Financial Literacy Bill Passes U.S. House; Empowers Students Through Financial Counseling

Financial education took a top position this week on the docket of the United States House of Representatives, as a bipartisan measure designed to provide student loan education and other financial literacy passed the House by a vote of 405-11. The Empowering Students through Enhanced Financial Counseling Act (H.R. 4984) was moved through the legislative process in an effort to reform the current policies to mandate annual counseling for students who borrow money to finance their education, while increasing their understanding financial aid options, benefits and risks.

The passage of the bill comes at a very important time in financial education circles, particularly on the heels of recently released results of the first ever Organization for Economic Cooperation and Development (OECD) PISA international assessment of financial literacy, which uncovered that U.S. youth are lacking in financial literacy as compared to young people in many other countries. The exam evaluated the knowledge and skills of teens on a range of financial matters, including their understanding of loans, bank statements, insurance and other important financial concepts that are critical to effectively managing one’s personal financial affairs.

The financial literacy community also is noting that the speed with which this measure moved from introduction, which took place only one month earlier in June, to passage in the House is reflective not only of the importance placed on solving the student debt crisis, but also on the high priority being afforded to financial education generally among legislators from various political parties and from all regions within the country.

The bill moved out of its committee via bipartisan vote on July 10th on its way to passage by the House on July 24th. The measure is part of a sequence of bills drafted and introduced to help steer the reauthorization of the Higher Education Act. As an increasing number of financial literacy bills continue to move through Congress, as well as through the legislative channels at the state and local levels too, financial education will continue to make an important difference in the lives of young people and other beneficiaries of the legislation in the months and years ahead.