Bills
| 3.23.22

Does Federal Financial Aid Counseling for Students and Parents Need to be Improved? (H.R. 3179)

Do you support or oppose this bill?

What is H.R. 3179?

(Updated January 30, 2018)

This bill would seek to improve the financial counseling received by students taking out loans for their education. Annual financial aid counseling would be required for all borrowers in addition to students receiving Pell Grants, and the Dept. of Education would be required to make this counseling tool available online.

Each year, both students and parents — or whoever is doing the borrowing — would be required to go through interactive counseling that reflects their personal borrowing situation each year. The counseling would provide an awareness about the financial obligations students and parents are accumulating, and require them to consent each year before accepting federal student loans. Financial aid exit counseling would also be provided when the student concludes their education to inform the student about repayment options, grace periods, and forbearance.

The Dept. of Education would be required to begin a longitudinal (over multiple years) study about the effectiveness of student loan counseling in improving student performance in the following categories:

  • Student persistence;

  • Degree attainment;

  • Program completion;

  • Successful entry into student loan repayment;

  • Cumulative borrowing levels;

  • Other factors that the Secretary of Education may determine.

No new funds would be made available for implementing this legislation if it’s enacted, as the Dept. of Education would be able to use $2 million in funding it has already been given to use on maintaining its financial aid counseling tool.

The Dept. of Education does currently require students and parents to go through counseling and sign a promissory note before accepting federal student loans, but it is less involved than what would be offered under this bill. For example, this bill would require a signature to accept each loan during the course of a year, and counseling is currently only required before the student accepts their first loan rather than each year.

Argument in favor

Some Americans who are struggling with their student loan debt didn’t fully understand the repercussions of borrowing thousands of dollars in federal loans. That’s a symptom of inadequate counseling, which this bill looks to improve.

Argument opposed

There is already financial aid counseling for students and parents that they go through before accepting federal student loans. There’s no need to improve the quality of the counseling as borrowers need to do their due diligence and inform themselves.

Impact

Students and parents borrowing federal student loans; colleges, universities, and other higher education institutions; and the Dept. of Education.

Cost of H.R. 3179

The CBO estimates that implementing this bill would cost $2 million, which would come from funds reserved by the Dept. of Education.

Additional Info

In-Depth: Sponsoring Rep. Brett Guthrie (R-KY) introduced this bill to ensure that students and their parents go through an adequate student loan counseling process that gives them the power to make informed financial choices:

“Students need timely and comprehensive information on facts and existing options surrounding financing their college education in order to make wise and informed decisions. Current policies do not provide students with the tools they need to have a clear understanding of their financial obligations. My bill will improve the quality of counseling for student borrowers so that they have the ability to choose the best-suited financing option for them.”

This legislation was passed by the House Education and Workforce Committee on a voice vote, and has the support of 38 bipartisan cosponsors equally divided between Democrats and Republicans.



Media:

Summary by Eric Revell
(Photo Credit: Flickr user Satsuma61)