[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3477 Introduced in Senate (IS)]
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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 Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Earn to Learn Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Skyrocketing costs of higher education are outpacing
available financial aid. Individuals in the United States owe
more than $1,500,000,000,000 in student loan debt, and more
than 3,000 student loan borrowers default on a student loan
every day, many of whom left college before finishing a degree.
(2) The cost of paying for public higher education and
workforce training programs continues to rise while the
purchasing power of Federal Pell Grant aid has significantly
diminished.
(3) The confluence of these issues forces prospective
students to make the tough choice between foregoing
postsecondary education and borrowing enough money to pay for
college, an amount that is often many times their annual salary
and can remain a financial burden for decades after these
students graduate.
(4) The higher rates of loan delinquencies and default
among low- and moderate-income populations often lead to
increased financial hardship, fewer assets, and lower net
worth.
(5) In 2013, the Brookings Institute found that the
increasing debt burden represents a drag on recent graduates
and also serves as a deterrent to would-be students who may
question the trade-off between the debt burden and the payoff
of a college degree.
(6) During the academic year 2015-2016 the Department of
Education found that nearly 3 in 4 students experience unmet
need, and that unmet need among college students has risen by
23 percent since academic year 2011-2012.
(7) The Federal Reserve System has determined student loan
payments are displacing retirement savings, home ownership,
small business development, and other forms of building wealth.
(8) The Economic Well-Being of U.S. Households in 2018
report by the Federal Reserve found that two-thirds of
graduates with a bachelor's degree or higher feel that their
educational investment paid off financially, but only 3 in 10
students who started higher education programs but did not
complete a degree share this view.
(9) The United States urgently needs a new national,
innovative approach to financial aid to help low-income
students achieve their educational goals, graduate with
affordable amounts of student loan debt, and improve their
financial capability.
SEC. 3. PURPOSES.
It is the purpose of this Act to--
(1) establish a proven and innovative matched savings
program for low-income students that provides the financial
resources and support those students need to attain their
educational goals;
(2) provide a much-needed supplement to traditional
financial aid options through matched savings;
(3) give students the tools to succeed by giving students
the opportunity to invest in their education and to improve
their financial capability through financial empowerment
training and success coaching; and
(4) help students--
(A) develop healthy financial habits and life
skills;
(B) prepare to embark on a lifetime of healthy
financial practices after graduation; and
(C) minimize or eliminate student loan debt.
SEC. 4. DEFINITIONS.
In this Act:
(1) 529 account.--The term ``529 account'' means a
qualified tuition program as defined in section 529(b) of the
Internal Revenue Code of 1986.
(2) Cost of attendance.--The term ``cost of attendance''
has the meaning given that term in section 472 of the Higher
Education Act of 1965 (20 U.S.C. 1087ll).
(3) Custodial account.--The term ``custodial account''
means a financial account established for the benefit of an
eligible student, which shall be treated as a trust if the
assets of the custodial account are held by a bank (as defined
in section 408(n) of the Internal Revenue Code of 1986 (26
U.S.C. 408 (n))) or another person who demonstrates, to the
satisfaction of the Secretary, that the manner in which such
person will administer the custodial account will be consistent
with the requirements of this Act.
(4) Educational savings account.--The term ``educational
savings account'' means an account that is--
(A) a custodial account; or
(B) a 529 account.
(5) Eligible educational institution.--The term ``eligible
educational institution'' means the following:
(A) Institution of higher education.--An
institution of higher education, as defined in section
101 or 102 of the Higher Education Act of 1965 (20
U.S.C. 1001, 1002).
(B) Area career and technical education school.--An
area career and technical education school, as defined
in section 3(3) of the Carl D. Perkins Career and
Technical Education Act of 2006 (20 U.S.C. 2302(3)).
(6) Eligible entity.--The term ``eligible entity'' means a
State or a nonprofit organization.
(7) Eligible student.--
(A) In general.--The term ``eligible student''
means an individual who--
(i) is selected to participate in a college
match savings program;
(ii) has been admitted to an institution of
higher education;
(iii) is a student from a low-income
family, as determined by the eligible entity;
(iv) successfully completes a required
prerequisite personal finance training program;
(v) agrees to contribute savings to the
educational savings account administered by the
eligible entity under this section;
(vi) has submitted a Free Application for
Federal Student Aid (FAFSA); and
(vii) meets any other eligibility criteria
as defined by the eligible entity.
(B) Preliminary eligibility.--Notwithstanding
subparagraph (A), a student may be selected to
participate in the college match savings program on a
preliminary basis and given an educational savings
account if the student is from a low-income family, as
determined by the eligible entity, who plans to attend
an institution of higher education.
(8) Financial capability training platform.--The term
``Financial Capability Training Platform'' means a program for
use by a college match savings program carried out with a grant
under this section that--
(A) delivers financial capability training to
participating students that is designed to help
students improve their financial capability and overall
financial well-being;
(B) includes an initial assessment to identify
individual learning goals and objectives;
(C) creates a personal and dynamic learning
experience for each individual participant, including
ongoing assessments as well as interim milestones
related to learning objectives and longer-term goals;
and
(D) includes modules on student loans, financial
aid, budgeting and credit, consumer debt, housing
costs, retirement, the importance of emergency savings,
banking (including checking and savings accounts),
credit use and interest rates, predatory lending
practices, privacy, and security, which shall be
conducted by or at the direction of the eligible
entity.
(9) Program guide.--The term ``Program Guide'' means a
guide that includes program policies and procedures, a savings
plan agreement template, withdrawal form template, recommended
timelines, other key forms, and the structure for implementing
and reporting program results for a college match savings
program carried out with a grant under this section.
(10) Reporting dashboard.--The term ``Reporting Dashboard''
means a robust online data portal for college match savings
programs carried out with a grant under this section that--
(A) allows eligible entities to monitor student
progress, track achievement, and measure relevant
behavioral change;
(B) standardizes and facilitates student evaluation
across participating institutions; and
(C) is in compliance with the requirements of
section 444 of the General Education Provisions Act
(commonly known as the `Family Educational Rights and
Privacy Act of 1974').
(11) Success coaching model.--The term ``Success Coaching
Model'' includes--
(A) financial capability training to address
budgeting, managing student debt, savings, debit
management, credit cards, retirement readiness, and
credit reports;
(B) college readiness training that provides
mentoring to help students be better prepared for the
challenges of postsecondary education; and
(C) workforce readiness training to learn
interviewing, resume skills, and career exploration.
(12) Secretary.--The term ``Secretary'' means the Secretary
of Education.
SEC. 5. COLLEGE SAVINGS DEMONSTRATION GRANT PROGRAM.
(a) Grant Established.--
(1) In general.--Not later than 9 months after the date of
enactment of this Act, the Secretary shall establish a college
matched savings demonstration grant program described in this
section, through which the Secretary shall award grants, on a
competitive basis, to eligible entities to enable those
eligible entities to carry out the activities described in
subsection (e).
(2) Tools for grantees.--The Secretary shall develop the
Reporting Dashboard, Financial Capability Training Platform,
Program Guide, and Success Coaching Model and make those tools
available to grantees.
(3) Pell eligibility not affected.--The Secretary shall
ensure that, notwithstanding any other provision of law--
(A) participation in the grant program shall not
affect a student's eligibility for a Federal Pell
Grant; and
(B) funds deposited in an educational savings
account by a participating student, as well as any
matching funds under this section, shall not be
considered when a determination is made about that
student's eligibility for Federal student aid under
title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.), including for a Federal Pell Grant.
(b) Application.--An eligible entity that desires to participate in
the grant program shall submit an application to the Secretary at such
time, in such manner, and containing such information as the Secretary
may determine, including, at a minimum--
(1) a demonstration of--
(A) a commitment of non-Federal matching funds at a
ratio of 1:1 (which non-Federal funds may be provided
by an entity other than the eligible entity);
(B) the ability to launch and implement the
program; and
(C) a plan for compliance with evaluation and
program monitoring; and
(2) an assurance that the applicant will utilize the
Reporting Dashboard, Financial Capability Training Platform,
and Success Coaching Model developed by the Secretary under
subsection (a)(2).
(c) Selection.--
(1) Priority.--In selecting eligible entities to
participate in the grant program, the Secretary shall give
priority to eligible entities that--
(A) target individuals at a statewide level with
networks of participating eligible educational
institutions; and
(B) commit to supporting selected eligible students
through the student's graduation from an institution of
higher education.
(2) Diversity of projects.--The Secretary shall ensure, to
the maximum extent practical, that the grants awarded under
this section include eligible entities that represent a range
of communities (both rural and urban) and diverse populations.
(d) Amount.--A grant awarded under this section shall be in an
amount not to exceed the lesser of--
(1) the aggregate amount of funds committed as matching
contributions from non-Federal public or private sector
sources; or
(2) $10,000,000.
(e) Uses of Funds.--
(1) In general.--An eligible entity receiving a grant under
this section shall use the grant funds to--
(A) select eligible students, or students who may
have preliminary eligibility, in the State in which the
eligible entity is located to participate in the grant
program;
(B) provide selected students with financial
literacy education using the Success Coaching Model;
(C) after ensuring that a selected eligible student
or selected student with preliminary eligibility has
completed an agreement regarding the terms and
conditions of the educational savings account,
establish an educational savings account for each
participating eligible student or student who has
preliminary eligibility and allow students and their
families to deposit funds in that account to save for
attendance at an eligible educational institution; and
(D) reserve matching funds for participating
students in accordance with paragraph (2).
(2) Matching funds.--
(A) In general.--For each $1 that a student or
student's family contributes to the student's
educational savings account for an academic year, up to
a maximum of $500 in contributions, the eligible entity
shall pay $8 to the student's individual account at the
student's eligible educational institution once that
student meets the requirements of section 4(7)(A).
(B) Carry over.--Any amounts that a student or
student's family contributes to such account that are
above $500 for that year may be carried over and
considered as contributions that are eligible to be
matched in accordance with subparagraph (A) for the
following year.
(C) Withdrawal from school.--If a participating
student withdraws from an eligible institution during
the drop-add period at that eligible institution, the
student shall be responsible for any amounts owed for
that academic period and will not receive matching
funds for that academic period.
(D) Delay of attendance; extenuating
circumstances.--Subject to paragraph (3), each eligible
entity shall describe in the agreement under paragraph
(1)(C) the eligible entity's policy regarding the
availability of matching funds in the event a student
decides to delay attendance at an eligible institution
or in the case of extenuating circumstances, such as
illness of a student.
(3) Return of deposited funds.--
(A) In general.--Each eligible entity shall ensure
that a participating student, including a student with
preliminary eligibility, who does not meet or maintain
the requirements of section 4(7)(A) shall be entitled
to withdraw funds that the student or the student's
family contributed to the educational savings account
in accordance with the terms and conditions that are
contained in the agreement for that educational savings
account, as described in paragraph (1)(C).
(B) Expiration.--On the date that is 6 years after
the date on which a participating eligible student
first enrolled in an eligible educational institution,
that student's participation in the college matched
savings demonstration grant program shall terminate.
The eligible entity shall cease reserving matching
funds on behalf of that student as described in
paragraph (1)(D). Any remaining funds that the student
or the student's family deposited in an educational
savings account shall be made available for withdrawal
in accordance with subparagraph (A).
(4) Management costs.--An eligible entity receiving a grant
under this section may use not more than 5 percent of grant
funds for management costs, which may include nonadminstrative
and administrative functions, including program management,
reporting requirements, recruitment and enrollment of
individuals, and monitoring.
(f) Data Sharing.--An eligible entity receiving a grant under this
Act shall enter into a data sharing agreement with eligible
institutions in order to exchange data necessary to carry out the
activities described in this section. Such data sharing shall be
carried out in a manner that complies with the requirements of section
444 of the General Education Provisions Act (commonly known as the
`Family Educational Rights and Privacy Act of 1974').
(g) Annual Progress Reports.--Each eligible entity receiving a
grant under this section shall prepare and submit to the Secretary an
annual progress report containing the following information, in the
aggregate and in a manner that protects personally identifiable
information in accordance with Federal privacy laws:
(1) The number and characteristics of participating
eligible students making a deposit into an educational savings
account.
(2) Data on program goals and achievements including
enrollment rates, first-year retention rates, program
completion, average Federal student loan debt, and share of
students borrowing Federal student loans.
(3) The amount that the eligible entity has reserved in
accordance with subsection (e)(1)(D).
(4) The aggregate amounts deposited in educational savings
accounts by students and their families, without including any
personally identifiable information.
(5) What service configurations of the eligible entity
(such as configurations relating to peer support, structured
planning exercises, mentoring, and case management) increased
the rate and consistency of participation in the demonstration
project and how such configurations varied among different
populations or communities.
(6) Such other information as the Secretary may require to
evaluate the demonstration project.
(h) Report to Congress.--Not later than 12 months after the
establishment of this demonstration project, the Secretary of Education
shall prepare and submit to Congress a report containing the following
information:
(1) The effects of incentives and organizational or
institutional support on college retention in the demonstration
project.
(2) The savings rates of individuals in the demonstration
project, in the aggregate and disaggregated by demographic
characteristics including gender, age, family size, race or
ethnic background, and income.
(3) The effects of educational savings accounts on savings
rates, college retention and completion, and how such effects
vary among different populations or communities.
(4) The lessons to be learned from the demonstration
projects conducted under this Act and whether a permanent
college savings grant program should be established.
(5) The characteristics of educational savings accounts
(such as threshold amounts and match rates) required to
stimulate participation in the demonstration project, and how
such characteristics vary among different populations or
communities.
(6) Such other factors as may be prescribed by the
Secretary.
(i) Technical Assistance.--The Secretary of Education may reserve
not more than 10 percent of the amounts appropriated under this section
to provide technical assistance to eligible entities receiving grants
under this Act.
SEC. 6. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this Act
$100,000,000 for fiscal year 2020 and each of the succeeding 4 years.
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