SEC. 2. ONLINE COUNSELING TOOLS. 
(a) OPTION FOR INSTITUTIONS OF HIGHER EDU-
CATION.—Section 485(l)(1)(A)(ii) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1092(l)(1)(A)(ii)) is 
amended— 
(1) in subclause (II), by striking ‘‘or’’ at the 
end; 
(2) in subclause (III), by striking the period at 
the end and inserting ‘‘; or’’; and 
(3) by adding at the end the following: 
‘‘(IV) through the use of the on-
line counseling tool described in sub-
section (n).’’. 
(b) REQUIREMENTS
FOR
SECRETARY
OF
EDU-
CATION.—Section 485 of the Higher Education Act of 
1965 (20 U.S.C. 1092) is further amended by adding at 
the end the following: 
‘‘(n) ONLINE COUNSELING TOOLS.— 
‘‘(1) IN GENERAL.—Beginning not later than 1 
year after the date of the enactment of the Financial 
Literacy for Financial Aid Act, the Secretary shall 
maintain an online counseling tool that— 
‘‘(A) provides the entrance counseling re-
quired under subsection (l); and 
‘‘(B) meets the applicable requirements of 
this subsection. 
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‘‘(2) REQUIREMENTS OF TOOLS.—In maintain-
ing the online counseling tool described in paragraph 
(1), the Secretary shall ensure that the tool is— 
‘‘(A) consumer tested, in consultation with 
other relevant Federal agencies, to ensure that 
the tool is effective in helping individuals under-
stand the information described in subsection 
(l)(2); 
‘‘(B) interactive and tests the borrower’s 
understanding of the information described in 
subsection (l)(2); 
‘‘(C) understandable to borrowers of loans 
made under part D; 
‘‘(D) effective in providing instruction in 
general financial literacy in accordance with 
paragraph (3) of this subsection; and 
‘‘(E) freely available to all eligible institu-
tions. 
‘‘(3) GENERAL PRINCIPLES OF FINANCIAL LIT-
ERACY.—The Secretary shall ensure that the online 
counseling tool provides instruction in general prin-
ciples of financial literacy, including the following: 
‘‘(A) PERSONAL INCOME.—An explanation 
of— 
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‘‘(i) how to identify various types of 
income and expenses; 
‘‘(ii) gross and net pay and how to 
read a paycheck stub; and 
‘‘(iii) how to craft financial goals. 
‘‘(B) TAXES.—An explanation of— 
‘‘(i) the history of taxes; 
‘‘(ii) the purpose and uses of taxes; 
and 
‘‘(iii) how to differentiate between 
types of taxes. 
‘‘(C) RETIREMENT.—An explanation of— 
‘‘(i) the importance of planning for re-
tirement; 
‘‘(ii) retirement strategies to achieve 
financial goals; 
‘‘(iii) how to differentiate among the 
types of investment vehicles for retirement; 
and 
‘‘(iv) how to assess overall financial 
situation in determining retirement needs. 
‘‘(D) SPENDING PLANS AND BANKING RE-
SOURCES.—An explanation of— 
‘‘(i) the benefits of transaction and 
savings accounts; 
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‘‘(ii) how compound interest helps 
saved money grow; and 
‘‘(iii) how to define and create a 
spending plan. 
‘‘(E) CREDIT
CARDS.—An explanation 
of— 
‘‘(i) how to define and calculate the 
cost of borrowing; 
‘‘(ii) the difference between good debt 
and bad debt; 
‘‘(iii) credit cards and how to evaluate 
credit card offers; 
‘‘(iv) consumer credit rights; and 
‘‘(v) credit scores. 
‘‘(F) FINANCIAL
RECOVERY
AND
GIVING 
BACK.—An explanation of— 
‘‘(i) how to assess financial health; 
‘‘(ii) how to budget; 
‘‘(iii) how to find ways to reduce ex-
penses or increase income; 
‘‘(iv) the difference between credit re-
pair and credit consolidation; 
‘‘(v) the importance of charitable giv-
ing; and 
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‘‘(vi) how to define future financial 
goals. 
‘‘(4) RECORD OF COUNSELING COMPLETION.— 
The Secretary shall use the online counseling tool 
described in paragraph (1) to keep a record of which 
individuals have received counseling using the tool, 
and notify the applicable institutions of the individ-
ual’s completion of such counseling.’’. 
SEC. 3. REPORT. 
Not later than 2 years after the date of the enact-
ment of this Act, and not less than once every 3 years 
thereafter, the Secretary shall submit to the Committee 
on Education and the Workforce of the House of Rep-
resentatives, and the Committee on Health, Education, 
Labor, and Pensions of the Senate, a written report that 
includes an evaluation of the effectiveness of the instruc-
tion in general principles of financial literacy described in 
section 485(n)(3) of the Higher Education Act of 1965 
(20 U.S.C. 1092(n)(3)), as added by this Act. 
Æ 
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