[House Report 113-531]
[From the U.S. Government Publishing Office]
113th Congress } { Report
2d Session } HOUSE OF REPRESENTATIVES { 113-531
=======================================================================
EMPOWERING STUDENTS THROUGH ENHANCED FINANCIAL COUNSELING ACT
_______
July 17, 2014.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Kline, from the Committee on Education and the Workforce, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 4984]
[Including cost estimate of the Congressional Budget Office]
The Committee on Education and the Workforce, to whom was
referred the bill (H.R. 4984) to amend the loan counseling
requirements under the Higher Education Act of 1965, and for
other purposes, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
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 institution shall
ensure that each individual who receives a Federal Pell
Grant or a loan made under part D (other than a Federal
Direct Consolidation Loan) receives comprehensive
information on the terms and conditions of such Federal
Pell Grant or loan and the responsibilities 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 manner--
``(i) during a counseling session conducted
in person;
``(ii) online, with the borrower
acknowledging 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 institutions to carry out the requirements
of subparagraph (A) through the use of interactive
programs, during an annual counseling session that is
in-person or online, that test the individual's
understanding of the terms and conditions of the
Federal Pell Grant or loan awarded to the student,
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 include the following:
``(A) An explanation of how the student may budget
for typical educational expenses and a sample budget
based on the cost of attendance for the institution.
``(B) An explanation that an individual has a right
to annually request a disclosure of information
collected by a consumer reporting agency pursuant to
section 612(a) of the Fair Credit Reporting Act (15
U.S.C. 1681j(a)).
``(3) Students receiving federal pell grants.--The
information to be provided under paragraph (1)(A) to each
student receiving a Federal Pell Grant shall include the
following:
``(A) An explanation of the terms and conditions of
the Federal Pell Grant.
``(B) An explanation of approved educational 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 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.
``(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 eligibility
of the borrower for other forms of student financial
assistance.
``(B) An explanation of the use of the master
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, scholarship, 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 options prior to taking
out private loans, an explanation that Federal student
loans typically offer better terms and conditions than
private loans, and an explanation that if a borrower
decides to take out a private education loan--
``(i) the borrower has the ability to select
a private educational lender of the borrower's
choice;
``(ii) the proposed private education loan
may impact the borrower's potential eligibility
for other financial assistance, including
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
calendar 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)(6) of the Truth in
Lending Act; and
``(II) to cancel such loan within 3
business days of the date on which the
loan is consummated, pursuant to
section 128(e)(7) of such Act.
``(F) An explanation of the approved educational
expenses for which the borrower may use a loan made
under part D.
``(G) Information on the annual and aggregate loan
limits for Federal Direct Stafford Loans and Federal
Direct Unsubsidized Stafford Loans.
``(H) Information on how interest accrues and is
capitalized during periods when the interest is not
paid by either the borrower or the Secretary.
``(I) In the case of a Federal Direct PLUS Loan or a
Federal Direct Unsubsidized Stafford Loan, the option
of the borrower to pay the interest while the borrower
is in school.
``(J) The definition of half-time enrollment at the
institution, during regular terms and summer school, if
applicable, and the consequences of not maintaining at
least half-time enrollment.
``(K) An explanation of the importance of contacting
the appropriate offices at the institution of higher
education if the borrower withdraws prior to completing
the borrower's program of study so that the institution
can provide exit counseling, including information
regarding the borrower's repayment options and loan
consolidation.
``(L) For a first-time borrower, the anticipated
monthly payment amount under, at minimum, a standard
repayment plan and, using the regionally available data
from the Bureau of Labor Statistics of the average
starting salary for the occupation the borrower intends
to be employed, an income-based repayment plan under
section 493C, and based on--
``(i) a range of levels of indebtedness of--
``(I) borrowers of Federal Direct
Stafford Loans or Federal Direct
Unsubsidized Stafford Loans; and
``(II) as appropriate, graduate
borrowers of Federal Direct PLUS Loans
or Federal Direct Unsubsidized Stafford
Loans; or
``(ii) the average cumulative indebtedness at
graduation for students who borrowed loans made
under part D and who are in the same program of
study as the borrower.
``(M) 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 balance, the
anticipated monthly payment amount under, at
minimum, the standard repayment plan and, using
regionally available data from the Bureau of
Labor Statistics of the average starting salary
for the occupation the borrower intends to be
employed, an income-based repayment plan under
section 493C; and
``(iii) an estimate of the projected monthly
payment amount under each repayment plan
described in clause (ii), based on--
``(I) the outstanding balance
described in clause (i);
``(II) the anticipated outstanding
balance on the loan for which the
student 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
accept during the borrower's program of
study based on at least the expected
increase in the cost of attendance of
such program.
``(N) 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.
``(O) The likely consequences of default on the loan,
including adverse credit reports, delinquent debt
collection procedures under Federal law, and
litigation, and a notice of the institution's most
recent cohort default rate (defined in section 435(m)),
an explanation of the cohort default rate, and the most
recent national average cohort default rate for the
category of institution described in section 435(m)(4)
to which the institution belongs.
``(P) Information on the National Student Loan Data
System and how the borrower can access the borrower's
records.
``(Q) The contact information for the institution's
financial aid office or other appropriate office at the
institution the borrower may contact 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 information to be provided under paragraph
(1)(A) to a borrower of a Federal Direct PLUS Loan made on
behalf of a dependent student shall include the following:
``(A) The information described in subparagraphs (A)
through (C) and (N) through (Q) of paragraph (4).
``(B) The option of the borrower to pay the interest
on the loan while the loan is in deferment.
``(C) For a first-time borrower of such loan, sample
monthly repayment amounts under the standard repayment
plan based on--
``(i) a range of levels of indebtedness of
borrowers of Federal Direct PLUS Loans made on
behalf of a dependent student; or
``(ii) 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 balance, the
anticipated monthly payment amount under the
standard repayment plan; and
``(iii) an estimate of the projected monthly
payment amount under the standard repayment
plan, based on--
``(I) the outstanding balance
described in clause (i);
``(II) the anticipated outstanding
balance on the loan for which the
borrower 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
expected increase in the cost of
attendance of such program.
``(E) Debt management strategies that are designed to
facilitate the repayment of such indebtedness.
``(F) An explanation that the borrower has the
options to prepay each loan, pay each loan on a shorter
schedule, 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
counseling requirements of this subsection for the loan, ensure
that the borrower accepts the loan for such award year by--
``(A) signing the master promissory note for the
loan;
``(B) signing and returning to the institution a
separate written statement that affirmatively states
that the borrower accepts the loan; or
``(C) electronically signing an electronic version of
the statement described in subparagraph (B).''.
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 otherwise'' 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 (iv) through (xii), respectively;
(C) by inserting before clause (iv), as so
redesignated, 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 preceding 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;'';
(D) in clause (iv), as so redesignated--
(i) by striking ``sample information showing
the average'' and inserting ``information,
based on the borrower's outstanding balance
described in clause (i), showing the
borrower's''; and
(ii) by striking ``of each plan'' and
inserting ``of at least the standard repayment
plan and the income-based repayment plan under
section 493C'';
(E) in clause (x), as so redesignated, by striking
``consolidation loan under section 428C or a'';
(F) in clauses (xi) and (xii), as so redesignated, by
striking ``and'' at the end; and
(G) by adding at the end the following:
``(xiii) for each of the borrower's loans made under part B,
D, or E 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; and
``(xiv) an explanation that an individual has a right to
annually request a disclosure of information collected by a
consumer reporting agency pursuant to section 612(a) of the
Fair Credit Reporting Act (15 U.S.C. 1681j(a)).'';
(2) in paragraph (1)(B)--
(A) by inserting ``online or'' before ``in writing'';
and
(B) by adding before the period at the end the
following: ``, except that in the case of an
institution using the online counseling tool described
in subsection (n)(1)(A), the Secretary shall attempt to
provide such information to the student in the manner
described in subsection (n)(3)(C)''; and
(3) in paragraph (2)(C), by inserting ``, such as the online
counseling tool described in subsection (n)(1)(A),'' after
``electronic means''.
SEC. 4. ONLINE COUNSELING TOOLS.
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 enactment of the Empowering Students Through Enhanced
Financial Counseling Act, the Secretary shall maintain--
``(A) an online counseling tool that provides the
exit counseling required under subsection (b) and meets
the applicable requirements of this subsection; and
``(B) an online counseling tool that provides the
annual counseling required under subsection (l) and
meets the applicable requirements of this subsection.
``(2) Requirements of tools.--In maintaining the online
counseling tools described in paragraph (1), the Secretary
shall ensure that each such tool is--
``(A) consumer tested, in consultation with other
relevant Federal agencies, to ensure that the tool is
effective in helping individuals understand their
rights and obligations with respect to borrowing a loan
made under part D or receiving a Federal Pell Grant;
``(B) understandable to students receiving Federal
Pell Grants and borrowers of loans made under part D;
and
``(C) freely available to all eligible institutions.
``(3) Record of counseling completion.--The Secretary shall--
``(A) use each 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 individual's completion
of such counseling;
``(B) in the case of a borrower who receives annual
counseling for a loan made under part D using the tool
described in paragraph (1)(B), notify the borrower by
when the borrower should accept, in a manner described
in section 485(l)(6), the loan for which the borrower
has received such counseling; and
``(C) in the case of a borrower described in
subsection (b)(1)(B) at an institution that uses the
online counseling tool described in paragraph (1)(A) of
this subsection, the Secretary shall attempt to provide
the information described in subsection (b)(1)(A) to
the borrower through such tool.''.
SEC. 5. AVAILABILITY OF FUNDS.
(a) Use of Existing Funds.--Of the amount authorized to be
appropriated for maintaining the Department of Education's Financial
Awareness Counseling Tool, $2,000,000 shall be available to carry out
this Act and the amendments made by this Act.
(b) No Additional Funds Authorized.--No funds are authorized to be
appropriated by this Act to carry out this Act or the amendments made
by this Act.
Purpose
H.R. 4984, the Empowering Students through Enhanced
Financial Counseling Act, promotes financial literacy through
enhanced counseling for recipients of federal financial aid.
Committee Action
As the Committee on Education and the Workforce begins the
Higher Education Act reauthorization process, increasing
transparency and usefulness of higher education data;
simplifying and improving the federal student aid programs; and
promoting innovation, access, and completion remain top
priorities.
112TH CONGRESS
Hearings--First session
On March 1, 2011, the Committee on Education and the
Workforce held a hearing in Washington, D.C., on ``Education
Regulations: Weighing the Burden on Schools and Students.'' The
hearing was the first in a series examining the burden of
federal, state, and local regulations on the nation's education
system. The purpose of the hearing was to uncover the damaging
effects of federal regulations on schools and institutions.
These rules increasingly stifle growth and innovation, raise
operating costs, and limit student access to affordable
colleges and universities throughout the nation. Testifying
before the committee were Dr. Edgar Hatrick, Superintendent,
Loudon County Public Schools, Ashburn, Virginia; Ms. Kati
Haycock, President, The Education Trust, Washington, D.C.; Mr.
Gene Wilhoit, Executive Director, Council of Chief State School
Officers, Washington, D.C.; and Mr. Christopher B. Nelson,
President, St. John's College, Annapolis, Maryland.
On March 11, 2011, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., on ``Education
Regulations: Federal Overreach into Academic Affairs.'' The
purpose of the hearing was to discuss the most egregious and
intrusive pieces of the program integrity regulations issued by
the U.S. Department of Education, specifically, the state
authorization regulation and the credit hour regulation, and to
uncover the unintended consequences of the regulations to
states and institutions of higher education. Testifying before
the subcommittee were Mr. John Ebersole, President, Excelsior
College, Albany, New York; Dr. G. Blair Dowden, President,
Huntington University, Huntington, Indiana; The Honorable
Kathleen Tighe, Inspector General, U.S. Department of
Education, Washington, D.C.; and Mr. Ralph Wolff, President,
Western Association of Schools and Colleges, Alameda,
California.
On March 17, 2011, the Committee on Education and the
Workforce held a hearing in Washington, D.C., on ``Education
Regulations: Roadblocks to Student Choice in Higher
Education.'' The purpose of the hearing was to explore the
harmful consequences of the gainful employment regulation
issued by the U.S. Department of Education. Testifying before
the committee were Ms. Catherine Barreto, Graduate, Monroe
College, and Senior Sales Associate, Doubletree Hotels,
Brooklyn, New York; Mr. Travis Jennings, Electrical Supervisor
of the Manufacturing Launch Systems Group, Orbital Sciences
Corporation, Chandler, Arizona; Dr. Arnold Mitchem, President,
Council for Opportunity in Education, Washington, D.C.; and Ms.
Jeanne Herrmann, Chief Operating Officer, Globe University/
Minnesota School of Business, Woodbury, Minnesota.
On March 21, 2011, the Committee on Education and the
Workforce held a hearing in Wilkes-Barre, Pennsylvania, on
``Reviving our Economy: The Role of Higher Education in Job
Growth and Development.'' The purpose of the hearing was to
highlight work by local colleges and universities to respond to
local and state economic needs. Testifying before the committee
were Mr. James Perry, President, Hazelton City Council,
Hazelton, Pennsylvania; Mr. Jeffrey Alesson, Vice President of
Strategic Planning and Quality Assurance, Diamond
Manufacturing, Exeter, Pennsylvania; Dr. Reynold Verret,
Provost, Wilkes University, Wilkes-Barre, Pennsylvania; Mr.
Raymond Angeli, President, Lackawanna College, Scranton,
Pennsylvania; Ms. Joan Seaman, Executive Director, Empire
Beauty School, Moosic, Pennsylvania; and Mr. Thomas P. Leary,
President, Luzerne County Community College, Nanticoke,
Pennsylvania.
On March 22, 2011, the Committee on Education and the
Workforce held a hearing in Utica, New York, on ``Reviving our
Economy: The Role of Higher Education in Job Growth and
Development.'' The purpose of the hearing was to highlight work
by local colleges and universities to respond to local and
state economic needs. Testifying before the committee were Mr.
Anthony J. Picente, Jr., County Executive, Oneida County,
Utica, New York; Mr. Dave Mathis, Director, Oneida County
Workforce Development, Utica, New York; Dr. John Bay, Vice
President and Chief Scientist, Assured Information Security,
Inc., Rome, New York; Dr. Bjong Wolf Yeigh, President, State
University of New York Institute of Technology, Utica, New
York; Dr. Ann Marie Murray, President, Herkimer County
Community College, Herkimer, New York; Dr. Judith Kirkpatrick,
Provost, Utica College, Utica, New York; and Mr. Phil Williams,
President, Utica School of Commerce, The Business College,
Utica, New York.
On April 21, 2011, the Committee on Education and the
Workforce held a hearing in Columbia, Tennessee, on ``Reviving
our Economy: The Role of Higher Education in Job Growth and
Development.'' The purpose of the hearing was to highlight the
work by local colleges and universities to respond to local and
state economic needs. Testifying before the committee were Dr.
Janet Smith, President, Columbia State Community College,
Columbia, Tennessee; Dr. Ted Brown, President, Martin-Methodist
College, Pulaski, Tennessee; Mr. Jim Coakley, President,
Nashville Auto-Diesel College, Nashville, Tennessee; The
Honorable Dean Dickey, Mayor, City of Columbia, Tennessee; Ms.
Susan Marlow, President and Chief Executive Officer, Smart Data
Strategies, Franklin, Tennessee; Ms. Jan McKeel, Executive
Director, South Central Tennessee Workforce Board, Columbia,
Tennessee; and Ms. Margaret Prater, Executive Director,
Northwest Tennessee Workforce Board, Dyersburg, Tennessee.
On July 8, 2011, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training, together with the House Committee on Oversight and
Government Reform Subcommittee on Regulatory Affairs, Stimulus
Oversight, and Government Spending, held a hearing in
Washington, D.C., on ``The Gainful Employment Regulation:
Limiting Job Growth and Student Choice.'' The purpose of the
hearing was to explore the harmful consequences of the gainful
employment regulation issued by the U.S. Department of
Education. Testifying before the subcommittees were Dr. Dario
A. Cortes, President, Berkeley College, New York City, New
York; Dr. Anthony P. Carnevale, Director, Georgetown University
Center on Education and the Workforce, Washington, D.C.; Ms.
Karla Carpenter, Graduate, Herzing University and Program
Manager, Quest Software, Madison, Wisconsin; and Mr. Harry C.
Alford, President and Chief Executive Officer, National Black
Chamber of Commerce, Washington, D.C.
On August 16, 2011, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Greenville, South Carolina, on
``Reviving Our Economy: The Role of Higher Education in Job
Growth and Development.'' The purpose of the hearing was to
highlight the work by local colleges and universities to
respond to local and state economic needs. Testifying before
the subcommittee were The Honorable Knox White, Mayor, City of
Greenville, South Carolina; Mr. Werner Eikenbusch, Section
Manager, Associate Development and Training, BMW Manufacturing
Co., Spartanburg, South Carolina; Ms. Laura Harmon, Project
Director, Greenville Works, Greenville, South Carolina; Dr.
Brenda Thames, Vice President of Academic Development,
Greenville Health System, Greenville, South Carolina; Mr. James
F. Barker, President, Clemson University, Clemson, South
Carolina; Dr. Thomas F. Moore, Chancellor, University of South
Carolina Upstate, Spartanburg, South Carolina; Dr. Keith
Miller, President, Greenville Technical College, Greenville,
South Carolina; and Ms. Amy Hickman, Campus President, ECPI
College of Technology, Greenville, South Carolina.
On October 25, 2011, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., on ``Government-
Run Student Loans: Ensuring the Direct Loan Program is
Accountable to Students and Taxpayers.'' The purpose of the
hearing was to examine the switch to and implementation of the
Direct Loan program. Testifying before the subcommittee were
Mr. James W. Runcie, Chief Operating Officer, Office of Federal
Student Aid, U.S. Department of Education, Washington, D.C.;
Mr. Ron H. Day, Director of Financial Aid, Kennesaw State
University, Kennesaw, Georgia; Ms. Nancy Hoover, Director of
Financial Aid, Denison University, Granville, Ohio; and Mr.
Mark. A. Bandre, Vice President for Enrollment Management and
Student Affairs, Baker University, Baldwin City, Kansas.
On November 30, 2011, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., on ``Keeping
College Within Reach: Discussing Ways Institutions Can
Streamline Costs and Reduce Tuition.'' The purpose of the
hearing was to highlight innovative practices institutions of
higher education are implementing to reduce their costs to
limit tuition increases for students. Testifying before the
subcommittee were Ms. Jane V. Wellman, Executive Director,
Delta Project on Postsecondary Costs, Productivity, and
Accountability, Washington, D.C.; Dr. Ronald E. Manahan,
President, Grace College and Seminary, Winona Lake, Indiana;
Mr. Jamie P. Merisotis, President and Chief Executive Officer,
Lumina Foundation for Education, Indianapolis, Indiana; and Mr.
Tim Foster, President, Colorado Mesa University, Grand
Junction, Colorado.
Legislative action--First session
On February 17, 2011, the House of Representatives
considered an amendment offered by Chairman John Kline (R-MN),
Higher Education and Workforce Training Subcommittee Chairwoman
Virginia Foxx (R-NC), and Rep. Alcee Hastings (D-FL) to H.R. 1,
the Disaster Relief Appropriations Act of 2013. The amendment
prohibited the use of funds by the U.S. Department of Education
to implement and enforce the gainful employment regulation. The
amendment was agreed to by a bipartisan vote of 289 to 136.
On February 19, 2011, the House of Representatives passed
H.R. 1 by a vote of 235 to 189. The amendment was not included
in the bill at final passage.
On June 3, 2011, Chairman John Kline (R-MN) and Higher
Education and Workforce Training Subcommittee Chairwoman
Virginia Foxx (R-NC) introduced H.R. 2117, the Protecting
Academic Freedom in Higher Education Act. The bill repealed the
state authorization regulation, one piece of the credit hour
regulation, and prohibited the secretary of education from
defining credit hour for any purpose under the Higher Education
Act of 1965.
On June 15, 2011, the Committee on Education and the
Workforce considered H.R. 2117 in legislative session and
reported it favorably, as amended, to the House of
Representatives by a bipartisan vote of 27 to 11.
The committee considered and adopted the following
amendment to H.R. 2117:
Subcommittee Chairwoman Virginia Foxx (R-NC)
offered an amendment in the nature of a substitute to
add a short title to the legislation. The amendment was
adopted by voice vote.
The committee further considered the following amendments
to H.R. 2117, which were not adopted:
Rep. Raul Grijalva (D-AZ) offered an
amendment to maintain pieces of the state authorization
regulation, including the complaint process. The
amendment failed by a vote of 17 to 22.
Ranking Member George Miller (D-CA) offered
an amendment to prohibit implementation until the U.S.
Department of Education Inspector General certifies
there are equal or greater protections in place related
to program integrity under Title IV of the Higher
Education Act of 1965. The amendment failed by a vote
of 17 to 22.
Rep. Rush Holt (D-NJ) offered an amendment
to stipulate the act will be effective only if the
maximum Pell Grant award is at least $5,550 for the
2012-2013 school year. The amendment was ruled out of
order.
Rep. Tim Bishop (D-NY) offered an amendment
to strike the repeal of the credit hour regulation that
establishes a federal definition of a ``credit hour.''
The amendment failed by a vote of 11 to 27.
Rep. Tim Bishop (D-NY) offered an amendment
to strike the prohibition on the secretary of education
from defining credit hour in the future. The amendment
failed by a vote of 16 to 22.
Hearings--Second session
On July 18, 2012, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., on ``Keeping
College Within Reach: Exploring State Efforts to Curb Costs.''
The purpose of the hearing was to highlight innovative
practices at the state level to assist postsecondary
institutions in keeping costs affordable and to promote
accountability of public funds. Testifying before the
subcommittee were Mr. Scott Pattison, Executive Director,
National Association of State Budget Officers, Washington,
D.C.; Ms. Teresa Lubbers, Commissioner for Higher Education,
State of Indiana, Indianapolis, Indiana; Mr. Stan Jones,
President, Complete College America, Zionsville, Indiana; and
Dr. Joe May, President, Louisiana Community and Technical
College System, Baton Rouge, Louisiana.
On September 20, 2012, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., on ``Assessing
College Data: Helping to Provide Valuable Information to
Students, Institutions, and Taxpayers.'' The purpose of the
hearing was to examine data collected by the federal government
from institutions of higher education, including data
requirements established during the last reauthorization of the
Higher Education Act. Testifying before the subcommittee were
Dr. Mark Schneider, Vice President, American Institutes for
Research, Washington, D.C.; Dr. James Hallmark, Vice Chancellor
for Academic Affairs, Texas A&M System, College Station, Texas;
Dr. Jose Cruz, Vice President for Higher Education Policy and
Practice, The Education Trust, Washington, D.C.; and Dr. Tracy
Fitzsimmons, President, Shenandoah University, Winchester,
Virginia.
Legislative action--Second session
On February 28, 2012, the House of Representatives passed
H.R. 2117 by a bipartisan vote of 303 to 114. The bill was sent
to the Senate and referred to the Senate Committee on Health,
Education, Labor, and Pensions.
On April 25, 2012, Rep. Judy Biggert (R-IL) introduced H.R.
4628, the Interest Rate Reduction Act. The bill reduced the
interest rate on subsidized Stafford loans made to
undergraduate students from 6.8 percent to 3.4 percent for one
year, from July 1, 2012, through June 30, 2013. To offset the
increase in mandatory spending, the bill repealed the
Prevention and Public Health Fund authorized under Section 4002
of the Patient Protection and Affordable Care Act and rescinded
the balance of unobligated monies made available for the fund.
On April 27, 2012, the House of Representatives passed H.R.
4628 by a vote of 215 to 195.
While H.R. 4628 was never considered by the Senate, its
provisions were included in the Conference Report for H.R.
4348, the Moving Ahead for Progress in the 21st Century Act
(MAP-21), sponsored by Rep. John Mica (R-FL). To partially
offset the increase in mandatory spending that resulted from
the temporary reduction in interest rates on subsidized
Stafford loans, the bill permanently restricted the period of
eligibility to borrow subsidized Stafford loans to 150 percent
of the published length of a student's educational program.
On June 29, 2012, the House of Representatives passed the
Conference Report to H.R. 4348 by a bipartisan vote of 373 to
52.
On June 29, 2012, the Senate passed the Conference Report
to H.R. 4348 by a bipartisan vote of 74 to 19.
On July 6, 2012, the President of the United States signed
H.R. 4348 into law (P.L. 112-141).
113TH CONGRESS
Hearings--First session
On March 13, 2013, the Committee on Education and the
Workforce held a hearing in Washington, D.C., on ``Keeping
College Within Reach: Examining Opportunities to Strengthen
Federal Student Loan Programs.'' The purpose of the hearing was
to examine ways to strengthen federal student loans, as well as
how moving to a market-based or variable interest rate on all
federal student loans could benefit both students and
taxpayers. Testifying before the committee were Dr. Deborah J.
Lucas, Sloan Distinguished Professor of Finance, Massachusetts
Institute of Technology, Cambridge, Massachusetts; Mr. Jason
Delisle, Director, Federal Education Budget Project, The New
America Foundation, Washington, D.C.; Mr. Justin Draeger,
President and Chief Executive Officer, National Association of
Student Financial Aid Administrators, Washington, D.C.; and Dr.
Charmaine Mercer, Vice President of Policy, Alliance for
Excellent Education, Washington, D.C.
On April 9, 2013, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Monroe, Michigan, entitled
``Reviving Our Economy: The Role of Higher Education in Job
Growth and Development.'' The purpose of the hearing was to
highlight work being done by local colleges and universities to
respond to local and state economic needs. Testifying before
the subcommittee were Mr. Henry Lievens, Commissioner, Monroe
County, Monroe, Michigan; Ms. Lynette Dowler, Plant Director,
Fossil Generation, DTE Energy, Detroit, Michigan; Ms. Susan
Smith, Executive Director, Economic Development Partnership of
Hillsdale County, Jonesville, Michigan; Mr. Dan Fairbanks,
United Auto Workers International Representative, UAW-GM Skill
Development and Training Department, Detroit, Michigan; Dr.
David E. Nixon, President, Monroe County Community College,
Monroe, Michigan; Sister Peg Albert, OP, Ph.D., President,
Siena Heights University, Adrian, Michigan; Dr. Michelle
Shields, Career Coach/Workforce Development Director, Jackson
Community College, Jackson, Michigan; and Mr. Douglas A. Levy,
Director of Financial Aid, Macomb Community College, Warren,
Michigan.
On April 16, 2013, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., entitled ``Keeping
College Within Reach: The Role of Federal Student Aid
Programs.'' The purpose of the hearing was to examine shifting
the focus of federal student aid programs from enhancing access
to improving student outcomes. Testifying before the
subcommittee were Mr. Terry W. Hartle, Senior Vice President,
Division of Government and Public Affairs, American Council on
Education, Washington, D.C.; Ms. Moriah Miles, State Chair,
Minnesota State University Student Association, Mankato,
Minnesota; Ms. Patricia McGuire, President, Trinity Washington
University, Washington, D.C.; and Mr. Dan Madzelan, Former
Employee (Retired), U.S. Department of Education, University
Park, Maryland.
On April 24, 2013, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce held a
hearing in Washington, D.C., entitled ``Keeping College Within
Reach: Enhancing Transparency for Students, Families, and
Taxpayers.'' The purpose of the hearing was to examine ways to
improve the information provided by the federal government to
inform students and families about their postsecondary
education options. Testifying before the subcommittee were Dr.
Donald E. Heller, Dean, College of Education, Michigan State
University, East Lansing, Michigan; Mr. Alex Garrido, Student,
Keiser University, Miami, Florida; Dr. Nicole Farmer Hurd,
Founder and Executive Director, National College Advising
Corps, Carrboro, North Carolina; and Mr. Travis Reindl, Program
Director, Postsecondary Education, National Governors
Association Center for Best Practices, Washington, D.C.
On June 13, 2013, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., entitled ``Keeping
College Within Reach: Discussing Program Quality through
Accreditation.'' The purpose of the hearing was to examine the
historical role of accreditation, discuss the role of regional
and national accreditors in measuring institutional quality,
and contemplate areas for reform. Testifying before the
subcommittee were Dr. Elizabeth H. Sibolski, President, Middle
States Commission on Higher Education, Philadelphia,
Pennsylvania; Dr. Michale McComis, Executive Director,
Accrediting Commission of Career Schools and Colleges,
Arlington, Virginia; Ms. Anne D. Neal, President, American
Council of Trustees and Alumni, Washington, D.C.; and Mr. Kevin
Carey, Director of the Education Policy Program, The New
America Foundation, Washington, D.C.
On July 9, 2013, the Committee on Education and the
Workforce held a hearing in Washington, D.C., entitled
``Keeping College Within Reach: Improving Higher Education
through Innovation.'' The purpose of the hearing was to
highlight innovation in higher education occurring at the state
and institutional level and in the private sector. Testifying
before the committee were Mr. Scott Jenkins, Director of
External Relations, Western Governors University, Salt Lake
City, Utah; Dr. Pamela J. Tate, President and Chief Executive
Officer, Council for Adult and Experiential Learning, Chicago,
Illinois; Dr. Joann A. Boughman, Senior Vice Chancellor for
Academic Affairs, University System of Maryland, Adelphi,
Maryland; and Mr. Burck Smith, Chief Executive Officer and
Founder, StraighterLine, Baltimore, Maryland.
On September 11, 2013, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., entitled ``Keeping
College Within Reach: Supporting Higher Education Opportunities
for America's Servicemembers and Veterans.'' The purpose of the
hearing was to examine the efforts of higher education to
improve postsecondary education opportunities for
servicemembers and veterans. Testifying before the subcommittee
were Mrs. Kimrey W. Rhinehardt, Vice President for Federal and
Military Affairs, The University of North Carolina, Chapel
Hill, North Carolina; Dr. Arthur F. Kirk, Jr., President, Saint
Leo University, Saint Leo, Florida; Dr. Russell S. Kitchner,
Vice President for Regulatory and Governmental Relations,
American Public University System, Charles Town, West Virginia;
and Dr. Ken Sauer, Senior Associate Commissioner for Research
and Academic Affairs, Indiana Commission for Higher Education,
Indianapolis, Indiana.
On September 18, 2013, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., entitled ``Keeping
College Within Reach: Improving Access and Affordability
through Innovative Partnerships.'' The purpose of the hearing
was to examine the efforts of higher education institutions to
expand access and reduce costs by partnering with local
employers, other colleges, or online course providers.
Testifying before the subcommittee were Dr. Jeffrey Docking,
President, Adrian College, Adrian, Michigan; Ms. Paula R.
Singer, President and Chief Executive Officer, Laureate Global
Products and Services, Baltimore, Maryland; Dr. Rich Baraniuk,
Professor, Rice University, and Founder, Connexions, Houston,
Texas; and Dr. Charles Lee Isbell, Jr., Professor and Senior
Associate Dean, College of Computing, Georgia Institute of
Technology, Atlanta, Georgia.
On November 13, 2013, the Committee on Education and the
Workforce held a hearing in Washington, D.C., entitled
``Keeping College Within Reach: Simplifying Federal Student
Aid.'' The purpose of the hearing was to examine the need to
streamline, consolidate, and simplify federal student aid
programs. Testifying before the committee were Ms. Kristin D.
Conklin, Founding Partner, HCM Strategies, LLC, Washington,
D.C.; Dr. Sandy Baum, Research Professor of Education Policy,
George Washington University Graduate School of Education and
Human Development, and Senior Fellow, Urban Institute,
Washington, D.C.; Ms. Jennifer Mishory, J.D., Deputy Director,
Young Invincibles, Washington, D.C.; and Mr. Jason Delisle,
Director, Federal Education Budget Project, New America
Foundation, Washington, D.C.
On December 3, 2013, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., entitled ``Keeping
College Within Reach: Strengthening Pell Grants for Future
Generations.'' The purpose of the hearing was to examine Pell
Grant program reform proposals to better target funds to the
neediest students and put the program on a fiscally responsible
and sustainable path. Testifying before the subcommittee were
Mr. Justin Draeger, President and Chief Executive Officer,
National Association of Student Financial Aid Administrators,
Washington, D.C.; Dr. Jenna Ashley Robinson, Director of
Outreach, John W. Pope Center for Higher Education Policy,
Raleigh, North Carolina; Mr. Michael Dannenberg, Director of
Higher Education and Education Finance Policy, The Education
Trust, Washington, D.C.; and Mr. Richard C. Heath, Director of
Student Financial Services, Anne Arundel Community College,
Arnold, Maryland.
Legislative action--First session
On May 9, 2013, Chairman John Kline (R-MN) and Higher
Education and Workforce Training Subcommittee Chairwoman
Virginia Foxx (R-NC) introduced H.R. 1911, the Smarter
Solutions for Students Act. The bill moved all federal student
loans (except Perkins loans) to a market-based interest rate.
On May 16, 2013, the Committee on Education and the
Workforce considered H.R. 1911 in legislative session and
reported it favorably, as amended, to the House of
Representatives by a bipartisan vote of 24 to 13.
The committee considered and adopted the following
amendment to H.R. 1911:
Subcommittee Chairwoman Virginia Foxx (R-NC)
offered an amendment in the nature of a substitute to
make a technical change to the bill. The amendment was
adopted by voice vote.
The committee further considered the following amendments
to H.R. 1911, which were not adopted:
Rep. Joe Heck (R-NV) offered an amendment to
allocate a portion of the savings generated under the
bill to Pell Grants. The amendment was withdrawn.
Rep. Joe Heck (R-NV) offered an amendment to
provide the secretary of education with authority to
reduce the interest rate on student loans if a borrower
makes the first 48 payments on time. The amendment was
withdrawn.
Rep. John Tierney (D-MA) offered an
amendment to set the federal student loan interest
rates at the same rate the Federal Reserve charges to
banks for two years. The amendment failed by a vote of
14 to 23.
Rep. Joe Courtney (D-CT) offered an
amendment to extend the 3.4 percent interest rate on
subsidized Stafford loans for two years. The amendment
failed by a vote of 15 to 21.
On May 23, 2013, the House of Representatives passed H.R.
1911 by a bipartisan vote of 221 to 198.
On July 24, 2013, the Senate passed a substitute version of
H.R. 1911, the Bipartisan Student Loan Certainty Act, by a
bipartisan vote of 81 to 18. The legislation allowed student
loan interest rates to reset once a year by the market, but
lock into a fixed rate once the loan is disbursed to the
student. Interest rates would be set using the following
formulas:
Undergraduate Stafford loans (subsidized and
unsubsidized): 10-year Treasury Note plus 2.05 percent,
capped at 8.25 percent.
Graduate Stafford loans: 10-year Treasury
Note plus 3.6 percent, capped at 9.5 percent
PLUS loans (graduate and parent): 10-year
Treasury Note plus 4.6 percent, capped at 10.5 percent.
On July 31, 2013, the House of Representatives agreed to
suspend the rules and agree to the Senate amendment to H.R.
1911 by a bipartisan vote of 392 to 31.
On August 9, 2013, the President of the United States
signed H.R. 1911 into law (P.L. 113-28).
On May 13, 2013, Rep. Luke Messer (R-IN) introduced H.R.
1949, the Improving Postsecondary Education Data for Students
Act. The bill directed the secretary of education to convene an
Advisory Committee on Improving Postsecondary Education Data to
conduct a study on the factors students and families want,
need, and already consider when choosing a higher education
institution.
On May 16, 2013, the Committee on Education and the
Workforce considered H.R. 1949 in legislative session and
reported it favorably, as amended, to the House of
Representatives by a voice vote. The committee considered and
adopted the following amendment to H.R. 1949:
Rep. Luke Messer (R-IN) offered an amendment
in the nature of a substitute to H.R. 1949 to (1)
include individuals who represent undergraduate and
graduate education; college and career counselors at
secondary schools; experts in data policy, collection,
and use; and experts in labor markets on the list of
individuals required to be represented on the Advisory
Committee on Improving Postsecondary Education Data;
(2) ensure individuals on the advisory committee
represent economic, racial, and geographically diverse
populations; (3) require the advisory committee to
examine information related to the sources of financial
assistance, including federal student loans, as part of
the required aspects of the study; (4) require the
advisory committee to examine how information regarding
student outcomes should be disaggregated for first-
generation students; and (5) provide other conforming
and technical changes to the bill. The amendment was
adopted by voice vote.
On May 23, 2013, the House of Representatives agreed to
suspend the rules and pass H.R. 1949 by voice vote. The bill
was sent to the Senate and referred to the Senate Committee on
Health, Education, Labor, and Pensions.
On July 10, 2013, Chairman John Kline (R-MN), Higher
Education and Workforce Training Subcommittee Chairwoman
Virginia Foxx (R-NC), and Rep. Alcee Hastings (D-FL) introduced
H.R. 2637, the Supporting Academic Freedom through Regulatory
Relief Act. The bill, which included the text of the Protecting
Academic Freedom in Higher Education Act (H.R. 2117) and the
Kline/Foxx/Hastings amendment to H.R. 1 from the 112th
Congress, repealed the credit hour, state authorization, and
gainful employment regulations and amended the statute to
clarify the incentive compensation regulation. Additionally,
the bill prohibited the U.S. Department of Education from
issuing related regulations until after Congress reauthorizes
the Higher Education Act.
On July 24, 2013, the Committee on Education and the
Workforce considered H.R. 2637 in legislative session and
reported it favorably, as amended, to the House of
Representatives by a bipartisan vote of 22 to 13.
The committee considered and adopted the following
amendment to H.R. 2637:
Subcommittee Chairwoman Virginia Foxx (R-NC)
offered an amendment in the nature of a substitute to
change a subsection title in the legislation. The
amendment was adopted by voice vote.
The committee further considered the following amendment to
H.R. 2637, which was not adopted:
Rep. Tim Bishop (D-NY) offered an amendment
to strike the prohibition on the U.S. Department of
Education from issuing regulations related to state
authorization, gainful employment, and credit hour. The
amendment failed by a vote of 13 to 22.
Hearings--Second session
On January 28, 2014, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., entitled ``Keeping
College Within Reach: Sharing Best Practices for Serving Low-
Income and First Generation Students.'' The purpose of the
hearing was to highlight best practices at institutions of
higher education for serving low-income and first generation
students. Testifying before the subcommittee were Dr. James
Anderson, Chancellor, Fayetteville State University,
Fayetteville, North Carolina; Mrs. Mary Beth Del Balzo, Senior
Executive Vice President and Chief Executive Officer, The
College of Westchester, White Plains, New York; Mr. Josse Alex
Garrido, Graduate Student, University of Texas--Pan American,
Edinburg, Texas; and Rev. Dennis H. Holtschneider, President,
DePaul University, Chicago, Illinois.
On February 27, 2013, the Committee on Education and the
Workforce Subcommittee on Early Childhood, Elementary, and
Secondary Education and Subcommittee on Higher Education and
Workforce Training held a joint hearing in Washington, D.C.,
entitled ``Exploring Efforts to Strengthen the Teaching
Profession.'' The purpose of the hearing was to discuss the
state of teacher preparation nationwide. Testifying before the
subcommittees were Dr. Deborah A. Gist, Commissioner, Rhode
Island Department of Elementary and Secondary Education,
Providence, Rhode Island; Dr. Marcy Singer-Gabella, Professor
of the Practice of Education, Vanderbilt University, Nashville,
Tennessee; Dr. Heather Peske, Associate Commissioner for
Educator Quality, Massachusetts Department of Elementary and
Secondary Education, Malden, Massachusetts; and Ms. Christina
Hall, Co-Founder and Co-Director, Urban Teacher Center,
Baltimore, Maryland.
On March 12, 2014, the Committee on Education and the
Workforce Subcommittee on Higher Education and Workforce
Training held a hearing in Washington, D.C., entitled
``Examining the Mismanagement of the Student Loan
Rehabilitation Process.'' The purpose of the hearing was to
examine the U.S. Department of Education's ability to oversee
the processing of rehabilitated loans issued under the Direct
Loan program. Testifying before the subcommittee were Ms.
Melissa Emrey-Arras, Director of Education, Workforce, and
Income Security Issues, U.S. Government Accountability Office,
Boston, Massachusetts; The Honorable Kathleen Tighe, Inspector
General, Department of Education, Washington, D.C.; Mr. James
Runcie, Chief Operating Officer, Federal Student Aid, U.S.
Department of Education, Washington, D.C.; and Ms. Peg Julius,
Executive Director of Enrollment Management, Kirkwood Community
College, Cedar Rapids, Iowa.
On March 20, 2014, the Committee on Education and the
Workforce held a hearing in Mesa, Arizona, entitled ``Reviving
our Economy: Supporting a 21st Century Workforce.'' The purpose
of the hearing was to explore the role of local higher
education institutions in fostering job creation and growth
through innovative partnerships with the business community and
new modes of teaching delivery. Testifying before the committee
were The Honorable Rick Heumann, Vice Mayor, City of Chandler,
Arizona; Ms. Cathleen Barton, Education Manager, Intel
Corporate Affairs, Southwestern United States, Intel
Corporation, Chandler, Arizona; Mr. Lee D. Lambert, J.D.,
Chancellor, Pima Community College, Tucson, Arizona; Dr.
William Pepicello, President, University of Phoenix, Tempe,
Arizona; Dr. Michael Crow, President, Arizona State University,
Tempe, Arizona; Dr. Ann Weaver Hart, President, The University
of Arizona, Tucson, Arizona; Dr. Ernest A. Lara, President,
Estrella Mountain Community College, Avondale, Arizona; and Ms.
Christy Farley, Vice President of Government Affairs and
Business Partnerships, Northern Arizona University, Phoenix,
Arizona.
On April 2, 2014, the Committee on Education and the
Workforce held a hearing in Washington, D.C., entitled
``Keeping College Within Reach: Meeting the Needs of
Contemporary Students.'' The purpose of the hearing was to
examine how institutions, states, and other entities assist
contemporary college students in accessing and completing
postsecondary education. Testifying before the committee were
Dr. George A. Pruitt, President, Thomas Edison State College,
Trenton, New Jersey; Dr. Kevin Gilligan, Chairman and Chief
Executive Officer, Capella Education Company, Minneapolis,
Minnesota; Mr. David Moldoff, Chief Executive Officer and
Founder, AcademyOne, Inc., West Chester, Pennsylvania; Dr.
Joann A. Boughman, Senior Vice Chancellor for Academic Affairs,
University System of Maryland, Adelphi, Maryland; Mr. Stan
Jones, President, Complete College America, Indianapolis,
Indiana; and Dr. Brooks A. Keel, President, Georgia Southern
University, Statesboro, Georgia.
Legislative action--Second session
On September 19, 2013, Rep. Matt Salmon (R-AZ), Rep. Susan
Brooks (R-IN), and Rep. Jared Polis (D-CO) introduced H.R.
3136, the Advancing Competency-Based Education Demonstration
Project Act of 2013. The bill directs the secretary of
education to select institutions or consortia of institutions
for voluntary participation in competency-based education
demonstration projects that provide participating entities with
the ability to offer competency-based education programs that
do not meet certain statutory and regulatory requirements which
would otherwise prevent them from participating in federal
student aid programs.
On July 10, 2014, the Committee on Education and the
Workforce considered H.R. 3136 in legislative session and
reported it favorably, as amended, to the House of
Representatives by a voice vote. The committee considered and
adopted the following amendment to H.R. 3136:
Rep. Matt Salmon (R-AZ) and Rep. Jared Polis
(D-CO) offered an amendment in the nature of a
substitute to add certain requirements to the
applications to participate in a competency-based
education project, allow eligible entities to submit
amendments to their previously-approved applications,
set requirements for the entities the secretary must
choose to participate in the programs, require
institutions to provide student information to the
director of the Institute of Education Sciences (IES),
require the director of IES to annually evaluate each
project and provide a report with specified information
to the authorizing committees, authorize funds to be
available from the amount appropriated for salaries and
expenses of the Department of Education, and make
conforming and technical changes to the introduced
bill. The amendment was adopted by voice vote.
The committee further considered the following amendment to
H.R. 2637, which was not adopted:
Rep. Tierney (D-MA) offered an amendment
that would allow students with federal student loans
and private student loans issued prior to 2013 to
refinance those loans into new federal loans at the
interest rate set for the 2013-2014 academic year. The
amendment was ruled non-germane. Rep. George Miller (D-
CA) appealed the ruling of the chair. Rep. Glenn
Thompson (R-PA) offered a motion to table the appeal of
the ruling of the chair, which was adopted by a vote of
22 to 16.
On June 26, 2014, Rep. Virginia Foxx (R-NC) and Rep. Luke
Messer (R-IN) introduced H.R. 4983, the Strengthening
Transparency in Higher Education Act. The bill simplifies and
streamlines the information made publicly available by the
Secretary of Education regarding institutions of higher
education.
On July 10, 2014, the Committee on Education and the
Workforce considered H.R. 4983 in legislative session and
reported it favorably, as amended, to the House of
Representatives by a voice vote. The committee considered and
adopted the following amendment to H.R. 4983:
Rep. Virginia Foxx (R-NC) offered an
amendment in the nature of a substitute to require
additional information on the College Dashboard,
require the secretary of education to conduct consumer
testing in consultation with appropriate federal
departments and agencies, ensure consumer testing
addresses whether the College Dashboard provides useful
and relevant information to students and families,
require the secretary of education to submit to the
authorizing committees recommendations based on the
results of consumer testing, set new minimum
requirements for net price calculators, require funding
to come from funds already appropriated to maintain the
College Navigator, and make other conforming and
technical changes. The amendment was adopted by voice
vote.
The committee further considered the following amendment to
H.R. 4983, which was not adopted:
Rep. George Miller (D-CA) offered an
amendment that would require the commissioner of
education statistics to establish a formula for
determining the percentage of student borrowers who
have completed their course of study and who are in
repayment or in an authorized deferment period at
three, five and 10 years after completion of a program
of study. The amendment failed by a vote of 13 to 21.
On June 26, 2014, Rep. Brett Guthrie (R-KY) and Rep.
Richard Hudson (R-NC) introduced H.R. 4984, the Empowering
Students through Enhanced Financial Counseling Act. The bill
amends the loan counseling requirements under the Higher
Education Act and requires counseling for Federal Pell Grant
recipients.
On July 10, 2014, the Committee on Education and the
Workforce considered H.R. 4984 in legislative session and
reported it favorably, as amended, to the House of
Representatives by voice vote. The committee considered and
adopted the following amendment to H.R. 4984:
Rep. Brett Guthrie (R-KY) and Rep. Suzanne
Bonamici (D-OR) offered an amendment in the nature of a
substitute to remove the requirement that annual
counseling for Pell Grant recipients be tied to
disbursement of the grant, require additional
information be disclosed to borrowers during annual
counseling and exit counseling sessions, require
institutions to provide annual counseling to borrowers
receiving Parent PLUS loans, require any funds used to
carry out the act to come from funds already
appropriated to maintain the Financial Awareness
Counseling Tool, and make conforming and technical
changes. The amendment was adopted by voice vote.
The committee further considered the following amendment to
H.R. 4984, which was not adopted:
Rep. Susan Davis (D-CA) offered an amendment
to modify the rule requiring for-profit colleges to
receive at least 10 percent of their revenue from
sources other than the Department of Education to
remain eligible for federal student aid to include all
federal aid, including veterans' educational benefits
and some Workforce Investment Act funds, in the 90
percent portion of the calculation and only private
funds in the 10 percent portion of the calculation. The
amendment was ruled non-germane. Rep. George Miller (D-
CA) appealed the ruling of the chair. Rep. Glenn
Thompson (R-PA) offered a motion to table the appeal of
the ruling of the chair, which was adopted by a vote of
20 to 13.
Summary
The Empowering Students through Enhanced Financial
Counseling Act would create a roadmap to repayment for
borrowers by improving the timing and frequency of loan
counseling and would ensure counseling is tailored to a
borrower's individual situation. The legislation ensures both
student and parent borrowers have the most current information
by requiring annual counseling before they sign on the dotted
line.
The legislation would require annual counseling for student
borrowers to include recommendations to exhaust available
grant, work-study, and scholarship assistance before taking out
loans, as well as a review of all federal student loan options
before considering a private loan. The counseling must also
include a notice that borrowers are not required to accept the
full amount of the loan they are offered and information on any
outstanding federal loan balance the borrower may have. The
legislation also would require counseling for borrowers of
parent PLUS loans on behalf of dependent students. Similar to
counseling for student borrowers, the counseling would afford
parent borrowers individualized information on their
outstanding loan balance and on anticipated monthly payments
based on their actual balance. Counseling also would include
debt management strategies, information on the National Student
Loan Data System, and contact information for the servicer of
each loan.
Additionally, the legislation would bolster exit counseling
for students. Exit counseling now would include information on
the borrower's outstanding loan balance, on anticipated monthly
payments under the standard and income-based repayment plans,
on the grace period preceding repayment, as well as contact
information for those organizations servicing the borrower's
loans. This information would empower borrowers to make smart
financial decisions as they leave school and begin to repay
their college loan commitments.
The legislation also would require colleges annually to
provide important counseling and disclosures to Pell Grant
recipients. The counseling a Pell Grant recipient receive would
address the terms and conditions of his or her grant, the
approved educational expenses to which the grant could be
applied, the maximum length of time a student is eligible to
receive Pell Grants, the amount of assistance a student is
eligible to receive, conditions under which a student may be
required to repay a Pell Grant, and how a student may seek
additional assistance due to a change in his or her financial
circumstances.
The legislation also requires the secretary of education to
maintain a consumer-tested, online counseling tool that
institutions could use to provide required counseling to their
students. Institutions could choose to use this tool to provide
their students financial counseling or they could offer it
directly to their students, either during an in-person session
or through an online tool created for the institution.
Committee Views
Introduction
With tuition increasing and economic pressures faced by
graduates mounting, responsibly financing a higher education
has never been more critical. However, many students and
parents are unprepared to navigate the complex maze of loans
and grants offered by the federal government, states, the
private sector, and institutions of higher education. Further,
upon graduation, many borrowers also struggle to manage the
repayment of the loans used to finance their education, leading
to significant financial hardship and greater risk for
taxpayers. Student financial literacy is vital to reversing
this trend, yet current efforts are failing to equip students
and parents with the crucial information they need to make wise
financial decisions.
Many students never receive meaningful financial literacy
assistance as they review options for paying for college. The
Higher Education Act currently requires only those students
receiving federal student loans to complete counseling, while
parents who take out loans on behalf of their student as well
as students who receive only a Pell Grant do not receive any
counseling. More robust and timely financial literacy support
must be available.
Enhancing Loan Counseling for Students
To help students make smart decisions about financing their
higher education, Reps. Brett Guthrie (R-KY), Richard Hudson
(R-NC), and Suzanne Bonamici (D-WA) championed H.R. 4984, the
Empowering Students through Enhanced Financial Counseling Act.
H.R. 4984 would improve the timing and frequency of loan
counseling and would ensure students have the most current
information available to them. Under current law, students who
receive federal student loans only are required to complete
one-time entrance counseling regarding the terms and conditions
of their loans. This counseling only is required to occur prior
to disbursement of the loan, so many students receive it after
they have already decided how much to borrow. During a November
13, 2013, hearing entitled ``Keeping College Within Reach:
Simplifying Federal Student Aid,'' the Committee on Education
and the Workforce explored opportunities to streamline the
federal aid system for students. At the hearing, Ms. Jennifer
Mishory, deputy director of Young Invincibles, highlighted the
need for enhanced and more frequent financial aid counseling:
In a recent Young Invincibles survey, 40 percent of
high-debt borrower respondents reported that they did
not receive federally mandated loan counseling. It is
perhaps unlikely that so many schools are out of
compliance, but that statistic warns us that many young
people benefit so little from loan counseling that they
do not remember receiving it--or did not consider what
they received to constitute counseling.
With student loan defaults rates on the rise, the committee
believes students should be given a complete picture of not
only their rights and obligation with respect to their federal
loans, but also the impact taking out loans may have on their
financial futures each year--before they accept a new round of
student loans. H.R. 4984 requires loan counseling to occur
annually before a student accepts a federal student loan for
the year. The legislation also requires counseling be
personalized to the individual borrower's situation, rather
than just providing general information applicable to a range
of borrowers. In the course of just one school year, Indiana
University was able to reduce undergraduate Stafford loan
disbursements by 11 percent, or $31 million, by telling
students annually what their monthly payment would be after
graduation before they took out loans for the next year. This
was more than five times the decrease in outlays at four-year
public institutions nationally.\1\ The committee believes
better information about loans and the post-college obligations
and responsibilities that come with those loans would help
students to make wise borrowing decisions.
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\1\http://www.bloomberg.com/news/2014-07-03/here-s-how-indiana-
university-students-borrowed-31-million-less.html
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At the November 13, 2013, Committee on Education and the
Workforce hearing, Jason Delisle, director of the federal
education budget project at the New America Foundation,
highlighted the complexity of the federal student loan program,
the confusion students often face, and the need for early and
improved information about federal student loan options.
From the borrower's perspective, the federal student
loan program is unnecessarily complex, and many of its
most important benefits are opt-in, difficult to
access, or even hidden--and many terms and benefits
overlap or cancel one another out. When a student
applies for federal loans, he would confront a mix of
types, terms, and names. Some may make sense to him,
others would confuse him, and some he may not even know
exist. Would he know that a ``Stafford'' loan is a
federal loan? Would he understand that ``unsubsidized''
doesn't mean he is getting a bad deal?
During the 2011-2012 academic year, almost half of private
loan borrowers did not exhaust federal Stafford loan options
before taking out private student loans.\2\ The committee is
concerned about the growing amount of student loan debt in the
country and wants to ensure students are aware of the
potentially more favorable terms available with federal loans.
Annual counseling would now include recommendations for
students to exhaust available grant, work-study, and
scholarship assistance before taking out loans, a review of all
federal student loan options before considering a private loan,
and an explanation of the rights and obligations associated
with a private loan. The counseling also would include a notice
that students are not required to accept the full amount of the
federal student loan offered and information on any outstanding
federal student loan balance the borrower may have.
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\2\ http://www.ticas.org/files/pub/private_loan_facts_trends.pdf
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H.R. 4984 also requires bolstered exit counseling. Under
current law, students who receive federal student loans must
complete exit counseling before they complete their course of
study. This counseling must include information on available
repayment plans, debt management strategies, and loan
forgiveness options; however, this counseling is very general
and does not provide any information on the borrower's specific
situation. Under H.R. 4984, exit counseling would include a
statement of the borrower's outstanding loan balance;
anticipated monthly payments based on the borrower's actual
balance under both the standard repayment plan and income-based
repayment plan, based on the borrower's anticipated salary;
information on the grace period preceding repayment; and
contact information for those organizations servicing the
borrower's loans. The committee believes this additional
information would empower borrowers to make smarter financial
decisions as they leave school and begin to repay their college
loan commitments.
Parent PLUS Borrowers
Parents taking out a federal loan to help their children
achieve the dream of a postsecondary education comprised almost
10 percent of federal student loan volume disbursed last
year.\3\ These borrowers are subject to the majority of the
same terms, conditions, and responsibilities as student
borrowers and can borrow up to the cost of attendance--much
more than the typical student borrower. However, parent
borrowers currently receive very little information about their
obligations with respect to their loan or assistance in
planning for repayment. The committee believes providing the
same information and disclosures to parents prior to taking out
a loan is crucial for encouraging smart borrowing and on-time
repayment. The Empowering Students through Enhanced Financial
Counseling Act would require annual counseling for all
borrowers of a parent PLUS loan prior to or in conjunction with
the acceptance of the PLUS loan.
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\3\https://trends.collegeboard.org/student-aid/figures-tables/
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This year, the U.S. Department of Education released the
three-year cohort default rates for borrowers of parent PLUS
loans for the first time. The released rates covered a multi-
year period from FY2006-FY2010. The most current rate for
borrowers who had a student at any type of school was 4.1
percent, up from 1.8 percent in 2006.\4\ To put a stop to this
upward trend, the committee believes these borrowers should be
provided with counseling each year they wish to take out an
additional loan. Similar to counseling for student borrowers,
the counseling would afford parent borrowers individualized
information on their outstanding loan balance and anticipated
monthly payments based on the actual balance. Counseling also
would include debt management strategies, information on the
National Student Loan Data System, and contact information for
the servicer of each of their loans.
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\4\http://www2.ed.gov/policy/highered/reg/hearulemaking/2012/
programintegrity.html
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Better Information for Pell Grant Recipients
The Empowering Students through Enhanced Financial
Counseling Act would require all recipients of a Pell Grant to
receive annual disclosures on the terms and conditions of their
grants. The disclosures would include information on the
approved educational expenses to which the grants could be
applied, the conditions under which student may be required to
repay Pell Grants, and how students may seek additional
assistance due to changes in their financial circumstances.
Additionally, the disclosures would provide students
information on the maximum number of semesters, or the
equivalent, for which they may be eligible to receive Pell
Grants, as well as a statement of the actual amount of time
remaining for which they personally may be eligible. The
information would ensure students are aware of their time-
limited eligibility to receive Pell Grants and would encourage
them to complete their academic program prior to exhausting
their eligibility for the program. The committee recognizes the
important role the Pell Grant program plays in helping low-
income students access and complete a postsecondary education
and does not intend for this counseling to be a hurdle for
students to receive their grant. H.R. 4984 would ensure those
students are armed with the knowledge needed to use their Pell
Grant eligibility in the most effective way possible.
Developing a Consumer-Tested Online Tool
A recent research study on federally mandated student loan
counseling, during which researchers studied actual borrowers
going through the federal government's online counseling tool,
found borrowers thought the tool to be too text heavy and
wanted more personalized information.\5\ The committee
appreciates the work the U.S. Department of Education has done
in creating the Financial Awareness Counseling tool, but
believes more can be done to make the tool more relevant and
meaningful for borrowers. The Empowering Students through
Enhanced Financial Counseling Act requires the secretary of
education to maintain an online counseling tool institutions
could use to provide required counseling to their students. The
committee expects the department would build upon the existing
tool to meet this requirement of the legislation. Additionally,
H.R. 4984 requires the department to conduct consumer testing
of the online financial aid counseling tools, in consultation
with other relevant federal agencies, to ensure the information
provided through the tools is presented in the most user-
friendly manner possible, which would better assist students
and parents in understanding their rights and obligations with
respect to borrowing student loans or receiving Pell Grants.
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\5\http://chronicle.com/blogs/headcount/new-research-points-to-
gaps-in-student-loan-counseling/
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Recognizing some institutions already provide their
students with robust loan counseling, H.R. 4984 allows
institutions to choose the manner in which they provide
counseling to their students and parents. Institutions would
have the option to provide financial counseling directly,
either during an in-person session or through an online tool
created for or by the institution, or an institution could
elect to have the students use the consumer-tested online tool
administered by the U.S. Department of Education. If an
institution opts to provide the counseling themselves, the
committee notes an institution could meet the requirements
under H.R. 4984 by contracting with entities that have
experience in offering this type of counseling to students,
such as guaranty agencies. If an institution chooses to use the
department's online tool, the department would then be
responsible for keeping a record of which individuals have
completed counseling and notifying borrowers of the obligation
to complete the counseling.
Conclusion
The current financial counseling requirements are
inadequate for providing student and parent borrowers with the
information they need to plan for college costs and responsibly
manage their loan repayment. Currently, counseling occurs too
late to guide students' decisions for smart borrowing and too
infrequently to make a lasting impression about the
implications of student debt. The Empowering Students through
Enhanced Financial Counseling Act would provide students and
parents the tools and information they need to borrow and repay
their student loans in a responsible way.
Section-by-Section Analysis
Section 1. Short title
States the short title is the Empowering Students through
Enhanced Financial Counseling Act.
Section 2. Annual counseling
Amends section 485(l) of the Higher Education Act to
require institutions ensure each individual who receives a
federal student loan also receives interactive annual
counseling on the terms, conditions, and responsibilities of
such loan. Pell Grant recipients likewise would receive annual
counseling on the terms, conditions, and responsibilities of
their grants.
Requires institutions to ensure, as a part of carrying out
the counseling requirements, all federal student loan borrowers
annually affirmatively accept new loans prior to the
disbursement of those loans.
Section 3. Exit counseling
Amends section 485(b) of the Higher Education Act to ensure
students who receive federal student loans receive
individualized, interactive exit counseling regarding their
loan portfolios and repayment options.
Section 4. Online counseling tools
Requires the secretary of education to maintain consumer-
tested online counseling tools that provide the required annual
and exit counseling.
Explanation of Amendments
The amendments, including the amendment in the nature of a
substitute, are explained in the body of this report.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch. H.R. 4984 promotes financial literacy through enhanced
counseling for recipients of federal financial aid.
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement of
whether the provisions of the reported bill include unfunded
mandates. This issue is addressed in the CBO letter.
Earmark Statement
H.R. 4984 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of House rule XXI.
Roll Call Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of General Performance Goals and Objectives
In accordance with clause (3)(c) of House rule XIII, the
goal of H.R. 4984 is to promote financial literacy through
enhanced counseling for recipients of federal financial aid.
Duplication of Federal Programs
No provision of H.R. 4984 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The committee estimates that enacting H.R. 4984 does not
specifically direct the completion of any specific rule makings
within the meaning of 5 U.S.C. 551.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the committee's oversight findings and recommendations are
reflected in the body of this report.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the committee has received
the following estimate for H.R. 4984 from the Director of the
Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 15, 2014.
Hon. John Kline,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4984, the
Empowering Students Through Enhanced Financial Counseling Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Justin
Humphrey.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 4984--Empowering Students Through Enhanced Financial Counseling
Act
H.R. 4984 would reserve $2 million from funding for the
Department of Education to change the requirements for the
counseling of students who participate in the federal student
aid programs, such as federal student loans and Pell grants.
CBO estimates that implementing H.R. 4984 would require $2
million for administrative costs for the department over the
2015-2019 period, assuming the availability of appropriated
funds.
Enacting the bill would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
H.R. 4984 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Justin Humphrey.
This estimate was approved by Peter H. Fontaine, Assistant
Director for Budget Analysis.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 4984.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when the committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
HIGHER EDUCATION ACT OF 1965
* * * * * * *
TITLE IV--STUDENT ASSISTANCE
* * * * * * *
Part G--General Provisions Relating to Student Assistance Programs
* * * * * * *
SEC. 485. INSTITUTIONAL AND FINANCIAL ASSISTANCE INFORMATION FOR
STUDENTS.
(a) * * *
(b) Exit Counseling for Borrowers.--(1)(A) Each eligible
institution shall, [through financial aid offices or otherwise]
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), provide counseling to borrowers of loans that are
made, insured, or guaranteed under part B (other than loans
made pursuant to section 428C or loans under section 428B made
on behalf of a student) or made under part D (other than
Federal Direct Consolidation Loans or Federal Direct PLUS Loans
made on behalf of a student) or made under part E of this title
prior to the completion of the course of study for which the
borrower enrolled at the institution or at the time of
departure from such institution. The counseling required by
this subsection shall include--
(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 preceding
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;
[(i)] (iv) information on the repayment plans
available, including a description of the different
features [of each plan] of at least the standard
repayment plan and the income-based repayment plan
under section 493C and [sample information showing the
average] information, based on the borrower's
outstanding balance described in clause (i), showing
the borrower's anticipated monthly payments, and the
difference in interest paid and total payments, under
each plan;
[(ii)] (v) debt management strategies that are
designed to facilitate the repayment of such
indebtedness;
[(iii)] (vi) an explanation that the borrower has the
options to prepay each loan, pay each loan on a shorter
schedule, and change repayment plans;
[(iv)] (vii) for any loan forgiveness or cancellation
provision of this title, a general description of the
terms and conditions under which the borrower may
obtain full or partial forgiveness or cancellation of
the principal and interest, and a copy of the
information provided by the Secretary under section
485(d);
[(v)] (viii) for any forbearance provision of this
title, a general description of the terms and
conditions under which the borrower may defer repayment
of principal or interest or be granted forbearance, and
a copy of the information provided by the Secretary
under section 485(d);
[(vi)] (ix) the consequences of defaulting on a loan,
including adverse credit reports, delinquent debt
collection procedures under Federal law, and
litigation;
[(vii)] (x) information on the effects of using a
[consolidation loan under section 428C or a] Federal
Direct Consolidation Loan to discharge the borrower's
loans under parts B, D, and E, including at a minimum--
(I) * * *
* * * * * * *
[(viii)] (xi) a general description of the types of
tax benefits that may be available to borrowers; [and]
[(ix)] (xii) a notice to borrowers about the
availability of the National Student Loan Data System
and how the system can be used by a borrower to obtain
information on the status of the borrower's loans;
[and]
(xiii) for each of the borrower's loans made under
part B, D, or E 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; and
(xiv) an explanation that an individual has a right
to annually request a disclosure of information
collected by a consumer reporting agency pursuant to
section 612(a) of the Fair Credit Reporting Act (15
U.S.C. 1681j(a)).
(B) In the case of borrower who leaves an institution without
the prior knowledge of the institution, the institution shall
attempt to provide the information described in subparagraph
(A) to the student online or in writing, except that in the
case of an institution using the online counseling tool
described in subsection (n)(1)(A), the Secretary shall attempt
to provide such information to the student in the manner
described in subsection (n)(3)(C).
(2)(A) * * *
* * * * * * *
(C) Nothing in this subsection shall be construed to prohibit
an institution of higher education from utilizing electronic
means, such as the online counseling tool described in
subsection (n)(1)(A), to provide personalized exit counseling.
* * * * * * *
[(l) Entrance Counseling for Borrowers.--
[(1) Disclosure required prior to disbursement.--
[(A) In general.--Each eligible institution
shall, at or prior to the time of a
disbursement to a 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 Consolidation Loan
or a Federal Direct PLUS loan made on behalf of
a student), ensure that the borrower receives
comprehensive information on the terms and
conditions of the loan and of the
responsibilities the borrower has with respect
to such loan in accordance with paragraph (2).
Such information--
[(i) shall be provided in a simple
and understandable manner; and
[(ii) may be provided--
[(I) during an entrance
counseling session conduction
in person;
[(II) on a separate written
form provided to the borrower
that the borrower signs and
returns to the institution; or
[(III) online, with the
borrower acknowledging receipt
of the information.
[(B) Use of interactive programs.--The
Secretary shall encourage institutions to carry
out the requirements of subparagraph (A)
through the use of interactive programs that
test the borrower's understanding of the terms
and conditions of the borrower's loans under
part B or D, using simple and understandable
language and clear formatting.
[(2) Information to be provided.--The information to
be provided to the borrower under paragraph (1)(A)
shall include the following:
[(A) To the extent practicable, the effect of
accepting the loan to be disbursed on the
eligibility of the borrower for other forms of
student financial assistance.
[(B) An explanation of the use of the master
promissory note.
[(C) Information on how interest accrues and
is capitalized during periods when the interest
is not paid by either the borrower or the
Secretary.
[(D) In the case of a loan made under section
428B or 428H, a Federal Direct PLUS Loan, or a
Federal Direct Unsubsidized Stafford Loan, the
option of the borrower to pay the interest
while the borrower is in school.
[(E) The definition of half-time enrollment
at the institution, during regular terms and
summer school, if applicable, and the
consequences of not maintaining half-time
enrollment.
[(F) An explanation of the importance of
contacting the appropriate offices at the
institution of higher education if the borrower
withdraws prior to completing the borrower's
program of study so that the institution can
provide exit counseling, including information
regarding the borrower's repayment options and
loan consolidation.
[(G) Sample monthly repayment amounts based
on--
[(i) a range of levels of
indebtedness of--
[(I) borrowers of loans under
section 428 or 428H; and
[(II) as appropriate,
graduate borrowers of loans
under section 428, 428B, or
428H; or
[(ii) the average cumulative
indebtedness of other borrowers in the
same program as the borrower at the
same institution.
[(H) 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.
[(I) The likely consequences of default on
the loan, including adverse credit reports,
delinquent debt collection procedures under
Federal law, and litigation.
[(J) Information on the National Student Loan
Data System and how the borrower can access the
borrower's records.
[(K) The name of and contact information for
the individual the borrower may contact if the
borrower has any questions about the borrower's
rights and responsibilities or the terms and
conditions of the loan.]
(l) Annual Financial Aid Counseling.--
(1) Annual disclosure required.--
(A) In general.--Each eligible institution
shall ensure that each individual who receives
a Federal Pell Grant or a loan made under part
D (other than a Federal Direct Consolidation
Loan) receives comprehensive information on the
terms and conditions of such Federal Pell Grant
or loan and the responsibilities 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 manner--
(i) during a counseling session
conducted in person;
(ii) online, with the borrower
acknowledging 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 institutions to
carry out the requirements of subparagraph (A)
through the use of interactive programs, during
an annual counseling session that is in-person
or online, that test the individual's
understanding of the terms and conditions of
the Federal Pell Grant or loan awarded to the
student, 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 include the
following:
(A) An explanation of how the student may
budget for typical educational expenses and a
sample budget based on the cost of attendance
for the institution.
(B) An explanation that an individual has a
right to annually request a disclosure of
information collected by a consumer reporting
agency pursuant to section 612(a) of the Fair
Credit Reporting Act (15 U.S.C. 1681j(a)).
(3) Students receiving federal pell grants.--The
information to be provided under paragraph (1)(A) to
each student receiving a Federal Pell Grant shall
include the following:
(A) An explanation of the terms and
conditions of the Federal Pell Grant.
(B) An explanation of approved educational
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 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.
(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
eligibility of the borrower for other forms of
student financial assistance.
(B) An explanation of the use of the master
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, scholarship, 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
options prior to taking out private loans, an
explanation that Federal student loans
typically offer better terms and conditions
than private loans, and an explanation that if
a borrower decides to take out a private
education loan--
(i) the borrower has the ability to
select a private educational lender of
the borrower's choice;
(ii) the proposed private education
loan may impact the borrower's
potential eligibility for other
financial assistance, including 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 calendar 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)(6) of the
Truth in Lending Act; and
(II) to cancel such loan
within 3 business days of the
date on which the loan is
consummated, pursuant to
section 128(e)(7) of such Act.
(F) An explanation of the approved
educational expenses for which the borrower may
use a loan made under part D.
(G) Information on the annual and aggregate
loan limits for Federal Direct Stafford Loans
and Federal Direct Unsubsidized Stafford Loans.
(H) Information on how interest accrues and
is capitalized during periods when the interest
is not paid by either the borrower or the
Secretary.
(I) In the case of a Federal Direct PLUS Loan
or a Federal Direct Unsubsidized Stafford Loan,
the option of the borrower to pay the interest
while the borrower is in school.
(J) The definition of half-time enrollment at
the institution, during regular terms and
summer school, if applicable, and the
consequences of not maintaining at least half-
time enrollment.
(K) An explanation of the importance of
contacting the appropriate offices at the
institution of higher education if the borrower
withdraws prior to completing the borrower's
program of study so that the institution can
provide exit counseling, including information
regarding the borrower's repayment options and
loan consolidation.
(L) For a first-time borrower, the
anticipated monthly payment amount under, at
minimum, a standard repayment plan and, using
the regionally available data from the Bureau
of Labor Statistics of the average starting
salary for the occupation the borrower intends
to be employed, an income-based repayment plan
under section 493C, and based on--
(i) a range of levels of indebtedness
of--
(I) borrowers of Federal
Direct Stafford Loans or
Federal Direct Unsubsidized
Stafford Loans; and
(II) as appropriate, graduate
borrowers of Federal Direct
PLUS Loans or Federal Direct
Unsubsidized Stafford Loans; or
(ii) the average cumulative
indebtedness at graduation for students
who borrowed loans made under part D
and who are in the same program of
study as the borrower.
(M) 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
balance, the anticipated monthly
payment amount under, at minimum, the
standard repayment plan and, using
regionally available data from the
Bureau of Labor Statistics of the
average starting salary for the
occupation the borrower intends to be
employed, an income-based repayment
plan under section 493C; and
(iii) an estimate of the projected
monthly payment amount under each
repayment plan described in clause
(ii), based on--
(I) the outstanding balance
described in clause (i);
(II) the anticipated
outstanding balance on the loan
for which the student 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 accept during the
borrower's program of study
based on at least the expected
increase in the cost of
attendance of such program.
(N) 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.
(O) The likely consequences of default on the
loan, including adverse credit reports,
delinquent debt collection procedures under
Federal law, and litigation, and a notice of
the institution's most recent cohort default
rate (defined in section 435(m)), an
explanation of the cohort default rate, and the
most recent national average cohort default
rate for the category of institution described
in section 435(m)(4) to which the institution
belongs.
(P) Information on the National Student Loan
Data System and how the borrower can access the
borrower's records.
(Q) The contact information for the
institution's financial aid office or other
appropriate office at the institution the
borrower may contact 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 information to be provided
under paragraph (1)(A) to a borrower of a Federal
Direct PLUS Loan made on behalf of a dependent student
shall include the following:
(A) The information described in
subparagraphs (A) through (C) and (N) through
(Q) of paragraph (4).
(B) The option of the borrower to pay the
interest on the loan while the loan is in
deferment.
(C) For a first-time borrower of such loan,
sample monthly repayment amounts under the
standard repayment plan based on--
(i) a range of levels of indebtedness
of borrowers of Federal Direct PLUS
Loans made on behalf of a dependent
student; or
(ii) 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
balance, the anticipated monthly
payment amount under the standard
repayment plan; and
(iii) an estimate of the projected
monthly payment amount under the
standard repayment plan, based on--
(I) the outstanding balance
described in clause (i);
(II) the anticipated
outstanding balance on the loan
for which the borrower 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 expected increase in the
cost of attendance of such
program.
(E) Debt management strategies that are
designed to facilitate the repayment of such
indebtedness.
(F) An explanation that the borrower has the
options to prepay each loan, pay each loan on a
shorter schedule, 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 counseling requirements of
this subsection for the loan, ensure that the borrower
accepts the loan for such award year by--
(A) signing the master promissory note for
the loan;
(B) signing and returning to the institution
a separate written statement that affirmatively
states that the borrower accepts the loan; or
(C) electronically signing an electronic
version of the statement described in
subparagraph (B).
* * * * * * *
(n) Online Counseling Tools.--
(1) In general.--Beginning not later than 1 year
after the date of enactment of the Empowering Students
Through Enhanced Financial Counseling Act, the
Secretary shall maintain--
(A) an online counseling tool that provides
the exit counseling required under subsection
(b) and meets the applicable requirements of
this subsection; and
(B) an online counseling tool that provides
the annual counseling required under subsection
(l) and meets the applicable requirements of
this subsection.
(2) Requirements of tools.--In maintaining the online
counseling tools described in paragraph (1), the
Secretary shall ensure that each such tool is--
(A) consumer tested, in consultation with
other relevant Federal agencies, to ensure that
the tool is effective in helping individuals
understand their rights and obligations with
respect to borrowing a loan made under part D
or receiving a Federal Pell Grant;
(B) understandable to students receiving
Federal Pell Grants and borrowers of loans made
under part D; and
(C) freely available to all eligible
institutions.
(3) Record of counseling completion.--The Secretary
shall--
(A) use each 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 individual's completion of such counseling;
(B) in the case of a borrower who receives
annual counseling for a loan made under part D
using the tool described in paragraph (1)(B),
notify the borrower by when the borrower should
accept, in a manner described in section
485(l)(6), the loan for which the borrower has
received such counseling; and
(C) in the case of a borrower described in
subsection (b)(1)(B) at an institution that
uses the online counseling tool described in
paragraph (1)(A) of this subsection, the
Secretary shall attempt to provide the
information described in subsection (b)(1)(A)
to the borrower through such tool.
* * * * * * *
MINORITY VIEWS
We support and concur with the Majority views on H.R. 4984.
Unfortunately, this bill does not go far enough to protect all
students, and particularly veterans, because it fails to
address a major loophole in HEA that allows institutions to
exploit their GI benefits. That is why Democrats offered an
amendment, which was rejected by the Majority, to help protect
our veterans.
The amendment, offered by Congresswoman Davis and
Congressman Takano, closes the loophole in the 90/10 rule and
will go a long way to end unscrupulous practices of some
nefarious for-profit colleges.
The 90/10 rule was designed to provide market incentives to
for-profit institutions, in order to perform competitively with
other private colleges and universities.
The 90/10 rule mandates that for-profit colleges obtain at
least 10 percent of their revenue from non-federal sources as a
measure of program quality. But a loophole in the rule allows
federal education benefits provided to veterans through the GI
Bill, veteran tuition assistance, and other federal assistance
to be treated as private dollars. This loophole has given some
for-profit colleges a strong incentive to predatorily target
our nation's service members and try to squeeze them for their
military benefits.
Further, colleges with higher levels of revenues from non-
federal sources have higher graduation rates and lower student
loan defaults than colleges that rely almost exclusively on
federal funding.
According to Holly Petraeus, the assistant director at the
Consumer Financial Protection Bureau's Office of Servicemember
Affairs, this loophole has been a ``lucrative target for
exploitation'' by for-profit colleges, and has resulted in
``aggressive and deceptive'' targeting of service members in
order to meet their 90/10 requirements.
It has also been reported that colleges have encouraged
veterans to take out more expensive private loans rather than
federal loans with more affordable interest rates. Others have
engaged in ``misleading recruiting practices'' on military
installations.
In sum, the current loophole undermines the integrity of
the 90/10 rule, and as Holly Petraeus said, is putting our
brave veterans ``under siege'' from nefarious for-profit
colleges through aggressive and misleading marketing.
Democrats believe that this is unacceptable. We have a
responsibility to taxpayers and to our veterans to fix this
problem and we can only do that with an act of Congress.
Democrats will continue to work to make college more affordable
and accessible, increase oversight and quality assurance of
colleges and loan servicers, and to promote new and innovative
practices that can reduce student loan debt.
George Miller.
Jared Polis.
Robert C. ``Bobby'' Scott.
Mark Takano.
Timothy H. Bishop.
Rush Holt.
Raul M. Grijalva.
Suzanne Bonamici.
Frederica S. Wilson.
Joe Courtney.
Gregorio Kilili Sablan.
Susan A. Davis.
Ruben Hinojosa.
Marcia L. Fudge.
Mark Pocan.
John F. Tierney.