I 

112TH CONGRESS 

1ST SESSION H. R. 2535 

To require financial literacy and economic education counseling for student 

borrowers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 14, 2011 

Ms. JACKSON LEE of Texas (for herself, Mr. YOUNG of Florida, Mr. CONYERS, Ms. KAPTUR, Mr. ANDREWS, Mr. HASTINGS of Florida, Ms. 

HANABUSA, Mr. MICHAUD, Mrs. MALONEY, Ms. EDDIE BERNICE JOHNSON of Texas, Mr. QUIGLEY, Mr. HIGGINS, Mr. CICILLINE, Mr. KILDEE, 

Mr. GUTIERREZ, Mr. MEEKS, Mr. RANGEL, Mr. HINOJOSA, Ms. BASS of 

California, Mr. SIRES, and Mr. TONKO) introduced the following bill; 

which was referred to the Committee on Education and the Workforce 

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: 


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1 (1) Student borrowing is widespread in higher 

2 education, and more than $100,000,000,000 in Fed3 eral education loans are originated each year. In 

4 2008, 62 percent of recipients of a baccalaureate de5 gree graduated with student debt. 

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

7 public institutions of higher education borrow money 

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

9 4-year private institutions of higher education, and 

10 96 percent of students at for-profit institutions of 

11 higher education. 

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

13 percent of Hispanic students, 85 percent of Amer14 ican Indian/Alaska Native students, 82 percent of 

15 multi-racial students, 80 percent of Native Hawai16 ian/Pacific Islander students, 77 percent of White 

17 students, and 68 percent of Asian students received 

18 financial aid. 

19 (4) Students depart from institutions of higher 

20 education with significant debt. In 2008, the average 

21 student loan debt among graduates of institutions of 

22 higher education was $23,186, and 1 in 10 recipi23 ents of a baccalaureate degree graduated with at 

24 least $40,000 in debt. In 2008, 57 percent of recipi25 ents of a baccalaureate degree from a for-profit inVerDate Mar 15 2010 00:44 Jul 15, 2011 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2535.IH H2535

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1 stitution of higher education owed more than 

2 $30,000, and the median amount of debt was 

3 $32,700. Since 2003, the average cumulative debt 

4 among students at institutions of higher education 

5 has increased by 5.6 percent each year. 

6 (5) Students enrolled in for-profit institutions 

7 of higher education account for 47 percent of all stu8 dent loan defaults, despite representing approxi9 mately 10 percent of all students enrolled in institu10 tions of higher education. Since 2003, the national 

11 cohort default rate has increased from 4.5 percent to 

12 7 percent. 

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

14 percent of dependent students at institutions of 

15 higher education had a credit card in their own 

16 name in 2004. The average credit card balance 

17 among such students who were carrying a balance 

18 on their cards was $2,000. 

19 (7) According to the National Foundation for 

20 Credit Counseling, the majority of adults (56 per21 cent of adults in the United States, or 127,000,000 

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

23 expenses or spending. 

24 (8) According to a 2009 National Bankruptcy 

25 Research Center study, consumers who received fiVerDate Mar 15 2010 00:44 Jul 15, 2011 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2535.IH H2535

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1 nancial education through pre-bankruptcy counseling 

2 had 27.5 percent fewer delinquent accounts and re3 mained current on their accounts for 29 percent 

4 longer than consumers who did not receive such 

5 counseling. 

6 (9) According to the Financial Industry Regu7 latory Authority Investor Education Foundation, 

less than 1 8 ⁄3 of young adults (ages 18 to 29) set 

9 aside emergency savings to weather unexpected fi10 nancial challenges. 

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

12 Personal Financial Literacy survey, 62 percent of 

13 high school students cannot pass a basic personal fi14 nance exam, and financial literacy scores among fu15 ture higher education students are low. 

16 (11) According to research by the National En17 dowment for Financial Education and the University 

18 of Arizona, schools are the institutions that students 

19 trust most to help increase their knowledge of per20 sonal finance. 

21 SEC. 3. FINANCIAL LITERACY COUNSELING. 

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

23 U.S.C. 1092) is amended by adding at the end the fol24 lowing: 

25 ‘‘(n) FINANCIAL LITERACY COUNSELING.— 


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

2 shall provide financial literacy counseling to bor3 rowers in accordance with the requirements of this 

4 subsection, through— 

5 ‘‘(A) financial aid offices; 

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

7 designated under subsection (c); or 

8 ‘‘(C) a contract or partnership with a non9 profit organization that has substantial experi10 ence developing or administering financial lit11 eracy and economic education curricula, which 

12 may include an organization that has received 

13 grant funding under the Excellence in Eco14 nomic Education Act of 2001 (20 U.S.C. 7267 

15 et seq.). 

16 ‘‘(2) ENTRANCE AND EXIT COUNSELING RE17 QUIRED.— 

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

19 counseling, as required under this subsection, 

20 shall be provided to borrowers on the following 

21 2 occasions: 

22 ‘‘(i) ENTRANCE COUNSELING.—Such 

23 counseling shall be provided not later than 

24 45 days after the first disbursement of a 

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


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1 or guaranteed under part B, made under 

2 part D, or made under part E. 

3 ‘‘(ii) EXIT COUNSELING.—Such coun4 seling shall be provided, in addition to the 

5 counseling provided under clause (i), prior 

6 to the completion of the course of study for 

7 which the borrower enrolled at the institu8 tion or at the time of departure from such 

9 institution, to each borrower of a loan that 

10 is made, insured, or guaranteed under part 

11 B, made under part D, or made under part 

12 E. 

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

14 subparagraph (A) shall not apply to borrowers 

15 of— 

16 ‘‘(i) a loan made, insured, or guaran17 teed pursuant to section 428C; 

18 ‘‘(ii) a loan made, insured, or guaran19 teed on behalf of a student pursuant to 

20 section 428B; or 

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

22 is a Federal Direct Consolidation Loan or 

23 a Federal Direct PLUS loan made on be24 half of a student. 


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1 ‘‘(C) MINIMUM COUNSELING REQUIRE2 MENTS.—Such financial literacy counseling 

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

4 counseling on the occasion described in sub5 paragraph (A)(i), and an additional period of 

6 not less than 4 hours of counseling on the occa7 sion described in subparagraph (A)(ii). A total 

8 of not more than 2 hours of counseling for each 

9 of the occasions described in subparagraph (A) 

10 shall be provided electronically. 

11 ‘‘(D) EARLY DEPARTURE.—Notwith12 standing subparagraph (C), if a borrower leaves 

13 an eligible institution without the prior knowl14 edge of such institution, the institution shall at15 tempt to provide the information required under 

16 this subsection to the student in writing. 

17 ‘‘(3) INFORMATION TO BE PROVIDED.—Finan18 cial literacy counseling, as required under this sub19 section, shall include information on the following: 

20 ‘‘(A) Student financial aid, including— 

21 ‘‘(i) general information about edu22 cational loans, grants, tax credits, and 

23 scholarships; 

24 ‘‘(ii) the difference between grants, 

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1 tween Federal loans under this title and 

2 private educational loans, and the dif3 ference between loans under this title and 

4 other loan products; and 

5 ‘‘(iii) information about educational 

6 loan management, including repayment, 

7 deferment, consolidation, cancellation, dis8 charge, and defaults. 

9 ‘‘(B) Banking basics, including— 

10 ‘‘(i) the types of financial institutions; 

11 ‘‘(ii) the roles, purposes, and uses of 

12 mainstream financial institutions; and 

13 ‘‘(iii) the fundamentals of opening, 

14 using, and managing basic savings and 

15 checking accounts, including common 

16 rates, fees, and borrower pitfalls. 

17 ‘‘(C) Budgeting and saving, including— 

18 ‘‘(i) the main components of a budget; 

19 ‘‘(ii) designating and prioritizing in20 come, expenses, and personal expenditures; 

21 and 

22 ‘‘(iii) developing and maintaining 

23 matching goals and savings plans. 


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1 ‘‘(D) Credit and debt management, includ2 ing responsible use of credit and the pitfalls of 

3 credit card debt. 

4 ‘‘(E) Credit cards and other common cred5 it products (such as debit cards, student loan 

6 debit and refund cards, charge cards, pre-paid 

7 cards, and secured cards linked to checking ac8 counts), including— 

9 ‘‘(i) features, terms, and conditions of 

10 credit agreements; 

11 ‘‘(ii) responsible use of such cards and 

12 products; 

13 ‘‘(iii) repayment; and 

14 ‘‘(iv) the consequences of making only 

15 required minimum payments. 

16 ‘‘(F) Investing, including— 

17 ‘‘(i) common investment products; 

18 ‘‘(ii) establishing investment goals 

19 (such as education, homeownership, wealth 

20 building, and retirement); 

21 ‘‘(iii) risks and benefits of investing; 

22 and 

23 ‘‘(iv) assessing and establishing risk 

24 tolerance. 

25 ‘‘(G) Credit scores, including— 


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1 ‘‘(i) functions and uses of credit 

2 scores; 

3 ‘‘(ii) calculation of credit scores; 

4 ‘‘(iii) factors that may improve or 

5 worsen credit scores; and 

6 ‘‘(iv) how to build a strong credit his7 tory. 

8 ‘‘(H) Housing, including information on— 

9 ‘‘(i) renting; 

10 ‘‘(ii) pre-homeownership education 

11 (such as assessing homeownership readi12 ness and capability); and 

13 ‘‘(iii) the basics of mortgage bor14 rowing (such as common mortgage prod15 ucts and qualifying for and obtaining a 

16 mortgage). 

17 ‘‘(I) Taxes, including— 

18 ‘‘(i) tax filing and planning; and 

19 ‘‘(ii) the tax consequences of financial 

20 decisions (such as placing an investment or 

21 purchasing a home). 

22 ‘‘(J) Responsible financial decision making, 

23 including identifying and analyzing costs, bene24 fits, economic incentives, and alternatives. 


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

2 Secretary may encourage institutions to carry out 

3 the requirements of this subsection through the use 

4 of interactive programs that test the borrower’s un5 derstanding of the financial literacy information pro6 vided through counseling under this subsection, 

7 using simple and understandable language and clear 

8 formatting. 

9 ‘‘(5) MODEL FINANCIAL LITERACY COUNSELING

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

11 of enactment of the College Literacy in Finance and 

12 Economics Act of 2011, the Secretary shall develop 

13 a curriculum in accordance with the requirements of 

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

15 fulfill the requirements of this subsection. In devel16 oping such curriculum, the Secretary may consult 

17 with members of the Financial Literacy and Edu18 cation Commission.’’. 

Æ 


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