text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``College Literacy in Finance and 
  Economics Act of 2011'' or the ``College LIFE Act''.
  
  SEC. 2. FINDINGS.
  
      Congress finds the following:
              (1) Student borrowing is widespread in higher education, 
          and more than $100,000,000,000 in Federal education loans are 
          originated each year. In 2008, 62 percent of recipients of a 
          baccalaureate degree graduated with student debt.
              (2) Forty-eight percent of students at 4-year public 
          institutions of higher education borrow money to pay for 
          college, as do 57 percent of students at 4-year private 
          institutions of higher education, and 96 percent of students at 
          for-profit institutions of higher education.
              (3) In 2008, 92 percent of Black students, 85 percent of 
          Hispanic students, 85 percent of American Indian/Alaska Native 
          students, 82 percent of multi-racial students, 80 percent of 
          Native Hawaiian/Pacific Islander students, 77 percent of White 
          students, and 68 percent of Asian students received financial 
          aid.
              (4) Students depart from institutions of higher education 
          with significant debt. In 2008, the average student loan debt 
          among graduates of institutions of higher education was 
          $23,186, and 1 in 10 recipients of a baccalaureate degree 
          graduated with at least $40,000 in debt. In 2008, 57 percent of 
          recipients of a baccalaureate degree from a for-profit 
          institution of higher education owed more than $30,000, and the 
          median amount of debt was $32,700. Since 2003, the average 
          cumulative debt among students at institutions of higher 
          education has increased by 5.6 percent each year.
              (5) Students enrolled in for-profit institutions of higher 
          education account for 47 percent of all student loan defaults, 
          despite representing approximately 10 percent of all students 
          enrolled in institutions of higher education. Since 2003, the 
          national cohort default rate has increased from 4.5 percent to 
          7 percent.
              (6) Students rely on access to credit. Fifty-six percent of 
          dependent students at institutions of higher education had a 
          credit card in their own name in 2004. The average credit card 
          balance among such students who were carrying a balance on 
          their cards was $2,000.
              (7) According to the National Foundation for Credit 
          Counseling, the majority of adults (56 percent of adults in the 
          United States, or 127,000,000 people) do not have a budget or 
          keep close track of expenses or spending.
              (8) According to a 2009 National Bankruptcy Research Center 
          study, consumers who received financial education through pre-
          bankruptcy counseling had 27.5 percent fewer delinquent 
          accounts and remained current on their accounts for 29 percent 
          longer than consumers who did not receive such counseling.
              (9) According to the Financial Industry Regulatory 
          Authority Investor Education Foundation, less than \1/3\ of 
          young adults (ages 18 to 29) set aside emergency savings to 
          weather unexpected financial challenges.
              (10) According to a Jump$tart Coalition for Personal 
          Financial Literacy survey, 62 percent of high school students 
          cannot pass a basic personal finance exam, and financial 
          literacy scores among future higher education students are low.
              (11) According to research by the National Endowment for 
          Financial Education and the University of Arizona, schools are 
          the institutions that students trust most to help increase 
          their knowledge of personal finance.
  
  SEC. 3. FINANCIAL LITERACY COUNSELING.
  
      Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is 
  amended by adding at the end the following:
      ``(n) Financial Literacy Counseling.--
              ``(1) In general.--Each eligible institution shall provide 
          financial literacy counseling to borrowers in accordance with 
          the requirements of this subsection, through--
                      ``(A) financial aid offices;
                      ``(B) an employee or group of employees designated 
                  under subsection (c); or
                      ``(C) a contract or partnership with a nonprofit 
                  organization that has substantial experience developing 
                  or administering financial literacy and economic 
                  education curricula, which may include an organization 
                  that has received grant funding under the Excellence in 
                  Economic Education Act of 2001 (20 U.S.C. 7267 et 
                  seq.).
              ``(2) Entrance and exit counseling required.--
                      ``(A) In general.--Financial literacy counseling, 
                  as required under this subsection, shall be provided to 
                  borrowers on the following 2 occasions:
                              ``(i) Entrance counseling.--Such counseling 
                          shall be provided not later than 45 days after 
                          the first disbursement of a borrower's first 
                          loan that is made, insured, or guaranteed under 
                          part B, made under part D, or made under part 
                          E.
                              ``(ii) Exit counseling.--Such counseling 
                          shall be provided, in addition to the 
                          counseling provided under clause (i), prior to 
                          the completion of the course of study for which 
                          the borrower enrolled at the institution or at 
                          the time of departure from such institution, to 
                          each borrower of a loan that is made, insured, 
                          or guaranteed under part B, made under part D, 
                          or made under part E.
                      ``(B) Exceptions.--The requirements of subparagraph 
                  (A) shall not apply to borrowers of--
                              ``(i) a loan made, insured, or guaranteed 
                          pursuant to section 428C;
                              ``(ii) a loan made, insured, or guaranteed 
                          on behalf of a student pursuant to section 
                          428B; or
                              ``(iii) a loan made under part D that is a 
                          Federal Direct Consolidation Loan or a Federal 
                          Direct PLUS loan made on behalf of a student.
                      ``(C) Minimum counseling requirements.--Such 
                  financial literacy counseling shall include a total of 
                  not less than 4 hours of counseling on the occasion 
                  described in subparagraph (A)(i), and an additional 
                  period of not less than 4 hours of counseling on the 
                  occasion described in subparagraph (A)(ii). A total of 
                  not more than 2 hours of counseling for each of the 
                  occasions described in subparagraph (A) shall be 
                  provided electronically.
                      ``(D) Early departure.--Notwithstanding 
                  subparagraph (C), if a borrower leaves an eligible 
                  institution without the prior knowledge of such 
                  institution, the institution shall attempt to provide 
                  the information required under this subsection to the 
                  student in writing.
              ``(3) Information to be provided.--Financial literacy 
          counseling, as required under this subsection, shall include 
          information on the following:
                      ``(A) Student financial aid, including--
                              ``(i) general information about educational 
                          loans, grants, tax credits, and scholarships;
                              ``(ii) the difference between grants, 
                          scholarships, and loans, the difference between 
                          Federal loans under this title and private 
                          educational loans, and the difference between 
                          loans under this title and other loan products; 
                          and
                              ``(iii) information about educational loan 
                          management, including repayment, deferment, 
                          consolidation, cancellation, discharge, and 
                          defaults.
                      ``(B) Banking basics, including--
                              ``(i) the types of financial institutions;
                              ``(ii) the roles, purposes, and uses of 
                          mainstream financial institutions; and
                              ``(iii) the fundamentals of opening, using, 
                          and managing basic savings and checking 
                          accounts, including common rates, fees, and 
                          borrower pitfalls.
                      ``(C) Budgeting and saving, including--
                              ``(i) the main components of a budget;
                              ``(ii) designating and prioritizing income, 
                          expenses, and personal expenditures; and
                              ``(iii) developing and maintaining matching 
                          goals and savings plans.
                      ``(D) Credit and debt management, including 
                  responsible use of credit and the pitfalls of credit 
                  card debt.
                      ``(E) Credit cards and other common credit products 
                  (such as debit cards, student loan debit and refund 
                  cards, charge cards, pre-paid cards, and secured cards 
                  linked to checking accounts), including--
                              ``(i) features, terms, and conditions of 
                          credit agreements;
                              ``(ii) responsible use of such cards and 
                          products;
                              ``(iii) repayment; and
                              ``(iv) the consequences of making only 
                          required minimum payments.
                      ``(F) Investing, including--
                              ``(i) common investment products;
                              ``(ii) establishing investment goals (such 
                          as education, homeownership, wealth building, 
                          and retirement);
                              ``(iii) risks and benefits of investing; 
                          and
                              ``(iv) assessing and establishing risk 
                          tolerance.
                      ``(G) Credit scores, including--
                              ``(i) functions and uses of credit scores;
                              ``(ii) calculation of credit scores;
                              ``(iii) factors that may improve or worsen 
                          credit scores; and
                              ``(iv) how to build a strong credit 
                          history.
                      ``(H) Housing, including information on--
                              ``(i) renting;
                              ``(ii) pre-homeownership education (such as 
                          assessing homeownership readiness and 
                          capability); and
                              ``(iii) the basics of mortgage borrowing 
                          (such as common mortgage products and 
                          qualifying for and obtaining a mortgage).
                      ``(I) Taxes, including--
                              ``(i) tax filing and planning; and
                              ``(ii) the tax consequences of financial 
                          decisions (such as placing an investment or 
                          purchasing a home).
                      ``(J) Responsible financial decision making, 
                  including identifying and analyzing costs, benefits, 
                  economic incentives, and alternatives.
              ``(4) Use of interactive programs.--The Secretary may 
          encourage institutions to carry out the requirements of this 
          subsection through the use of interactive programs that test 
          the borrower's understanding of the financial literacy 
          information provided through counseling under this subsection, 
          using simple and understandable language and clear formatting.
              ``(5) Model financial literacy counseling curriculum.--Not 
          later than 1 year after the date of enactment of the College 
          Literacy in Finance and Economics Act of 2011, the Secretary 
          shall develop a curriculum in accordance with the requirements 
          of paragraph (3), which eligible institutions may use to 
          fulfill the requirements of this subsection. In developing such 
          curriculum, the Secretary may consult with members of the 
          Financial Literacy and Education Commission.''.
target: College Literacy in Finance and Economics Act of 2011 or College LIFE Act - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to require institutions of higher education (IHEs) to provide student borrowers under the Federal Family Education Loan, Direct Loan, and Perkins Loan programs with financial literacy counseling within 45 days of their first receipt of such a loan and prior to the completion of their studies or when they leave school.
  
  Requires student borrowers to receive at least four hours of counseling on each occasion.
  
  Makes such counseling requirements inapplicable to borrowers of consolidation loans.
  
  Requires financial literacy counseling to include information on student financial aid, banking, budgeting and saving, credit and debt management, credit cards and products, investing, credit scores, housing, taxes, and responsible financial decision making.
  
  Directs the Secretary of Education to develop a curriculum that IHEs may use to fulfill this Act's requirements.
feat_title: To require financial literacy and economic education counseling for student borrowers, and for other purposes.