Empowering Students Through Enhanced Financial Counseling Act

Floor Speech

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Mr. GUTHRIE. Madam Chair, I rise today in support of H.R. 4984, the Empowering Students Through Enhanced Financial Counseling Act.

But first, I want to say thanks to my friend from Oregon, Congresswoman Bonamici, for putting together a coalition of both sides where we can come together to address a problem that faces so many of the people who sent us here to represent them. And to the chairman, we are going to pass three or four bills this week in a bipartisan manner. The President signed a bill that passed this committee this week as well. It shows that he is putting together where we can find common ground to solve problems that really affect the people who sent us here to represent them. We appreciate him for that.

But to address this bill: with the rising costs of attaining a college degree, many students need financial assistance to make that dream a reality. This bill will increase financial literacy by reforming the current guidelines to require annual counseling for student borrowers. In doing so, students will be empowered with the knowledge necessary to understand what they are borrowing, which financial options to draw from first, and the implication of their future debt load in repayment scenarios.

A June 2014 report from the Federal Reserve Bank of New York reported that less than 50 percent of survey respondents with student debt have what they consider a high loan literacy.

Current Federal law only requires colleges and universities to provide financial counseling to student borrowers at the beginning of their studies. In short, these students get a quick snapshot of their loan obligations after they have already committed to the first year's loans, and then again once they have accrued their entire loan burden. Making matters worse, these counseling sessions tend to be broad and not based on information specific to the borrower. Many of today's students do not have a clear picture of what their

financial obligation will look like upon graduation, and aren't necessarily given any opportunity to make decisions to alter that course. So will this bill make a difference?

Well, we have an example. Indiana University--being from Kentucky, I have to admit, Indiana University has begun a process of educating students annually prior to accepting their aid package for the following year, similar to our efforts in this bill. IU found that Federal undergraduate Stafford loan disbursements dropped by $31 million, or 11 percent, from the previous year. That is five times the decline in the national average. And they still were served in college. They just didn't take out too much excess debt.

Through this bill, we hope to expand upon what institutions like Indiana University are doing and reform the current guidelines to require annual counseling for student borrowers, and ensure that students are empowered with the information they need to take control of their financial futures.

I encourage my colleagues, and I appreciate the bipartisan support, and particularly my friend from Oregon, for working together, and I encourage my colleagues to support this meaningful legislation so we can arm students with the financial knowledge needed and help lower their debt burdens.

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