how to assess financial health; 

18 ‘‘(ii) how to budget; 

19 ‘‘(iii) how to find ways to reduce ex20 penses or increase income; 

21 ‘‘(iv) the difference between credit re22 pair and credit consolidation; 

23 ‘‘(v) the importance of charitable giv24 ing; and 

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1 ‘‘(vi) how to define future financial 

2 goals. 

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

4 The Secretary shall use the online counseling tool 

5 described in paragraph (1) to keep a record of which 

6 individuals have received counseling using the tool, 

7 and notify the applicable institutions of the individ8 ual’s completion of such counseling.’’. 

9 SEC. 3. REPORT. 

10 Not later than 2 years after the date of the enact11 ment of this Act, and not less than once every 3 years 

12 thereafter, the Secretary shall submit to the Committee 

13 on Education and the Workforce of the House of Rep14 resentatives, and the Committee on Health, Education, 

15 Labor, and Pensions of the Senate, a written report that 

16 includes an evaluation of the effectiveness of the instruc17 tion in general principles of financial literacy described in 

18 section 485(n)(3) of the Higher Education Act of 1965 

19 (20 U.S.C. 1092(n)(3)), as added by this Act. 

Æ 

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