SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Empowering Students 
Through Enhanced Financial Counseling Act’’. 
SEC. 2. ANNUAL COUNSELING. 
Section 485(l) of the Higher Education Act of 1965 
(20 U.S.C. 1092(l)) is amended to read as follows: 
‘‘(l) ANNUAL FINANCIAL AID COUNSELING.— 
‘‘(1) ANNUAL DISCLOSURE REQUIRED.— 
‘‘(A) IN GENERAL.—Each eligible institu-
tion shall ensure that each individual who re-
ceives a Federal Pell Grant or a loan made 
under part D (other than a Federal Direct Con-
solidation Loan) receives comprehensive infor-
mation on the terms and conditions of such 
Federal Pell Grant or loan and the responsibil-
ities the individual has with respect to such 
Federal Pell Grant or loan. Such information 
shall be provided, for each award year for which 
the individual receives such Federal Pell Grant 
or loan, in a simple and understandable man-
ner— 
‘‘(i) during a counseling session con-
ducted in person; 
‘‘(ii) online, with the individual ac-
knowledging receipt of the information; or
‘‘(iii) through the use of the online 
counseling tool described in subsection 
(n)(1)(B). 
‘‘(B) USE OF INTERACTIVE PROGRAMS.— 
In the case of institutions not using the online 
counseling 
tool 
described 
in 
subsection 
(n)(1)(B), the Secretary shall require such in-
stitutions to carry out the requirements of sub-
paragraph (A) through the use of interactive 
programs, during an annual counseling session 
that is in-person or online, that test the individ-
ual’s understanding of the terms and conditions 
of the Federal Pell Grant or loan awarded to 
the individual, using simple and understandable 
language and clear formatting. 
‘‘(2) ALL INDIVIDUALS.—The information to be 
provided under paragraph (1)(A) to each individual 
receiving counseling under this subsection shall in-
clude the following: 
‘‘(A) An explanation of how the individual 
may budget for typical educational expenses 
and a sample budget based on the cost of at-
tendance for the institution. 
‘‘(B) An explanation that an individual has 
a right to annually request a disclosure of infor-
mation collected by a consumer reporting agen-
cy pursuant to section 612(a) of the Fair Credit 
Reporting Act (15 U.S.C. 1681j(a)). 
‘‘(C) Based on the most recent data avail-
able from the American Community Survey 
available from the Department of Commerce, 
the estimated average income and percentage of 
employment in the State of domicile of the indi-
vidual for individuals with— 
‘‘(i) a high school diploma or equiva-
lent; 
‘‘(ii) some post-secondary education 
without completion of a degree or certifi-
cate; and 
‘‘(iii) a bachelor’s degree. 
‘‘(D) An introduction to the financial man-
agement resources provided by the Financial 
Literacy and Education Commission. 
‘‘(E) An explanation of how the student 
may seek additional financial assistance from 
the institution’s financial aid office due to a 
change in the student’s financial circumstances, 
and the contact information for such office. 
‘‘(3) STUDENTS
RECEIVING
FEDERAL
PELL 
GRANTS.—The information to be provided under
paragraph (1)(A) to each student receiving a Fed-
eral Pell Grant shall include the following: 
‘‘(A) An explanation of the terms and con-
ditions of the Federal Pell Grant. 
‘‘(B) An explanation of approved edu-
cational expenses for which the student may use 
the Federal Pell Grant. 
‘‘(C) An explanation of why the student 
may have to repay the Federal Pell Grant. 
‘‘(D) An explanation of the maximum 
number of semesters or equivalent for which the 
student may be eligible to receive a Federal Pell 
Grant, and a statement of the amount of time 
remaining for which the student may be eligible 
to receive a Federal Pell Grant. 
‘‘(E) An explanation that, in the case of a 
student who transfers to another institution, 
the amount of time remaining for which a stu-
dent may be eligible to receive a Federal Pell 
Grant, as provided under subparagraph (D), 
will not change, regardless of whether all of the 
courses completed by such student are accepted 
for purposes of meeting specific degree or pro-
gram requirements by the institution to which 
such student transfer.
‘‘(4) BORROWERS
RECEIVING
LOANS
MADE 
UNDER
PART
D
(OTHER
THAN
PARENT
PLUS 
LOANS).—The information to be provided under 
paragraph (1)(A) to a borrower of a loan made 
under part D (other than a Federal Direct PLUS 
Loan made on behalf of a dependent student) shall 
include the following: 
‘‘(A) To the extent practicable, the effect 
of accepting the loan to be disbursed on the eli-
gibility of the borrower for other forms of stu-
dent financial assistance. 
‘‘(B) An explanation of the use of the mas-
ter promissory note. 
‘‘(C) An explanation that the borrower is 
not required to accept the full amount of the 
loan offered to the borrower. 
‘‘(D) An explanation that the borrower 
should consider accepting any grant, scholar-
ship, or State or Federal work-study jobs for 
which the borrower is eligible prior to accepting 
Federal student loans. 
‘‘(E) A recommendation to the borrower to 
exhaust the borrower’s Federal student loan op-
tions prior to taking out private education 
loans, an explanation that Federal student
loans typically offer better terms and conditions 
than private education loans, an explanation of 
treatment of loans made under part D and pri-
vate education loans in bankruptcy, and an ex-
planation that if a borrower decides to take out 
a private education loan— 
‘‘(i) the borrower has the ability to se-
lect a private educational lender of the bor-
rower’s choice; 
‘‘(ii) the proposed private education 
loan may impact the borrower’s potential 
eligibility for other financial assistance, in-
cluding Federal financial assistance under 
this title; and 
‘‘(iii) the borrower has a right— 
‘‘(I) to accept the terms of the 
private education loan within 30 cal-
endar days following the date on 
which the application for such loan is 
approved and the borrower receives 
the required disclosure documents, 
pursuant to section 128(e) of the 
Truth in Lending Act (15 U.S.C. 
1638(e)); and
‘‘(II) to cancel such loan within 3 
business days of the date on which the 
loan is consummated, pursuant to sec-
tion 128(e)(7) of such Act (15 U.S.C. 
1638(e)(7)). 
‘‘(F) An explanation of the approved edu-
cational expenses for which the borrower may 
use a loan made under part D. 
‘‘(G) Information on the annual and aggre-
gate loan limits for Federal Direct Stafford 
Loans and Federal Direct Unsubsidized Staf-
ford Loans. 
‘‘(H) An explanation that, in the case of a 
student who transfers to another institution, 
the loan amounts such student received before 
such transfer shall be used in determining the 
aggregate loan amount of the student, regard-
less of whether all of the courses completed by 
such student are accepted for purposes of meet-
ing specific degree or program requirements by 
the institution to which such student transfers. 
‘‘(I) Information on how interest accrues 
and is capitalized during periods when the in-
terest is not paid by either the borrower or the 
Secretary.
‘‘(J) In the case of a Federal Direct PLUS 
Loan or a Federal Direct Unsubsidized Staf-
ford Loan, the option of the borrower to pay 
the interest while the borrower is in school. 
‘‘(K) The definition of half-time enrollment 
at the institution, during regular terms and 
summer school, if applicable, and the con-
sequences of not maintaining at least half-time 
enrollment. 
‘‘(L) An explanation of the importance of 
contacting the appropriate offices at the institu-
tion of higher education if the borrower with-
draws prior to completing the borrower’s pro-
gram of study so that the institution can pro-
vide exit counseling, including information re-
garding the borrower’s repayment options and 
loan consolidation. 
‘‘(M) For a first-time borrower— 
‘‘(i) a statement of the anticipated 
balance on the loan for which the borrower 
is receiving counseling under this sub-
section; 
‘‘(ii) based on such anticipated bal-
ance, the anticipated monthly payment 
amount under, at minimum—
‘‘(I) the standard repayment 
plan; and 
‘‘(II) the income-driven repay-
ment plans the borrower is eligible 
for, as determined using regionally 
available data from the Bureau of 
Labor Statistics of the average start-
ing salary for the occupation in which 
the borrower has an interest in or in-
tends to be employed; and 
‘‘(iii) an estimate of the projected 
monthly payment amount under each re-
payment plan described in clause (ii), 
based on the average cumulative indebted-
ness at graduation for borrowers of loans 
made under part D who are in the same 
program of study as the borrower. 
‘‘(N) For a borrower with an outstanding 
balance of principal or interest due on a loan 
made under this title— 
‘‘(i) a current statement of the 
amount of such outstanding balance and 
interest accrued; 
‘‘(ii) based on such outstanding bal-
ance, the anticipated monthly payment
amount under, at minimum, the standard 
repayment plan and, using regionally avail-
able data from the Bureau of Labor Sta-
tistics of the average starting salary for 
the occupation the borrower intends to be 
employed, the income-driven repayment 
plans the borrower is eligible for; and 
‘‘(iii) an estimate of the projected 
monthly payment amount under each re-
payment plan described in clause (ii), 
based on— 
‘‘(I) the outstanding balance de-
scribed in clause (i); 
‘‘(II) the anticipated outstanding 
balance on the loan for which the stu-
dent is receiving counseling under this 
subsection; and 
‘‘(III) a projection for any other 
loans made under part D that the 
borrower is reasonably expected to ac-
cept during the borrower’s program of 
study based on at least the expected 
increase in the cost of attendance of 
such program.
‘‘(O) The obligation of the borrower to 
repay the full amount of the loan, regardless of 
whether the borrower completes or does not 
complete the program in which the borrower is 
enrolled within the regular time for program 
completion. 
‘‘(P) The likely consequences of default on 
the loan, including adverse credit reports, delin-
quent debt collection procedures under Federal 
law, and litigation, and a notice of the institu-
tion’s most recent cohort default rate (defined 
in section 435(m)), an explanation of the cohort 
default rate, the most recent national average 
cohort default rate, and the most recent na-
tional average cohort default rate for the cat-
egory 
of 
institution 
described 
in 
section 
435(m)(4) to which the institution belongs. 
‘‘(Q) Information on the National Student 
Loan Data System and how the borrower can 
access the borrower’s records. 
‘‘(R) The contact information for the insti-
tution’s financial aid office or other appropriate 
office at the institution the borrower may con-
tact if the borrower has any questions about the
borrower’s rights and responsibilities or the 
terms and conditions of the loan. 
‘‘(5) BORROWERS
RECEIVING
PARENT
PLUS 
LOANS FOR DEPENDENT STUDENTS.—The informa-
tion to be provided under paragraph (1)(A) to a bor-
rower of a Federal Direct PLUS Loan made on be-
half of a dependent student shall include the fol-
lowing: 
‘‘(A) The information described in sub-
paragraphs (A) through (C) and (O) through 
(R) of paragraph (4). 
‘‘(B) A notification that some students 
may qualify for other financial aid and an ex-
planation that the student for whom the bor-
rower is taking out the loan should consider ac-
cepting any grant, scholarship, or State or Fed-
eral work-study jobs for which such student is 
eligible prior to borrowing Parent PLUS Loans. 
‘‘(C) For a first-time borrower of such 
loan— 
‘‘(i) a statement of the anticipated 
balance on the loan for which the borrower 
is receiving counseling under this sub-
section;
‘‘(ii) based on such anticipated bal-
ance, the anticipated monthly payment 
amount under the standard repayment 
plan; and 
‘‘(iii) an estimate of the projected 
monthly payment amount under the stand-
ard repayment plan, based on the average 
cumulative indebtedness of other borrowers 
of Federal Direct PLUS Loans made on 
behalf of dependent students who are in 
the same program of study as the student 
on whose behalf the borrower borrowed the 
loan. 
‘‘(D) For a borrower with an outstanding 
balance of principal or interest due on such 
loan— 
‘‘(i) a statement of the amount of 
such outstanding balance; 
‘‘(ii) based on such outstanding bal-
ance, the anticipated monthly payment 
amount under the standard repayment 
plan; and 
‘‘(iii) an estimate of the projected 
monthly payment amount under the stand-
ard repayment plan, based on—
‘‘(I) the outstanding balance de-
scribed in clause (i); 
‘‘(II) the anticipated outstanding 
balance on the loan for which the bor-
rower is receiving counseling under 
this subsection; and 
‘‘(III) a projection for any other 
Federal Direct PLUS Loan made on 
behalf of the dependent student that 
the borrower is reasonably expected to 
accept during the program of study of 
such student based on at least the ex-
pected increase in the cost of attend-
ance of such program. 
‘‘(E) Debt management strategies that are 
designed to facilitate the repayment of such in-
debtedness. 
‘‘(F) An explanation that the borrower has 
the options to prepay each loan, pay each loan 
on a shorter schedule, pay each loan while the 
dependent child is still in school, pay the inter-
est on the loan while the loan is in deferment, 
and change repayment plans. 
‘‘(G) For each Federal Direct PLUS Loan 
made on behalf of a dependent student for
which the borrower is receiving counseling 
under this subsection, the contact information 
for the loan servicer of the loan and a link to 
such servicer’s Website. 
‘‘(6) ANNUAL
LOAN
ACCEPTANCE.—Prior to 
making the first disbursement of a loan made under 
part D (other than a Federal Direct Consolidation 
Loan) to a borrower for an award year, an eligible 
institution, shall, as part of carrying out the coun-
seling requirements of this subsection for the loan, 
ensure that after receiving the applicable counseling 
under paragraphs (2), (4), and (5) for the loan the 
borrower accepts the loan for such award year and 
for such amount as is specified by the borrower by— 
‘‘(A) signing the master promissory note 
for the loan; 
‘‘(B) signing and returning to the institu-
tion a separate written statement that affirma-
tively states that the borrower accepts the loan; 
or 
‘‘(C) electronically signing an electronic 
version of the statement described in subpara-
graph (B). 
‘‘(7) CONSTRUCTION.—Nothing in this section 
shall be construed to prohibit an eligible institution
from providing additional information and coun-
seling services to recipients of Federal student aid 
under this title, provided that any additional infor-
mation and counseling services for recipients of Fed-
eral student aid shall not preclude or be considered 
a condition for disbursement of such aid. 
‘‘(8) COUNSELING
SESSIONS
CONDUCTED
IN 
PERSON.—Institutions of higher education may en-
courage individuals to attend in-person loan coun-
seling sessions under paragraph (1)(A).’’. 
SEC. 3. EXIT COUNSELING. 
Section 485(b) of the Higher Education Act of 1965 
(20 U.S.C. 1092(b)) is amended— 
(1) in paragraph (1)(A)— 
(A) in the matter preceding clause (i), by 
striking ‘‘through financial aid offices or other-
wise’’ and inserting ‘‘through the use of an 
interactive program, during an exit counseling 
session that is in-person or online, or through 
the use of the online counseling tool described 
in subsection (n)(1)(A)’’; 
(B) by redesignating clauses (i) through 
(ix) as clauses (v) through (xiii), respectively; 
(C) by inserting before clause (v), as so re-
designated, the following:
‘‘(i) a summary of the outstanding balance of 
principal and interest due on the loans made to the 
borrower under part B, D, or E; 
‘‘(ii) an explanation of the grace period pre-
ceding repayment and the expected date that the 
borrower will enter repayment; 
‘‘(iii) an explanation that the borrower has the 
option to pay any interest that has accrued while the 
borrower was in school or that may accrue during 
the grace period preceding repayment or during an 
authorized period of deferment or forbearance, prior 
to the capitalization of the interest; 
‘‘(iv) an explanation that the borrower may be 
approached during the repayment process by third- 
party student debt relief companies, that they should 
use caution in any such dealings, and that the typ-
ical services provided by these companies are already 
offered to borrowers free of charge through 
servicers;’’; 
(D) in clause (v), as so redesignated— 
(i) by striking ‘‘sample information 
showing the average’’ and inserting ‘‘infor-
mation, based on the borrower’s out-
standing balance described in clause (i), 
showing the borrower’s’’; and
(ii) by striking ‘‘of each plan’’ and in-
serting ‘‘of at least the standard repay-
ment plan and the income-driven repay-
ment plans the borrower is eligible for’’; 
(E) in clause (x), as so redesignated— 
(i) by inserting ‘‘decreased credit 
score,’’ after ‘‘credit reports,’’; and 
(ii) by inserting ‘‘reduced ability to 
rent or purchase a home or car, potential 
difficulty in securing employment,’’ after 
‘‘Federal law,’’; 
(F) in clause (xi), as so redesignated, by 
striking ‘‘consolidation loan under section 428C 
or a’’; 
(G) in clauses (xii) and (xiii), as so redes-
ignated, by striking ‘‘and’’ at the end; and 
(H) by adding at the end the following: 
‘‘(xiv) for each of the borrower’s loans made 
under part B, D, or E for which the borrower is re-
ceiving counseling under this subsection, the contact 
information for the loan servicer of the loan and a 
link to such servicer’s Website; and 
‘‘(xv) an explanation that an individual has a 
right to annually request a disclosure of information 
collected by a consumer reporting agency pursuant