The House plans to vote next week on legislation, the Empowering Students Through Enhanced Financial Counseling Act, H.R. 1635, which would provide annual financial counseling for student loan borrowers.
The bill, reintroduced by Reps. Brett Guthrie, R-Ky., chairman of the Higher Education and Workforce Development Subcommittee, and Suzanne Bonamici, D-Ore., amends, among other measures, the loan counseling requirements under the Higher Education Act of 1965.
In reintroducing the legislation, Bonamici said that for students receiving federal loans, financial counseling is currently only required at the beginning and end of their academic careers.
“Part of fixing the problem is ensuring that student borrowers grasp the extent of their financial obligations,” she said. “By requiring students to complete annual financial counseling when they accept federal student aid, we can help them better understand which financial options to draw from first and the implications of their future debt load and repayment scenarios.”
The legislation is designed to improve “the timing, frequency and content of financial counseling,” she added.
The legislation states, in part, that “each eligible institution shall ensure that each individual who receives a Federal Pell Grant or a loan … receives comprehensive information on the terms and conditions of such Federal Pell Grant or loan and the responsibilities the individual has … 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.”
The counseling, which can be either in person or online, would test the “understanding of the terms and conditions” of the loan.
— Check out Top 10 Colleges With Best Financial Aid Packages: Princeton Review on ThinkAdvisor.