Empowering Students Through Enhanced Financial Counseling Act

Floor Speech

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Ms. BONAMICI. Madam Chair, I yield myself such time as I may consume, and I rise today in support of the Empowering Students Through Enhanced Financial Counseling Act.

I would like to start by thanking Chairman Kline, Ranking Member Miller, and Congressman Guthrie for their leadership on this bill, which will improve the financial counseling that millions of student loan borrowers receive. I am pleased that Members are coming together to take a meaningful step toward protecting student loan borrowers. I also want to thank the Committee on Education and Workforce staff on both sides of the aisle for their hard work to include Members' shared priorities in a bill that has earned tremendous bipartisan support.

The need for enhanced financial counseling for students is clear. More than 40 million Americans are carrying more than $1.2 trillion in student loan debt, and default rates are climbing. At the same time there is evidence that student loan debt is a drag on the broader economy. Borrowers struggling with debt may delay purchasing a new car, a home, or new appliances. They may be unable to access capital to start a business, or they may put off saving for retirement.

Of course, the solution to the mounting burden of student loan debt will require a number of changes. We will need to address rising tuition, and we will need to do a better job of granting existing borrowers access to affordable repayment plans. But we also must help current and future students understand their rights and obligations as borrowers. And we need to help them forecast their obligations in the years after college so they can make informed decisions now and for the future.

One of the frustrations I hear frequently from former students is that they didn't understand the jumble of terms and products in the student loan market when they were borrowing. Many didn't ask questions until after they left college. What kind of loans did they borrow? When will they need to begin repayment? What will their monthly payments be, and what repayment plans will be available?

That is why I am especially pleased that H.R. 4984 goes beyond entrance counseling for new borrowers and requires annual counseling for all student loan borrowers.

Under this bill, students, whether they are sophomores or seniors, will have information about how much they have borrowed, what they are expected to borrow to complete their education, how their loans will accrue interest, and what they can expect their monthly payments to be when they leave college. They will be better able to see their road to repayment.

Importantly, providing annual counseling means that borrowers who don't graduate will still receive information about what to expect when they leave school and enter repayment. Borrowers will have more clarity on their monthly payments under two repayment plans: income-based repayment and the standard 10-year option. Streamlining this information will simplify the repayment process.

Borrowers will be reminded each year that they don't have to borrow the full amount made available, and they should consider grants, work study, and Federal loans before turning to private lenders. Unlike current practice, borrowers will receive financial counseling before signing their master promissory note, and they will be reminded that they can repay interest before it capitalizes.

H.R. 4984 will provide for the first time important disclosures to parents who borrow for their children. Parent borrowers of student loans will be given virtually the same information about their loans as students receive. And the bill will extend counseling to Pell grant recipients so that they understand the limits on eligibility for Pell grants, and the circumstances in which they would be asked to repay their grants.

Finally, this bill delivers enhanced student loan information in consumer-tested formats to check for student understanding. It will ensure that we provide personalized borrower information that the borrowers understand.

Madam Chair, there is another reason why this bill is so important right now. Recent consumer complaints suggest that some debt settlement companies are using predatory practices to target student loan borrowers. These firms target low-income and minority borrowers, but also Americans giving back through public service careers, like firefighting, teaching, and law enforcement. These firms are reportedly charging thousands of dollars to enroll borrowers in Federal income-based repayment programs, a program that borrowers can enroll in for free.

Until we can address these predatory practices directly, this bill will go a long way to ensuring that students fully understand their eligibility for income-based repayment. In short, the Empowering Students Through Enhanced Financial Counseling Act will help Pell grant recipients and student loan borrowers. It will help the borrowers anticipate their monthly payments and plan their road to repayment. This will make a real positive difference, and I ask my colleagues to join me in supporting H.R. 4984.

I reserve the balance of my time.

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Ms. BONAMICI. Madam Chair, H.R. 4984, the Empowering Students Through Enhanced Financial Counseling Act, will give student loan borrowers a much better understanding of their road to repayment. It does this by helping students track the amount they borrowed, predict monthly payments, and access affordable repayment plans.

As I mentioned, this bill is not a cure-all for the problems student loan borrowers face, which include rising tuition and opaque servicing contracts, but the bill serves a very important purpose, and it is especially important because of the cost of college and the challenges of managing student debt.

Greater transparency about what it means to borrow student loans will help students anticipate their obligations and advocate for their rights as borrowers, and perhaps greater transparency will elevate the conversation about the underlying need to address college costs.

Again, I want to thank Chairman Kline, Ranking Member Miller, and Representative Guthrie for their bipartisan effort on this important bill. It has been delightful to work with them. I look forward to more bipartisanship in the Education and the Workforce Committee.

I ask all of my colleagues to join me in supporting H.R. 4984, and I yield back the balance of my time.

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