Bill Overview
Title: Clean Slate through Repayment Act of 2022
Description: 2022 This bill provides for the removal of any adverse credit history related to a defaulted federal student loan from a borrower's credit history once the borrower has repaid in full the amount due on the loan.
Sponsors: Rep. Ross, Deborah K. [D-NC-2]
Target Audience
Population: Individuals with adverse credit history due to defaulted federal student loans
Estimated Size: 9000000
- Individuals with adverse credit history due to defaulted federal student loans can have negative information removed after loan repayment.
- The bill targets people who have defaulted on their federal student loans, impacting their credit ratings and potentially affecting their ability to borrow or lease.
- According to data from the U.S. Department of Education, there are millions of Americans with defaulted student loans.
- Globally, the primary impact will be within the United States due to the nature of U.S. federal student loans.
- There may be indirect impacts if this bill sets a precedent for international student loan practices.
Reasoning
- The target population for this bill primarily comprises individuals with defaulted federal student loans, which is estimated to be around 9 million Americans. Given the large target population and limited budget, the reach of the policy in the first year will be constrained.
- The policy's immediate financial implications likely include the administrative cost of credit report updates and outreach efforts. The budget constraints suggest prioritizing initial impact on individuals who are closest to meeting the criteria set by the policy.
- In terms of Cantril wellbeing scores, it's predicted that individuals with a defaulted federal student loan will see an improvement in their self-reported wellbeing due to alleviation of the financial stress associated with negative credit history.
- To provide a range of perspectives, the simulated interviews will involve individuals with varied personal and financial backgrounds, including age, occupation, and repayment status.
- Some individuals in this population might not perceive an immediate effect due to the long-term nature of student loan repayment or if they are not actively seeking credit products. Thus, the impact could be seen as medium to high for those currently facing significant financial limitations due to poor credit ratings.
- While the policy specifically targets the redemption of credit status post-repayment, its broader implications could include improved access to credit and better financial opportunities, enhancing overall life satisfaction.
Simulated Interviews
Marketing Specialist (Denver, CO)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 16/20
Statement of Opinion:
- I believe the policy will finally allow me to plan for the future without my credit report holding me back.
- Removing a default from my credit will definitely help when I'm applying for a mortgage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Teacher (Houston, TX)
Age: 35 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- It's about time something like this was available. The impact of these defaults has been immense.
- This policy could help me lower my interest rates on current debts, saving me more money in the long run.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Freelancer (Miami, FL)
Age: 42 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 10/20
Statement of Opinion:
- The chance to remove negative credit events will change everything for my business prospects and personal life.
- I'm optimistic about the opportunities this policy can offer financially and emotionally.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Graduate Student (Seattle, WA)
Age: 23 | Gender: other
Wellbeing Before Policy: 3
Duration of Impact: 3.0 years
Commonness: 18/20
Statement of Opinion:
- It sounds promising, but without the means to repay quickly, the policy feels out of reach right now.
- Hopefully, future job prospects will help me benefit from this.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 3 | 3 |
| Year 2 | 4 | 3 |
| Year 3 | 4 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Retired Military Personnel (Topeka, KS)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Less worried about credit, more interested in ensuring my family's financial security.
- This policy could have been beneficial years ago when our financial situation was more critical.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Nurse (Portland, OR)
Age: 40 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 12/20
Statement of Opinion:
- This policy gives me hope to finally fix my credit and secure a better interest rate for a personal loan or mortgage.
- I have been repaying as much as I can to stay on track. An actual benefit like this is encouraging.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Software Developer (New York, NY)
Age: 31 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- I worked hard to get my loans out of default, and this policy feels like the fresh start we need.
- It's exciting to think my past mistakes won't haunt me as I plan for bigger things.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Retiree (Boston, MA)
Age: 60 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- For me, it's about the peace of mind that these issues are resolved, for my children more than for myself.
- Happy to see changes that cater to improving the situations for those in debt.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Entrepreneur (Phoenix, AZ)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 8.0 years
Commonness: 11/20
Statement of Opinion:
- This policy could help me stabilize my business finances once I clear my default status.
- I hope to leverage this to secure future funding.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Project Manager (Chicago, IL)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 13/20
Statement of Opinion:
- My current credit situation doesn't reflect my financial behavior over the last few years.
- Excited about the prospect of a clean slate and better financial terms on loans.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $10000000)
Year 2: $4500000 (Low: $3000000, High: $9000000)
Year 3: $4000000 (Low: $2500000, High: $8500000)
Year 5: $3500000 (Low: $2000000, High: $8000000)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The number of individuals benefiting depends on both successful repayments and timely reporting by the Department of Education and credit agencies.
- Legal challenges could arise related to inaccuracies in credit amendments.
- The bill may encourage others with defaulted loans to pay off their debts to benefit from improved credit ratings.
- Coordination with credit reporting agencies is crucial for the bill's effectiveness.