S. 3116

Empowering Students Through Enhanced Financial Counseling Act

This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to modify loan counseling requirements for an institution of higher education (IHE) that participates in federal student aid programs.

Currently, an IHE must provide entrance counseling to a student who is a first-time federal student loan borrower. This bill replaces required entrance counseling with required annual counseling. Also, it expands the required recipients of such annual counseling to include, in addition to student borrowers, Federal Pell Grant recipients and parent PLUS Loan borrowers.

Each annual counseling recipient must receive comprehensive information on the terms, conditions, and responsibilities with respect to a grant or loan and general information on a typical student budget, the right to request an annual credit report, average income and employment data, and financial management resources. Additionally, the bill revises and expands the required contents of annual counseling for student borrowers, specifies the authorized contents of annual counseling for Pell Grant recipients, and establishes the required contents of annual counseling for parent PLUS loan borrowers.

The bill revises and expands exit counseling information requirements to include an outstanding loan balance summary, the anticipated monthly payments under standard and income-based repayment plans, an explanation of the grace period preceding repayment, the option to pay accrued interest before it capitalizes, the right to request an annual credit report, and loan servicer contact information.

It directs ED to maintain a consumer-tested online counseling tool that provides annual and exit counseling.

The Institute of Education Sciences must study the impact and effectiveness of exit counseling, annual counseling, and the online counseling tool.