Earn to Learn Act

II 116TH CONGRESS 2D SESSION S. 3477 To establish a matched savings program for low-income students. IN THE SENATE OF THE UNITED STATES MARCH 12, 2020 Ms. SINEMA (for herself and Mr. ROMNEY) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To establish a matched savings program for low-income students. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Earn to Learn Act’’. 4 SEC. 2. FINDINGS. 5 Congress finds the following: 6 (1) Skyrocketing costs of higher education are 7 outpacing available financial aid. Individuals in the 8 United States owe more than $1,500,000,000,000 in 9 student loan debt, and more than 3,000 student loan 10 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 3477 IS borrowers default on a student loan every day, many 1 of whom left college before finishing a degree. 2 (2) The cost of paying for public higher edu- 3 cation and workforce training programs continues to 4 rise while the purchasing power of Federal Pell 5 Grant aid has significantly diminished. 6 (3) The confluence of these issues forces pro- 7 spective students to make the tough choice between 8 foregoing postsecondary education and borrowing 9 enough money to pay for college, an amount that is 10 often many times their annual salary and can re- 11 main a financial burden for decades after these stu- 12 dents graduate. 13 (4) The higher rates of loan delinquencies and 14 default among low- and moderate-income popu- 15 lations often lead to increased financial hardship, 16 fewer assets, and lower net worth. 17 (5) In 2013, the Brookings Institute found that 18 the increasing debt burden represents a drag on re- 19 cent graduates and also serves as a deterrent to 20 would-be students who may question the trade-off 21 between the debt burden and the payoff of a college 22 degree. 23 (6) During the academic year 2015–2016 the 24 Department of Education found that nearly 3 in 4 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 3477 IS students experience unmet need, and that unmet 1 need among college students has risen by 23 percent 2 since academic year 2011–2012. 3 (7) The Federal Reserve System has deter- 4 mined student loan payments are displacing retire- 5 ment savings, home ownership, small business devel- 6 opment, and other forms of building wealth. 7 (8) The Economic Well-Being of U.S. House- 8 holds in 2018 report by the Federal Reserve found 9 that two-thirds of graduates with a bachelor’s degree 10 or higher feel that their educational investment paid 11 off financially, but only 3 in 10 students who started 12 higher education programs but did not complete a 13 degree share this view. 14 (9) The United States urgently needs a new na- 15 tional, innovative approach to financial aid to help 16 low-income students achieve their educational goals, 17 graduate with affordable amounts of student loan 18 debt, and improve their financial capability. 19 SEC. 3. PURPOSES. 20 It is the purpose of this Act to— 21 (1) establish a proven and innovative matched 22 savings program for low-income students that pro- 23 vides the financial resources and support those stu- 24 dents need to attain their educational goals; 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 3477 IS (2) provide a much-needed supplement to tradi- 1 tional financial aid options through matched savings; 2 (3) give students the tools to succeed by giving 3 students the opportunity to invest in their education 4 and to improve their financial capability through fi- 5 nancial empowerment training and success coaching; 6 and 7 (4) help students— 8 (A) develop healthy financial habits and 9 life skills; 10 (B) prepare to embark on a lifetime of 11 healthy financial practices after graduation; and 12 (C) minimize or eliminate student loan 13 debt. 14 SEC. 4. DEFINITIONS. 15 In this Act: 16 (1) 529 ACCOUNT.—The term ‘‘529 account’’ 17 means a qualified tuition program as defined in sec- 18 tion 529(b) of the Internal Revenue Code of 1986. 19 (2) COST OF ATTENDANCE.—The term ‘‘cost of 20 attendance’’ has the meaning given that term in sec- 21 tion 472 of the Higher Education Act of 1965 (20 22 U.S.C. 1087ll). 23 (3) CUSTODIAL ACCOUNT.—The term ‘‘custo- 24 dial account’’ means a financial account established 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 3477 IS for the benefit of an eligible student, which shall be 1 treated as a trust if the assets of the custodial ac- 2 count are held by a bank (as defined in section 3 408(n) of the Internal Revenue Code of 1986 (26 4 U.S.C. 408 (n))) or another person who dem- 5 onstrates, to the satisfaction of the Secretary, that 6 the manner in which such person will administer the 7 custodial account will be consistent with the require- 8 ments of this Act. 9 (4) EDUCATIONAL SAVINGS ACCOUNT.—The 10 term ‘‘educational savings account’’ means an ac- 11 count that is— 12 (A) a custodial account; or 13 (B) a 529 account. 14 (5) ELIGIBLE EDUCATIONAL INSTITUTION.— 15 The term ‘‘eligible educational institution’’ means 16 the following: 17 (A) INSTITUTION OF HIGHER EDU- 18 CATION.—An institution of higher education, as 19 defined in section 101 or 102 of the Higher 20 Education Act of 1965 (20 U.S.C. 1001, 1002). 21 (B) AREA CAREER AND TECHNICAL EDU- 22 CATION SCHOOL.—An area career and technical 23 education school, as defined in section 3(3) of 24 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 3477 IS the Carl D. Perkins Career and Technical Edu- 1 cation Act of 2006 (20 U.S.C. 2302(3)). 2 (6) ELIGIBLE ENTITY.—The term ‘‘eligible enti- 3 ty’’ means a State or a nonprofit organization. 4 (7) ELIGIBLE STUDENT.— 5 (A) IN GENERAL.—The term ‘‘eligible stu- 6 dent’’ means an individual who— 7 (i) is selected to participate in a col- 8 lege match savings program; 9 (ii) has been admitted to an institu- 10 tion of higher education; 11 (iii) is a student from a low-income 12 family, as determined by the eligible entity; 13 (iv) successfully completes a required 14 prerequisite personal finance training pro- 15 gram; 16 (v) agrees to contribute savings to the 17 educational savings account administered 18 by the eligible entity under this section; 19 (vi) has submitted a Free Application 20 for Federal Student Aid (FAFSA); and 21 (vii) meets any other eligibility criteria 22 as defined by the eligible entity. 23 (B) PRELIMINARY ELIGIBILITY.—Notwith- 24 standing subparagraph (A), a student may be 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 3477 IS selected to participate in the college match sav- 1 ings program on a preliminary basis and given 2 an educational savings account if the student is 3 from a low-income family, as determined by the 4 eligible entity, who plans to attend an institu- 5 tion of higher education. 6 (8) FINANCIAL CAPABILITY TRAINING PLAT- 7 FORM.—The term ‘‘Financial Capability Training 8 Platform’’ means a program for use by a college 9 match savings program carried out with a grant 10 under this section that— 11 (A) delivers financial capability training to 12 participating students that is designed to help 13 students improve their financial capability and 14 overall financial well-being; 15 (B) includes an initial assessment to iden- 16 tify individual learning goals and objectives; 17 (C) creates a personal and dynamic learn- 18 ing experience for each individual participant, 19 including ongoing assessments as well as in- 20 terim milestones related to learning objectives 21 and longer-term goals; and 22 (D) includes modules on student loans, fi- 23 nancial aid, budgeting and credit, consumer 24 debt, housing costs, retirement, the importance 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 3477 IS of emergency savings, banking (including check- 1 ing and savings accounts), credit use and inter- 2 est rates, predatory lending practices, privacy, 3 and security, which shall be conducted by or at 4 the direction of the eligible entity. 5 (9) PROGRAM GUIDE.—The term ‘‘Program 6 Guide’’ means a guide that includes program policies 7 and procedures, a savings plan agreement template, 8 withdrawal form template, recommended timelines, 9 other key forms, and the structure for implementing 10 and reporting program results for a college match 11 savings program carried out with a grant under this 12 section. 13 (10) REPORTING DASHBOARD.—The term ‘‘Re- 14 porting Dashboard’’ means a robust online data por- 15 tal for college match savings programs carried out 16 with a grant under this section that— 17 (A) allows eligible entities to monitor stu- 18 dent progress, track achievement, and measure 19 relevant behavioral change; 20 (B) standardizes and facilitates student 21 evaluation across participating institutions; and 22 (C) is in compliance with the requirements 23 of section 444 of the General Education Provi- 24 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 3477 IS sions Act (commonly known as the ‘Family 1 Educational Rights and Privacy Act of 1974’). 2 (11) SUCCESS COACHING MODEL.—The term 3 ‘‘Success Coaching Model’’ includes— 4 (A) financial capability training to address 5 budgeting, managing student debt, savings, 6 debit management, credit cards, retirement 7 readiness, and credit reports; 8 (B) college readiness training that provides 9 mentoring to help students be better prepared 10 for the challenges of postsecondary education; 11 and 12 (C) workforce readiness training to learn 13 interviewing, resume skills, and career explo- 14 ration. 15 (12) SECRETARY.—The term ‘‘Secretary’’ 16 means the Secretary of Education. 17 SEC. 5. COLLEGE SAVINGS DEMONSTRATION GRANT PRO- 18 GRAM. 19 (a) GRANT ESTABLISHED.— 20 (1) IN GENERAL.—Not later than 9 months 21 after the date of enactment of this Act, the Sec- 22 retary shall establish a college matched savings dem- 23 onstration grant program described in this section, 24 through which the Secretary shall award grants, on 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 3477 IS a competitive basis, to eligible entities to enable 1 those eligible entities to carry out the activities de- 2 scribed in subsection (e). 3 (2) TOOLS FOR GRANTEES.—The Secretary 4 shall develop the Reporting Dashboard, Financial 5 Capability Training Platform, Program Guide, and 6 Success Coaching Model and make those tools avail- 7 able to grantees. 8 (3) PELL ELIGIBILITY NOT AFFECTED.—The 9 Secretary shall ensure that, notwithstanding any 10 other provision of law— 11 (A) participation in the grant program 12 shall not affect a student’s eligibility for a Fed- 13 eral Pell Grant; and 14 (B) funds deposited in an educational sav- 15 ings account by a participating student, as well 16 as any matching funds under this section, shall 17 not be considered when a determination is made 18 about that student’s eligibility for Federal stu- 19 dent aid under title IV of the Higher Education 20 Act of 1965 (20 U.S.C. 1070 et seq.), including 21 for a Federal Pell Grant. 22 (b) APPLICATION.—An eligible entity that desires to 23 participate in the grant program shall submit an applica- 24 tion to the Secretary at such time, in such manner, and 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 3477 IS containing such information as the Secretary may deter- 1 mine, including, at a minimum— 2 (1) a demonstration of— 3 (A) a commitment of non-Federal match- 4 ing funds at a ratio of 1:1 (which non-Federal 5 funds may be provided by an entity other than 6 the eligible entity); 7 (B) the ability to launch and implement 8 the program; and 9 (C) a plan for compliance with evaluation 10 and program monitoring; and 11 (2) an assurance that the applicant will utilize 12 the Reporting Dashboard, Financial Capability 13 Training Platform, and Success Coaching Model de- 14 veloped by the Secretary under subsection (a)(2). 15 (c) SELECTION.— 16 (1) PRIORITY.—In selecting eligible entities to 17 participate in the grant program, the Secretary shall 18 give priority to eligible entities that— 19 (A) target individuals at a statewide level 20 with networks of participating eligible edu- 21 cational institutions; and 22 (B) commit to supporting selected eligible 23 students through the student’s graduation from 24 an institution of higher education. 25 VerDate Sep 11 2014 03:36 Mar 25, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3477.IS S3477 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 3477 IS (2) DIVERSITY OF PROJECTS.—The Secretary 1 shall ensure, to the maximum extent practical, that 2 the grants awarded under this section include eligi- 3 ble entities that represent a range of communities 4 (both rural and urban) and diverse populations. 5 (d) AMOUNT.—A grant awarded under this section 6 shall be in an amount not to exceed the lesser of— 7 (1) the aggregate amount of funds committed 8 as matching contributions from non-Federal public 9 or private sector sources; or 10 (2) $10,000,000. 11 (e) USES OF FUNDS.— 12 (1) IN GENERAL.—An eligible entity receiving a 13 grant under this section shall use the grant funds 14 to— 15 (A) select eligible students, or students 16 who may have preliminary eligibility, in the 17 State in which the eligible entity is located to 18 participate in the grant program; 19 (B) provide selected students with financial 20 literacy education using the Success Coaching 21 Model; 22 (C) after ensuring that a selected eligible 23 student or selected student with preliminary eli- 24 gibility has completed an agreement regarding 25 VerDate Sep 11 2014 03:3 [Text truncated for display. 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