Bill Overview
Title: HIGHER ED Act
Description: This bill makes various changes to student loan forgiveness and loan repayment programs. First, the bill authorizes graduate and professional students to receive subsidized Stafford Loans. These students have been ineligible to receive subsidized Stafford Loans since July 1, 2012. Next, the bill allows student loans to be discharged in bankruptcy proceedings. The bill also establishes refinancing programs for student loans. It allows certain borrowers to refinance their federal student loans down to lower interest rates, and it creates the Federal Direct Refinanced Private Loan to allow certain borrowers to refinance their private student loans. Additionally, the bill revises the Public Service Loan Forgiveness (PSLF) program, such as by (1) allowing certain part-time faculty to participate in the PSLF program, (2) directing the Department of Education (ED) to annually cancel 10% of the amount a borrower owes after satisfying 12 qualifying monthly payments, (3) revising the process for certification of employment, and (4) requiring ED to establish a dispute resolution process. Further, the bill revises federal student loan repayment programs, including by (1) replacing existing student loan repayment plans with one income-based repayment plan and one standard 10-year repayment plan, and (2) allowing existing borrowers to lower their payments by switching to these new plans. It also establishes a process for ED to enroll a delinquent borrower in a new repayment plan. The bill also requires ED to provide certain notifications to borrowers.
Sponsors: Rep. DeFazio, Peter A. [D-OR-4]
Target Audience
Population: People with student loans and pursuing higher education
Estimated Size: 44000000
- The bill impacts individuals in or pursuing higher education by adjusting financial aid options.
- Graduate and professional students who were previously ineligible for subsidized Stafford Loans will now qualify.
- The allowance for bankruptcy discharge of student loans affects individuals struggling with student debt.
- Loan refinancing options will impact both federal and private student loan borrowers by potentially lowering their interest rates.
- Revisions to the Public Service Loan Forgiveness program will affect those in qualifying public service jobs, including new allowances for part-time faculty.
- The bill consolidates existing student loan repayment plans into fewer options, impacting current and future borrowers' repayment strategies.
Reasoning
- The US population currently includes about 44 million people with student loan debt, suggesting a broad range of people will be affected by this act.
- The policy targets particularly those who have federal and private student loans, with additional benefits for those in public service jobs.
- A consideration must be given to individuals who may not directly benefit from the policy changes, such as those without student loans or pursuing vocational careers.
- The budgetary constraint suggests that not every student or loan holder will be maximally served by the policy, prioritizing those within public sectors and with significant loan burdens.
- There is a diverse array of student loan circumstances in the US, from those starting the repayment journey to those significantly burdened by debt for years, impacting anticipated policy success.
Simulated Interviews
Graduate Student (Austin, TX)
Age: 23 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- Finally, I can access the subsidized loans that my peers have had. This will make a huge difference as I try to manage school and living expenses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Public School Teacher (San Diego, CA)
Age: 39 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Being able to include my part-time work will speed up my loan forgiveness. I can't wait to see progress in my principal balance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Software Developer (Chicago, IL)
Age: 28 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- Refinancing my loans will make a huge difference in my monthly budget. Plus, my non-profit work now counts toward forgiveness, so I feel hopeful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Hospital Administrator (New York, NY)
Age: 52 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 3/20
Statement of Opinion:
- This won't heavily impact me now; it's too late in my loan's life cycle, but I can see it helping younger people avoid my struggles.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Freelancer (Seattle, WA)
Age: 30 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- The possibility to include student loans in bankruptcy could relieve overwhelming pressure. I might afford a more stable life.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Undergraduate Student (Boston, MA)
Age: 21 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- New options for repayment after college could really help manage my future finances. I’m anxious but hopeful about it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Electrician (Nashville, TN)
Age: 45 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 4/20
Statement of Opinion:
- This policy won't impact me directly since I've already paid my dues through vocational training.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Nurse (Portland, OR)
Age: 34 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Being able to see part of my loan canceled yearly would be a game-changer for my family and me. I would feel more secure making larger life decisions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Musician (Atlanta, GA)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- I’m concerned about the changes since I'm not in a public service job, but refinancing options could help.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Small Business Owner (Salt Lake City, UT)
Age: 55 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- I'm just glad my children might benefit from these changes as they pursue their education, but it doesn't affect my personal finances directly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $15000000000 (Low: $13000000000, High: $17000000000)
Year 2: $16000000000 (Low: $14000000000, High: $18000000000)
Year 3: $17000000000 (Low: $15000000000, High: $19000000000)
Year 5: $19000000000 (Low: $17000000000, High: $21000000000)
Year 10: $21000000000 (Low: $19000000000, High: $23000000000)
Year 100: $25000000000 (Low: $23000000000, High: $27000000000)
Key Considerations
- Eligibility and take-up rates for new and revised programs will affect overall costs.
- Behavioral responses from borrowers, such as switching to new repayment or refinancing options.
- The scale of loan discharges through bankruptcy will significantly influence costs.
- Administrative efficiencies gained from new processes could offset some costs.