House passes student loan counseling bill

The House on Thursday passed a bill to establish financial literacy counseling for students preparing to attend college.

Passed 405-11, H.R. 4984 would require students and parents who participate in a federal loan program to receive annual counseling.

{mosads}Under the measure, all Pell Grant recipients would be provided with annual counseling from their colleges regarding the terms of the grants.

Rep. Brett Guthrie (R-Ky.), the bill’s sponsor, said it would improve students’ understanding of the loans they are undertaking to afford to attend college.

“This bill will increase financial literacy by reforming the current guidelines to require annual counseling for student borrowers,” Guthrie said. “In doing so, students will be empowered with knowledge necessary to understand what they are borrowing.”

Rep. Suzanne Bonamici (D-Ore.) said the counseling would keep borrowers informed about their obligations.

“Greater transparency about what it means to borrow student loans will help students anticipate their obligations and advocate for their rights as borrowers,” Bonamici said.

The bill would also direct the secretary of the Education Department to develop an online counseling tool for institutions of higher education to use. Additionally, it would direct the secretary to conduct a study on the impact of student loan counseling.

Before final passage, the House adopted an amendment by voice vote from Rep. Gary Peters (D-Mich.) that would require student borrowers to be counseled on the impact of defaulting on a loan to their credit score.

The Obama administration said it supports passage of the measure.

“This legislation would help students get the information they need to make responsible decisions about how to pay for higher education,” the White House said in a statement of administration policy.

However, the White House noted that the measure does not specifically establish ways to make college more affordable.

“This legislation is not a substitute for much-needed and more comprehensive action to tackle the rising cost of a college education,” the statement of administration policy read.