Empowering Students Through Enhanced Financial Counseling Act

Floor Speech

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Mr. GUTHRIE. 1635.

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Mr. GUTHRIE. Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, I rise to speak today in support of H.R. 1635, the Empowering Students Through Enhanced Financial Counseling Act, which I introduced earlier this Congress with my friend, Congresswoman Suzanne Bonamici of Oregon.

As the school year begins, high school seniors across the country are trying to figure out their next steps. Many of these students will ultimately decide to attend a traditional 4-year university or community college program.

Parents and students know too well that the cost of college tuition has climbed dramatically over the last decade. I know that many families are worried about how to afford a college education. As college tuition has risen, student loan debt has surged to more than $1.4 trillion, surpassing both national auto loan debt and credit card debt.

This should be a concern to everyone, not only to those with loan debt to their names. Many borrowers are entering the workforce with overwhelming debt that will play a role not only in their own lives, but in the health of the American economy as a whole.

Student loans can, of course, play a positive role in helping students attend college when they borrow mindfully and responsibly. Unfortunately, many students enter into binding loan contracts with their respective universities without fully appreciating the gravity of the financial decision they are making and the consequences it can have on their futures.

A recent survey of current students and new graduates with a high level of debt found that more than 40 percent had no recollection of having received financial counseling, even though current law requires that students receive entrance counseling before receiving their first loan.

It is vitally important for students to be equipped with all the facts of their loan agreement so they can finance their postsecondary education responsibly and with eyes wide open. The Empowering Students Through Enhanced Financial Counseling Act is designed to improve financial aid counseling for students receiving a Pell grant or a Federal loan. H.R. 1635 increases the timing, frequency, and content of mandatory student loan counseling.

Under current law, borrowers are required to receive counseling only when they arrive on campus and upon graduation, which makes it easy for borrowers to lose sight of just how much debt they are acquiring each year and the responsibility they bear to pay it back. H.R. 1635 requires financial counseling for students and parents who participate in Federal loan programs before they sign the dotted line on their loans. After that, students would participate in annual counseling so they can continue to understand their financial obligations and how new loans would affect their payments later on.

The importance of annually providing information was dramatically reinforced in a recent year when Indiana University reported they were able to reduce undergraduate Stafford loan disbursements by 11 percent--11 percent--or $31 million, by telling students annually what their monthly payment would be after graduation before the students took out loans for the next school year. This was more than a fivefold decrease in outlays compared to public schools nationally.

In addition to making the counseling an annual event, this bill would require the counseling to include recommendations to students to pursue all available grant, work study, and scholarship assistance prior to taking out loans, as well as provide them with information about the differences between Federal and private loans in bankruptcy. Exit counseling would include information about the borrower's remaining loan balance as well as what to anticipate throughout repayment of the loan.

The legislation would also require borrowers to affirmatively provide consent each year before receiving additional Federal loans instead of automatically receiving the full offered amount every year.

The bill also equips low-income students with enhanced information about the terms and conditions of the Pell Grant Program by providing annual financial counseling to all grant recipients. The counseling will include information about the expenses the grant covers, the level of assistance the students are able to receive, and ways to seek additional assistance in the case of changing financial circumstances. Under current law, Pell grant recipients are not required to receive any counseling.

This bipartisan legislation will help America's students and families borrow responsibly and understand their aid package better so that new graduates have the very best chance of success upon graduation.

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Mr. GUTHRIE. Mr. Chairman, I yield 2 minutes to the gentlewoman from North Carolina (Ms. Foxx), the chairwoman of the full committee.

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Mr. GUTHRIE. Mr. Chairman, I yield 2 minutes to the gentleman from Kansas (Mr. Estes).

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Mr. GUTHRIE. Mr. Chairman, I yield 3 minutes to the gentleman from Tennessee (Mr. Roe), my good friend from the eastern part of the great State of Tennessee and the chairman of the Veterans' Affairs Committee.

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Mr. GUTHRIE. Mr. Chairman, I yield 2 minutes to the gentleman from Georgia (Mr. Ferguson).

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Mr. GUTHRIE. Mr. Chairman, I yield 2 minutes to the gentleman from Michigan (Mr. Walberg), my good friend.

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Mr. GUTHRIE. Mr. Chairman, I yield 2 minutes to the gentleman from Georgia (Mr. Allen), my good friend.

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Mr. GUTHRIE. Mr. Chair, I yield myself such time as I may consume.

Mr. Chairman, this is important. It is a first step, but it is a big step and an important step as we look at what is going on in the cost of our higher education.

Mr. Chairman, I know that, in our beloved Commonwealth, our Governor and our legislators are trying to deal with the demands on the budget, and they are working hard on it. But in the meantime, the costs to go to school in our Commonwealth and across the country have increased. Students have to rely more on Federal subsidized loans and Pell grants.

We hear stories, like the one that Dr. Roe talked about, of people leaving professional school with a six-figure debt. But we hear about an awful lot of people who have $6,000, $7,000, and $10,000 worth of debt. They have to drop out, and they have no degree, and they have a hard time paying it back.

This bill lays out, through the course of their time in school, for each year, what their payments will be, and it walks them through what they really need. Do they need to take out the full loan?

Back when colleges weren't that expensive, I remember people saying: Take out the full loan; that is the cheapest money you will ever have. Well, it becomes the most expensive money you have ever had over time, as interest rates build up and other things move forward.

This bill is to make sure students are aware. It is something we agree on. We do it bipartisan. I expect a big bipartisan vote, and we do work together. There are issues that we have differences of opinion on, and there are issues that we have similar opinions on.

When I was home in my State in August, people would say: Can't you find things to work together on? And we do, as a matter of fact, on most of the things we do. It is just not what tends to get out into the news.

So I appreciate the hard work of my friend from Oregon, and I appreciate the hard work of our committee.

Mr. Chair, I urge the passage of this bill, and I yield back the balance of my time.

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Mr. GUTHRIE. Mr. Chairman, I claim the time in opposition to this amendment, but I do not intend to oppose it.

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Mr. GUTHRIE. Mr. Chairman, this amendment will provide borrowers with critical information on aggregate loan limits, which is particularly important for transfer students, as my friend just explained. This disclosure will encourage borrowers to thoughtfully plan their college expenses and will help students make informed decisions when transferring schools.

I thank my colleague for offering this amendment, and I urge my colleagues to support it and the underlying bill.

Mr. Chairman, I yield back the balance of my time.

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Mr. GUTHRIE. Mr. Chairman, I claim the time in opposition to this amendment, but I do not intend to oppose it.

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Mr. GUTHRIE. Mr. Chairman, this amendment will help students see an estimated monthly student loan payment broken down by all income-driven repayment plans for which the student is eligible.

I support this amendment because students need to see the full range of possibilities available to them so they can make informed choices about what they borrow and how they will repay the funds.

I thank my colleague for offering the amendment, and I urge my colleagues to support it and the underlying bill.

Mr. Chairman, I yield back the balance of my time.

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Mr. GUTHRIE. Madam Chair, I rise to claim the time in opposition to this amendment, but I do not intend to oppose it.

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Mr. GUTHRIE. Madam Chair, this proposal will make sure students are warned about third-party debt relief companies that prey on borrowers.

They frequently provide inaccurate or misleading information and often charge excessive fees for services that can be received without cost through federally contracted student loan servicers. As my friend said, Federal student loan servicers employ dedicated professionals equipped to help borrowers navigate the loan repayment process and provide the assistance they need free of charge.

This amendment will ensure borrowers are armed with the information they need to better protect their finances and help make wise decisions as they begin to repay their Federal student loans.

I thank my friend from Washington for offering this amendment, and I urge my colleagues to support it and the underlying bill.

Madam Chair, I yield back the balance of my time.

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Mr. GUTHRIE. Mr. Speaker, I rise in opposition to the motion to recommit.

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Mr. GUTHRIE. Mr. Speaker, I appreciate the opportunity to be here. We all support veterans.

Under this bill, every veteran receives the same enhanced counseling provided to all borrowers. Looking at the study and before we determine the right elements of a new study to ensure we are providing the best service, we should pause and, I suggest, work with our Veterans' Affairs Committee to make sure we address the totality of the issue.

Mr. Speaker, I urge the underlying bill's support. I urge my colleagues to vote ``no'' on the motion to recommit and support the final bill, and I yield back the balance of my time.

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