I 
111TH CONGRESS 
1ST SESSION H. R. 1325 
To require financial literacy counseling for borrowers, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 5, 2009 
Ms. JACKSON-LEE of Texas (for herself, Ms. WATSON, Ms. LEE of California, 
Ms. KOSMAS, Ms. FUDGE, Ms. CORRINE BROWN of Florida, Ms. KAP-
TUR, Mr. EDWARDS of Texas, Mr. PASCRELL, Mr. ELLISON, Mr. MEEKS 
of New York, and Mr. CLEAVER) introduced the following bill; which was 
referred to the Committee on Education and Labor 
A BILL 
To require financial literacy counseling for borrowers, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. 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 fol-
lowing new subsection: 
‘‘(n) FINANCIAL LITERACY COUNSELING.— 
‘‘(1) IN
GENERAL.—Each eligible institution 
shall, through financial aid offices, through an em-
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ployee or group of employees designated under sub-
section (c), or through a contract or partnership 
with a nonprofit organization, provide financial lit-
eracy counseling to borrowers in accordance with the 
requirements of this subsection. 
‘‘(2) ENTRANCE
AND
EXIT
COUNSELING
RE-
QUIRED.— 
‘‘(A) IN
GENERAL.—Financial literacy 
counseling required under this subsection 
shall— 
‘‘(i) be provided to— 
‘‘(I) each first-time borrower of a 
loan made, insured, or guaranteed 
under part B (other than a loan made 
pursuant to section 428C or a loan 
made on behalf of a student pursuant 
to section 428B) or made under part 
D (other than a Federal Direct Con-
solidation Loan or a Federal Direct 
PLUS loan made on behalf of a stu-
dent), at or prior to the time of the 
first disbursement of such loan; and 
‘‘(II) each borrower of a loan 
made, insured, or guaranteed under 
part B (other than loans made pursu-
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‘‘(A) Banking basics, including the types of 
financial institutions, why and how banks may 
be useful to individuals, and the fundamentals 
of using basic checking and savings bank ac-
counts (including how checking and savings ac-
counts work, fees that may be charged, and 
how to open and maintain an account). 
‘‘(B) Budgeting, including matching goals 
and savings, identification of ways borrowers 
can save money and understand savings options 
that can be used to reach savings goals, the 
main components of a budget (such as income, 
fixed income, fixed expenses, flexible expenses 
and discretionary expenses), and how to des-
ignate incomes and expenses. 
‘‘(C) Credit cards, including how to use 
credit appropriately, how to determine what 
forms of credit best suit the needs of the bor-
rower, the common pitfalls of credit card debt, 
the differences in types of credit cards (includ-
ing pre-paid cards, debit cards, secured credit 
cards linked to checking accounts, and charge 
cards), responsible uses of credit cards, and 
how to build a strong credit history. 
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‘‘(D) Loans, grants, education tax credits, 
and scholarships, including— 
‘‘(i) general information about and 
differences between installment loans, in-
cluding car loans and student loans; 
‘‘(ii) the difference between grants, 
scholarships, and loans, including the dif-
ferences between need-based and merit- 
based aid; and 
‘‘(iii) information about options for 
repayment, deferment, and the ability to 
discharge or cancel education loans. 
‘‘(E) Renting and housing, including infor-
mation on renting an apartment, the basics of 
getting a mortgage, and assistance with deter-
mining a borrower’s readiness to have a space 
of their own. 
‘‘(F) Credit scores and ratings, including 
information about credit (such as that credit is 
a sum of money lent by a bank or institution 
for repayment in the future and includes inter-
est on the balance that is borrowed), what fac-
tors go into a credit score, and the importance 
of having a good credit record (particularly the 
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influence of credit records on interest rates, 
loans, insurance rates, and job offers). 
‘‘(G) 
Investing, 
including 
information 
about the risks and benefits of investing money, 
setting goals and time horizons for when money 
may be needed, establishing risk tolerance, and 
the differences between stocks, bonds, and divi-
dends. 
‘‘(4) USE
OF
INTERACTIVE
PROGRAMS.—The 
Secretary shall encourage institutions to carry out 
the requirements of this subsection through the use 
of interactive programs that test the borrower’s un-
derstanding of the financial literacy information pro-
vided through counseling under this subsection, 
using simple and understandable language and clear 
formatting.’’. 
Æ 
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