II
109th CONGRESS
2d Session
S. 2654
IN THE SENATE OF THE UNITED STATES
April 26, 2006
Mr. Menendez introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions
A BILL
To protect consumers, and especially young consumers, from skyrocketing consumer debt and the barrage of credit card solicitations, to establish a financial literacy and education program in elementary and secondary schools to help prepare young people to be financially responsible consumers, and for other purposes.
Short title
This Act may be cited as the
Protection of Young Consumers Act of
2006
.
Protection of Young Consumers from prescreened credit offers
In general
Section 604(c)(1)(B) of the Fair Credit Reporting Act (15 U.S.C. 1681(c)(1)(B)) is amended—
in clause (ii), by striking
and
at the end; and
in clause (iii), by striking the period at the end and inserting the following:
; and
the consumer report indicates that the consumer is age 21 or older, except that a consumer who is at least 18 years of age may elect, in accordance with subsection (e)(7), to authorize the consumer reporting agency to include the name and address of the consumer in any list of names provided by the agency pursuant to this paragraph.
.
Opt-in for young consumers
Section 604(e) of the Fair Credit Reporting Act (15 U.S.C. 1681(e)) is amended—
by striking the subsection heading and inserting the following:
Election of consumers regarding lists
; and
by adding at the end the following:
Opt-in for underage consumers
In general
A consumer who is at least 18 years of age, but has not attained his or her 21st birthday may elect to have the name and address of the consumer included in any list provided by a consumer reporting agency under subsection (c)(1)(B) in connection with a credit or insurance transaction that is not initiated by the consumer by notifying the agency in accordance with subparagraph (B) that the consumer consents to the use of a consumer report relating to the consumer in connection with any credit or insurance transaction that is not initiated by the consumer.
Manner of notification
An election by a consumer described in subparagraph (A) shall be in writing, using a signed notice of election form issued or made available electronically by the agency at the request of the consumer for purposes of this paragraph.
Effectiveness of election
An election by a consumer under subparagraph (A) to be included in a list provided by a consumer reporting agency—
shall be effective until the earlier of—
the 21st birthday of the consumer; or
the date on which the consumer notifies the agency, through the notification system established by the agency under paragraph (5), that the election is no longer effective; and
shall be effective with respect to each affiliate of the agency.
Rule of construction
An election by a consumer under subparagraph (A) to be included in a list provided by a consumer reporting agency may not be construed to limit the applicability of this subsection to any person age 21 or older, and such person may elect to be excluded from any such list after the attainment of his or her 21st birthday in the manner otherwise provided under this subsection.
.
Promoting youth financial literacy
In general
Title IV of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7101 et seq.) is amended by adding at the end the following:
PROMOTING YOUTH FINANCIAL LITERACY
Short title and findings
Short Title
This part may be cited
as the Youth Financial Education Act
.
Findings
Congress finds the following:
In order to succeed in our dynamic American economy, young people must obtain the skills, knowledge, and experience necessary to manage their personal finances and obtain general financial literacy. All young adults should have the educational tools necessary to make informed financial decisions.
Despite the critical importance of financial literacy to young people, the average high school graduate lacks basic skills in the management of personal financial affairs. A nationwide survey conducted in 2004 by the Jump$tart Coalition for Personal Financial Literacy examined the financial knowledge of 4,074 12th graders. On average, survey respondents answered only 52 percent of the questions correctly, up only slightly from the 50 percent average score in 2002.
An evaluation by the National Endowment for Financial Education High School Financial Planning Program undertaken jointly with the Cooperative State Research, Education, and Extension Service of the Department of Agriculture demonstrates that as little as 10 hours of classroom instruction can impart substantial knowledge and affect significant change in how teens handle their money.
State educational leaders have recognized the importance of providing a basic financial education to students in kindergarten through grade 12 by integrating financial education into State educational standards, but by 2004, only 7 States required students to complete a course that covered personal finance before graduating from high school.
Teacher training and professional development are critical to achieving youth financial literacy. Teachers should be given the tools they need to educate our Nation’s youth on personal finance and economics.
Personal financial education helps prepare students for the workforce and for financial independence by developing their sense of individual responsibility, improving their life skills, and providing them with a thorough understanding of consumer economics that will benefit them for their entire lives.
Financial education integrates instruction in valuable life skills with instruction in economics, including income and taxes, money management, investment and spending, and the importance of personal savings.
The consumers and investors of tomorrow are in our schools today. The teaching of personal finance should be encouraged at all levels of our Nation’s educational system, from kindergarten through grade 12.
State grant program
Program Authorized
The Secretary is authorized to award grants, from allocations under subsection (c), to State educational agencies to develop and integrate youth financial education programs for students in elementary schools and secondary schools.
State Plan
Approved state plan required
To be eligible to receive a grant under this section, a State educational agency shall submit an application to the Secretary that—
includes a State plan in accordance with paragraph (2); and
is approved by the Secretary.
State plan contents
The State plan referred to in paragraph (1) shall include—
a description of how the State educational agency will use the grant funds;
a description of how the programs supported by the grant will be coordinated with other relevant Federal, State, regional, and local programs; and
a description of how the State educational agency will evaluate program performance.
Allocation of Funds
Allocation factors
Except as otherwise provided in paragraph (2), the Secretary shall allocate the amounts made available to carry out this section pursuant to subsection (a) to each State according to the relative populations in all of the States of students in kindergarten through grade 12, as determined by the Secretary based on the most recent satisfactory data.
Minimum allocation
Subject to the availability of appropriations, and notwithstanding paragraph (1), a State that has submitted a plan under subsection (b) that is approved by the Secretary shall be allocated a grant under this section that is not less than $500,000 for a fiscal year.
Reallocation
In any fiscal year, the Secretary shall reallocate, to States with approved plans under this section in accordance with paragraph (1), an allocation under this subsection—
for any State that has not submitted a plan under subsection (b); or
for any State whose plan submitted under subsection (b) has been disapproved by the Secretary.
Use of Grant Funds
Required uses
A grant made to a State educational agency under this part shall be used—
to provide funds to local educational agencies and public schools to carry out financial education programs for students in kindergarten through grade 12, based on the concept of achieving financial literacy through the teaching of personal financial management skills and the basic principles involved with earning, spending, saving, and investing;
to carry out professional development programs to prepare teachers and administrators for financial education; and
to monitor and evaluate programs supported under subparagraphs (A) and (B).
Limitation on administrative costs
A State educational agency receiving a grant under subsection (a) may use not more than 4 percent of the total amount of the grant in any fiscal year for the administrative costs of carrying out this section.
Report to the Secretary
In general
Each State educational agency receiving a grant under this section shall transmit a report to the Secretary with respect to each fiscal year for which a grant is received.
Content of report
Each report required under paragraph (1) shall describe—
the programs supported by the grant; and
the results of the State educational agency’s monitoring and evaluation of such programs.
Clearinghouse
Authority
Subject to the availability of
appropriations, the Secretary shall make a grant to, or execute a contract
with, an eligible entity with substantial experience in the field of financial
education, such as the Jump$tart Coalition for Personal Financial Literacy, to
establish, operate, and maintain a national clearinghouse (in this part
referred to as the Clearinghouse
) for instructional materials
and information regarding model financial education programs and best
practices.
Eligible Entity
In this section, the term eligible entity means a national nonprofit organization with a proven record of—
cataloging youth financial literacy materials; and
providing support services and materials to schools and other organizations that work to promote youth financial literacy.
Application
An eligible entity desiring to establish, operate, and maintain the Clearinghouse shall submit an application to the Secretary at such time, in such manner, and accompanied by such information, as the Secretary may reasonably require.
Basis and Term
The Secretary shall make the grant or contract authorized under subsection (a) on a competitive, merit basis for a term of 5 years.
Use of Funds
The Clearinghouse shall use the funds provided under a grant or contract made under subsection (a)—
to maintain a repository of instructional materials and related information regarding financial education programs for elementary schools and secondary schools, including kindergartens, for use by States, localities, and the general public;
to disseminate to States, localities, and the general public, through electronic and other means, instructional materials and related information regarding financial education programs for elementary schools and secondary schools, including kindergartens; and
to the extent that resources allow, to provide technical assistance to States, localities, and the general public on the design, establishment, and implementation of financial education programs for elementary schools and secondary schools, including kindergartens.
Consultation
The chief executive officer of the eligible entity selected to establish and operate the Clearinghouse shall consult with the Department of the Treasury and the Securities and Exchange Commission with respect to its activities under subsection (e).
Submission to Clearinghouse
Each Federal agency or department that develops financial educational programs and instructional materials for such programs shall submit to the Clearinghouse information on the programs and copies of the materials.
Application of Copyright Laws
In carrying out this section, the Clearinghouse shall comply with the provisions of title 17, United States Code.
Evaluation and report
Performance Measures
The Secretary shall develop measures to evaluate the performance of programs assisted under sections 4402 and 4403.
Evaluation According to Performance Measures
Applying the performance measures developed under subsection (a), the Secretary shall evaluate programs assisted under sections 4402 and 4403—
to judge the programs' performance and effectiveness;
to identify which of the programs represent the best practices of entities developing financial education programs for students in kindergarten through grade 12; and
to identify which of the programs may be replicated and used to provide technical assistance to States, localities, and the general public.
Report
In general
For each fiscal year for which there are appropriations under section 4407(a), the Secretary shall transmit a report to Congress describing the status of the implementation of this part.
Contents of report
The report required under paragraph (1) shall include—
the results of the evaluation required under subsection (b); and
a description of the programs supported under section 4402.
Definitions
In this part:
Financial education
The term financial education means educational activities and experiences, planned and supervised by qualified teachers, that enable students—
to understand basic economic and consumer principles;
to acquire the skills and knowledge necessary to manage personal and household finances; and
to develop a range of competencies that will enable the students to become responsible consumers.
Qualified teacher
The term qualified teacher means a teacher who holds a valid teaching certification or is considered to be qualified by the State educational agency in the State in which the teacher works.
Prohibition
Nothing in this part shall be construed to authorize an officer or employee of the Federal Government to mandate, direct, or control a State, local educational agency, or school’s specific instructional content, curriculum, or program of instruction, as a condition of eligibility to receive funds under this part.
Authorization of appropriations
Authorization
For the purposes of carrying out this part, there are authorized to be appropriated $100,000,000 for each of the fiscal years 2007 through 2011.
Limitation on Funds for Clearinghouse
The Secretary may use not less than 2 percent and not more than 5 percent of amounts appropriated under subsection (a) for each fiscal year to carry out section 4403.
Limitation on Funds for Secretary Evaluation
The Secretary may use not more than $200,000 from the amounts appropriated under subsection (a) for each fiscal year to carry out subsections (a) and (b) of section 4404.
Limitation on Administrative Costs
Except as necessary to carry out subsections (a) and (b) of section 4404 using amounts described in subsection (c), the Secretary shall not use any portion of the amounts appropriated under subsection (a) for the costs of administering this part.
.
Table of contents
The table of contents of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 note) is amended by inserting after the item relating to section 4304 the following:
PART D—PROMOTING YOUTH FINANCIAL LITERACY
Sec. 4401. Short title and findings.
Sec. 4402. State grant program.
Sec. 4403. Clearinghouse.
Sec. 4404. Evaluation and report.
Sec. 4405. Definitions.
Sec. 4406. Prohibition.
Sec. 4407. Authorization of appropriations.
.
GAO study
Study
The Comptroller General shall conduct an annual study of the effectiveness of the programs and activities assisted under part D of title IV of the Elementary and Secondary Education Act of 1965.
Report
The Comptroller General shall prepare and submit to Congress a report on the results of each study conducted under paragraph (1). The first such report shall be submitted 1 year after the date of enactment of this Act and subsequent reports shall be submitted each year thereafter.
Authorization of appropriations
There are authorized to be appropriated to carry out this section such sums as may be necessary for fiscal year 2007 and each of the 4 succeeding fiscal years thereafter.