H.R. 4984, Empowering Students Through Enhanced Financial Counseling Act

H.R. 4984

Empowering Students Through Enhanced Financial Counseling Act

July 24, 2014 (113th Congress, 2nd Session)

Staff Contact

Floor Situation

On Thursday, July, 24, 2014, the House will consider H.R. 4984, the Empowering Students through Enhanced Financial Counseling Act, under a rule. H.R. 4984 was introduced on June 26, 2014 by Representatives Brett Guthrie (R-KY) and Richard Hudson (R-NC) and has 16 cosponsors.  H.R. 4984 was marked up on July 10, 2014 and favorably reported, as amended, by the Committee on Education and the Workforce by voice vote.[1]

[1]See https://beta.congress.gov/113/crpt/hrpt531/CRPT-113hrpt531.pdf

Bill Summary

H.R. 4984 “creates a roadmap to repayment for borrowers [both student and parent borrowers] by improving the timing and frequency of loan counseling and … ensure[s] that counseling is tailored to a borrower’s individual situation.”[2]

Specifically, the bill “ensures that parents and students have the most current information by requiring annual counseling before they sign on the dotted line.”[3] It “requires annual counseling for student borrowers to include recommendations to exhaust available grant, work-study, and scholarship assistance before taking out loans.”[4]  “[C]ounseling must also include a notice that borrowers are not required to accept the full amount of the loan and information on any outstanding federal loan balance the borrower may have.”[5] Similar counseling is required for parent borrowers, including individualized information on their outstanding loan balance and on anticipated monthly payments based on actual balance.”[6]

In addition, the legislation would bolster exit counseling for students, including information on the outstanding loan, expected monthly payments, grace periods preceding repayment, and contact information for loan servicers.[7]  It requires colleges annually provide important counseling and disclosures to Pell Grant recipients, including the terms and conditions of the grant, the approved educational expenses to which the grant can be applied, the maximum length of time a student is eligible to receive a Pell Grant, the amount of assistance a student is eligible to receive, conditions for repayment, and process for obtaining additional assistance.[8]  Finally, H.R. 4984 “requires the Secretary of Education to develop and maintain a consumer-tested, online counseling tool that institutions can use to provide required counseling to their students.”[9] Institutions have the discretion of either using this tool or offering in person counseling sessions or an on-line tool created for the institution.[10]

[2]See Id., p. 19.
[3]See Id., p. 19.
[4]See Id.
[5]See Id.
[6]See Id.
[7]See Id., p. 20.
[8]See Id.
[9]See Id.
[10]See Id.


According to the Committee on Education and the Workforce, “many students and parents are unprepared to navigate the complex maze of loans and grants offered by the federal government, states, the private sector and institutions of higher education. Further, upon graduation, many borrowers also struggle to manage the repayment of the loans used to finance their education, leading to significant financial hardship and greater risk for the taxpayer. Student financial literacy is vital to reversing this trend, yet current efforts are failing to equip students and parents with the crucial information they need to make wise decisions.”[11] Moreover, “[t]he Higher Education Act currently requires only those students receiving federal student loans to complete counseling, while parents who take out loans on behalf of their student as well as students who receive only a Pell Grant do not receive any counseling.”[12]

[11]See Id.
[12]See Id.


CBO estimates that implementing H.R. 4984 would require $2 million for administrative costs for the department over the 2015-2019 period, assuming the availability of appropriated funds. Enacting the bill would not affect direct spending or revenues; therefore, pay as you go procedures do not apply. H.R. 4984 contains no intergovernmental or private sector mandates as defined in the Unfunded Mandates Reform Act and would impose no costs on state, local, or tribal governments.”[13]

[13]See http://www.cbo.gov/sites/default/files/cbofiles/attachments/hr4984.pdf.


1)         Rep. Kline (R-MN), Rep. Miller (R-CA) Amendment #7 – Amendment clarifies the information provided to first-time borrowers; a clarification that borrowers must accept their loans annually after the completion of the other counseling requirements; a requirement for the secretary of education, acting through the director of the Institute of Education Sciences, to conduct a longitudinal study of the impact and effectiveness of the student loan counseling required under this act; and other minor technical edits.

2)         Rep. Kilmer (D-WA), Rep. Hinojosa (D-TX), Rep. Bachus (R-AL), Rep. Petri (R-WI), Rep. Tsongas (D-MA) Amendment #6 – Amendment ensures each individual is aware of financial management resources provided by the Treasury Department’s Financial Literacy and Education Commission.

3)         Rep. Murphy (D-FL) Amendment #12 –Amendment requires the inclusion of recent average income and employment data for different levels of educational attainment.

4)         Rep. Sanchez (D-CA) Amendment #3 – Amendment includes an explanation that if a student decides to transfer to another institution, not all of the student’s credits may be acceptable towards meeting specific degree or program requirements at such institution,therefore, eligibility for Federal Pell Grants will not reset due to the maximum number of semesters or equivalent.

5)         Rep. Cohen (D-TN) Amendment #2 – Amendment adds a requirement that students be told how federal and private student loans are treated in bankruptcy.

6)         Rep. Hahn (D-CA) Amendment #1 – Amendment provides student loan borrowers with the national average cohort default rate in addition to the institution’s cohort default rate and the categorical national cohort default rate.

7)         Rep. Peters (D-MI) Amendment #4–Amendment requires that student borrowers receive an explanation of the impact of a delinquency or default on a loan to their credit score, including the borrower’s future ability to find employment or purchase a home or a car.

Additional Information

For questions or further information contact the GOP Conference at 5-5107.