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[Page: S5633]  GPO's PDF
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   By Mr. CORZINE (for himself, Mr. TORRICELLI, and Mr. KENNEDY):

   S. 2628. A bill to amend part A of title IV of the Social Security Act to require a State to promote financial education under the temporary assistance to needy families program and to allow financial education to count as a work activity under that program; to the Committee on Finance.

   Mr. CORZINE. Mr. President, I rise today with my colleagues Senators TORRICELLI and KENNEDY to introduce the Financial Literacy for Self-Sufficiency Act.

   Our bill would require states to promote financial education through their TANF , Temporary Assistance to Needy Families, programs. Financial education, education that promotes an understanding of consumer, and personal finance concepts, is extremely important for all families, and is especially important for low-income families who are moving from welfare to work.

   While TANF focuses on moving families off cash assistance and into work, it fails to provide recipients with the tools they need to maximize their earnings and manage their expenses in order to achieve financial stability once they are employed. If we truly expect to move these families to achieve financial independence, we must give them the tools they will need to make that transition.

   One of these tools is a bank account. Millions of low-income families remain outside of the formal banking system, with many of them spending too much of their hard-earned dollars at costly check cashing operations. In fact, more than eight million families earning under $25,000 a year lack a checking or savings account. A study conducted by the United States Department of the Treasury in 2000 found that a worker earning $12,000 a year would pay approximately $250 a year just to cash their payroll checks at such an outlet. And, nearly 16 percent of the checks cashed at check cashing outlets are government benefits checks, including welfare benefit checks.

   In addition to expanding the number of banks that do business in low-income communities, educating low-income unbanked families about the benefits of formal checking and savings accounts can significantly improve access to financial services.

   But, financial education isn't just about bank accounts and savings. It is also about protecting low-income families from predatory lending and devastating credit arrangements. Financial education that addresses abusive lending practices can help prevent unaffordable loan payments, equity stripping, and foreclosure. I strongly support legislative efforts to end predatory lending practices in our country, but until we do, ensuring that consumers are aware of unfair and abusive loan terms is a measure that will provide them some protection from these tactics.

   Finally, families leaving welfare for work face many challenges, including securing child care and transportation. One challenge that often is not mentioned, however, is the challenge of transitioning from a benefits-based income to a wage income. Financial literacy programs that educate families transitioning from welfare to work about taxes and tax benefits that they may be eligible for, such as the Department Care Tax Credit and the Earned Income Tax Credit, will ensure that they have access to these important work benefits.

   The Financial Literacy for Self-Sufficiency Act will allow states to use their TANF funds to collaborate with community-based organizations, banks, and community colleges to create financial education programs for low-income families receiving welfare and for those transitioning from welfare to work. As Federal Reserve Chairman Alan Greenspan has noted, ``Educational and training programs may be the most critical service offered by community-based organizations to enhance the ability of lower-income households to accumulate assets.''

[Page: S5634]  GPO's PDF

   I hope members of the Senate Finance Committee will join my colleagues Senator TORRICELLI and Senator KENNEDY and me in promoting financial education for our nation's TANF recipients when they act to create a reauthorization framework for our Nation's welfare program.

   I ask unanimous consent that the text of the legislation be printed in the RECORD.

   There being no objection, the bill was ordered to be printed in the RECORD, as follows:

    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 ``TANF Financial Education Promotion Act of 2002''.

   SEC. 2. FINDINGS.

    Congress makes the following findings:

    (1) Most recipients of assistance under the temporary assistance to needy families program established under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) and individuals moving toward self-sufficiency operate outside the financial mainstream, paying high costs to handle their finances and saving little for emergencies or the future.

    (2) Currently, personal debt levels and bankruptcy filing rates are high and savings rates are at their lowest levels in 70 years. The inability of many households to budget, save, and invest prevents them from laying the foundation for a secure financial future.

    (3) Financial planning can help families meet near-term obligations and maximize their longer-term well being, especially valuable for populations that have traditionally been underserved by our financial system.

    (4) Financial education can give individuals the necessary financial tools to create household budgets, initiate savings plans, and acquire assets.

    (5) Financial education can prevent vulnerable customers from becoming entangled in financially devastating credit arrangements.

    (6) Financial education that addresses abusive lending practices targeted at specific neighborhoods or vulnerable segments of the population can prevent unaffordable payments, equity stripping, and foreclosure.

    (7) Financial education speaks to the broader purpose of the temporary assistance to needy families program to equip individuals with the tools to succeed and support themselves and their families in self-sufficiency.

   SEC. 3. REQUIREMENT TO PROMOTE FINANCIAL EDUCATION UNDER TANF .

    (a) STATE PLAN.--Section 402(a)(1)(A) of the Social Security Act (42 U.S.C. 602(a)(1)(A)) is amended by adding at the end the following:

    ``(vii) Establish goals and take action to promote financial education, as defined in section 407(j), among parents and caretakers receiving assistance under the program through collaboration with community-based organizations, financial institutions, and the Cooperative State Research, Education, and Extension Service of the Department of Agriculture.''.

    (b) INCLUSION OF FINANCIAL EDUCATION AS A WORK ACTIVITY.--Section 407 of the Social Security Act (42 U.S.C 607) is amended--

    (1) in subsection (c)(1)--

    (A) in subparagraph (A), by striking ``or (12)'' and inserting ``(12), or (13)''; and

    (B) in subparagraph (B), by striking ``or (12)'' and inserting ``(12), or (13)'';

    (2) in subsection (d)--

    (A) in paragraph (11), by striking ``and'' at the end;

    (B) in paragraph (12), by striking the period and inserting ``; and''; and

    (C) by adding at the end the following:

    ``(13) financial education, as defined in subsection (j).''; and

    (3) by adding at the end the following:

    ``(j) DEFINITION OF FINANCIAL EDUCATION.--In this part, the term `financial education' means education that promotes an understanding of consumer, economic, and personal finance concepts, including the basic principles involved with earning, budgeting, spending, saving, investing, and taxation.''.

    (c) EFFECTIVE DATE.--The amendments made by this section take effect on October 1, 2002.

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