IN THE SENATE OF THE UNITED STATES
April 15, 2021
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
To establish a matched savings program for low-income students.
This Act may be cited as the
Earn to Learn Act.
Congress finds the following:
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.
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.
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.
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.
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.
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.
The Federal Reserve System has determined student loan payments are displacing retirement savings, home ownership, small business development, and other forms of building wealth.
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.
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.
It is the purpose of this Act to—
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;
provide a much-needed supplement to traditional financial aid options through matched savings;
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
develop healthy financial habits and life skills;
prepare to embark on a lifetime of healthy financial practices after graduation; and
minimize or eliminate student loan debt.
In this Act:
The term 529 account means a qualified tuition program as defined in section 529(b) of the Internal Revenue Code of 1986.
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).
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.
Educational savings account
The term educational savings account means an account that is—
a custodial account; or
a 529 account.
Eligible educational institution
The term eligible educational institution means the following:
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).
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)).
The term eligible entity means a State or a nonprofit organization.
The term eligible student means an individual who—
is selected to participate in a college match savings program;
has been admitted to an institution of higher education;
is a student from a low-income family, as determined by the eligible entity;
successfully completes a required prerequisite personal finance training program;
agrees to contribute savings to the educational savings account administered by the eligible entity under this section; and
meets any other eligibility criteria as defined by the eligible entity.
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.
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—
delivers financial capability training to participating students that is designed to help students improve their financial capability and overall financial well-being;
includes an initial assessment to identify individual learning goals and objectives;
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
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.
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.
Reporting Dashboard means a robust online data portal for college match savings programs carried out with a grant under this section that—
allows eligible entities to monitor student progress, track achievement, and measure relevant behavioral change;
standardizes and facilitates student evaluation across participating institutions; and
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’).
Success Coaching Model
The term Success Coaching Model includes—
financial capability training to address budgeting, managing student debt, savings, debit management, credit cards, retirement readiness, and credit reports;
college readiness training that provides mentoring to help students be better prepared for the challenges of postsecondary education; and
workforce readiness training to learn interviewing, resume skills, and career exploration.
The term Secretary means the Secretary of Education.
College savings demonstration grant program
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).
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.
Pell eligibility not affected
The Secretary shall ensure that, notwithstanding any other provision of law—
participation in the grant program shall not affect a student's eligibility for a Federal Pell Grant; and
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.
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—
a demonstration of—
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);
the ability to launch and implement the program; and
a plan for compliance with evaluation and program monitoring; and
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).
In selecting eligible entities to participate in the grant program, the Secretary shall give priority to eligible entities that—
target individuals at a statewide level with networks of participating eligible educational institutions; and
commit to supporting selected eligible students through the student's graduation from an institution of higher education.
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.
A grant awarded under this section shall be in an amount not to exceed the lesser of—
the aggregate amount of funds committed as matching contributions from non-Federal public or private sector sources; or
Uses of funds
An eligible entity receiving a grant under this section shall use the grant funds to—
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;
provide selected students with financial literacy education using the Success Coaching Model;
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
reserve matching funds for participating students in accordance with paragraph (2).
After a student or student's family meets a $500 savings threshold, for every additional $1 a student or student's family contributes to an educational savings account, that amount shall be matched by an additional $8 that the eligible entity will pay to the student's individual account at the student's eligible educational institution once that student meets the requirements of section 4(7)(A), including being accepted to an eligible educational institution.
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.
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.
Return of deposited funds
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).
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).
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 nonadministrative and administrative functions, including program management, reporting requirements, recruitment and enrollment of individuals, and monitoring.
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’).
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:
The number and characteristics of participating eligible students making a deposit into an educational savings account.
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.
The amount that the eligible entity has reserved in accordance with subsection (e)(1)(D).
The aggregate amounts deposited in educational savings accounts by students and their families, without including any personally identifiable information.
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.
Such other information as the Secretary may require to evaluate the demonstration project.
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:
The effects of incentives and organizational or institutional support on college retention in the demonstration project.
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.
The effects of educational savings accounts on savings rates, college retention and completion, and how such effects vary among different populations or communities.
The lessons to be learned from the demonstration projects conducted under this Act and whether a permanent college savings grant program should be established.
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.
Such other factors as may be prescribed by the Secretary.
The Secretary of Education may reserve not more than 10 percent of the amounts appropriated under section to provide technical assistance to eligible entities receiving grants under this Act.
Authorization of appropriations
There are authorized to be appropriated to carry out this Act $100,000,000 for fiscal year 2021 and each of the succeeding 4 years.