Thu, June 23, 2011
“It is essential that we provide young adults with the financial skills they need to manage their finances and avoid costly and lasting mistakes,” said Senator Akaka. “Enormous debt, loan defaults, and insufficient financial literacy are too common among students and young adults today. The College LIFE Act will help students across the country improve their futures, and I am committed to seeing it enacted.”
Borrowing to pay for school is common today. Two out of every three college graduates have significant student loan debt, and the median level of debt is over $23,000. The Department of Education estimates that over 36 million Americans have outstanding federal student loan debt that totals over $740 billion combined. At the same time, college tuition continues to rise, causing students to rely on credit cards on top of their student loans to pay their way through college.
While students are now expected to make major financial decisions early in their adult lives, few have had the opportunity to develop sound financial decision-making abilities. This is evident in the Council for Economic Education’s most recent Survey of the States, which found that only 21 states require students to take a class in economics to graduate and only 13 states require a course in personal finance.
The College LIFE Act seeks to address these issues by empowering young adults through financial literacy. Under the legislation, student borrowers would be provided entrance and exit financial literacy counseling at first disbursement of their loan and prior to their departure from their academic institution. The counseling curriculum would be based on the Financial Education Core Competencies developed by the Department of the Treasury and the Financial Literacy Education Commission, which identify five core financial literacy concepts (earning, spending, saving, borrowing, and protection) and explain the expected knowledge and outcomes associated with each.
Senator Akaka’s Senate Floor statement is available here: LINK
The full text of the College LIFE Act is attached and downloadable at the bottom of this page.