The House plans to vote next week on legislation, the Empowering Students Through Enhanced Financial Counseling Act, H.R. 1635, which would provide annual financial counseling for student loan borrowers.
The bill, reintroduced by Reps. Brett Guthrie, R-Ky., chairman of the Higher Education and Workforce Development Subcommittee, and Suzanne Bonamici, D-Ore., amends, among other measures, the loan counseling requirements under the Higher Education Act of 1965.
In reintroducing the legislation, Bonamici said that for students receiving federal loans, financial counseling is currently only required at the beginning and end of their academic careers.
“Part of fixing the problem is ensuring that student borrowers grasp the extent of their financial obligations,” she said. “By requiring students to complete annual financial counseling when they accept federal student aid, we can help them better understand which financial options to draw from first and the implications of their future debt load and repayment scenarios.”
The legislation is designed to improve “the timing, frequency and content of financial counseling,” she added.
The legislation states, in part, that “each eligible institution shall ensure that each individual who receives a Federal Pell Grant or a loan … receives comprehensive information on the terms and conditions of such Federal Pell Grant or loan and the responsibilities the individual has … Such information shall be provided, for each award year for which the individual receives such Federal Pell Grant or loan, in a simple and understandable manner.”
The counseling, which can be either in person or online, would test the “understanding of the terms and conditions” of the loan.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
