Bill Overview
Title: Transforming Student Debt to Home Equity Act of 2022
Description: This bill requires the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency to jointly establish and implement a pilot demonstration program to provide, to eligible applicants with federal student loan debt, assistance in purchasing eligible properties. Specifically, the program may provide for (1) discounts on the appraised value of eligible properties, (2) flexibility in certain underwriting standards, (3) the development of new mortgage products specifically targeted to eligible applicants, and (4) other appropriate assistance. The program must provide for the development of a program that uses actuarial information to determine how the repayment of federal student loans may be integrated into a mortgage repayment schedule to allow eligible applicants to accumulate home equity. An eligible property is a property (1) that is designed as a dwelling for occupancy by one to four families; (2) that is safe and habitable; (3) the occupancy of which will promote community revitalization; and (4) that is owned by HUD, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), a local land bank, the Department of Agriculture, or the Department of Veterans Affairs.
Sponsors: Rep. Kaptur, Marcy [D-OH-9]
Target Audience
Population: Individuals with federal student loan debt who are potential homebuyers
Estimated Size: 43000000
- The bill targets individuals with federal student loan debt, specifically those who are eligible for mortgage assistance for home purchasing.
- According to the U.S. Federal Reserve, around 43 million Americans had federal student loan debt as of 2022.
- The bill creates opportunities for individuals to purchase properties owned by specific organizations, thus adding constraints based on property availability.
- Community revitalization requirements suggest that the impact will also be geographically limited to areas in need of such efforts.
- The program has provisions to help integrate student loan repayment with mortgage schedules, primarily aiding those who are attempting to manage both debts.
Reasoning
- The policy targets individuals with federal student loan debt who can afford a mortgage but are deterred by additional debt burdens.
- Because it partners with specific organizations (HUD, Fannie Mae, etc.), the availability of eligible properties will vary by location, impacting some geographical areas more than others.
- As student debt is widespread, the policy could potentially reach a large audience, but the impact will be limited by the budget constraints.
- High-impact participants will likely be those in the early stages of their working lives (20s-30s), looking to buy homes.
- Community revitalization aims suggest that urban downturn areas might see more direct effects by this policy.
- The complexity of integrating student loan debt and mortgage repayments means not everyone with student debt will find the policy beneficial or applicable.
Simulated Interviews
Teacher (Atlanta, GA)
Age: 34 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- The policy is a great way to help those in my situation finally buy a home.
- We have been renting and making minimum loan payments, which doesn't allow us to save for a down payment.
- Reducing student loan burden through mortgage integration is exactly what we need to get into a home.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 9 | 6 |
Software Developer (Buffalo, NY)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I think it's innovative and can be quite helpful.
- I'm eyeing a property in an area that fits the community revitalization criteria.
- This makes buying much more feasible for me next year.
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 | 9 | 8 |
| Year 10 | 9 | 9 |
| Year 20 | 8 | 9 |
Nurse (Dallas, TX)
Age: 41 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 4/20
Statement of Opinion:
- The policy doesn't really help me since I already bought a home.
- Could be transformative for younger nurses just starting out, though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Manufacturing Worker (Detroit, MI)
Age: 50 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 15.0 years
Commonness: 6/20
Statement of Opinion:
- I'm skeptical, but if it helps clean up our neighborhoods and make housing more affordable, I'm on board.
- Integration of student loans into mortgage could be beneficial.
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 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Marketing Specialist (Los Angeles, CA)
Age: 25 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 9/20
Statement of Opinion:
- The idea is good, but I doubt there will be enough eligible properties available in my area.
- Programs could be more geographically inclusive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Freelancer (Omaha, NE)
Age: 38 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- Converting debt into assets via such programs could change my current unstable situation.
- A challenge will be accessing the right properties.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Public Relations Manager (Miami, FL)
Age: 31 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- I appreciate the intent, but integration of mortgage and student loan might not lower my payments sufficiently.
- It solves one problem, but creates a more complex financial instrument.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Real Estate Agent (Seattle, WA)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 3/20
Statement of Opinion:
- This policy is good for business, promoting sales in areas that need investing.
- Personally, I see no direct benefit to my life, but professionally, it helps.
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 |
Artist (San Francisco, CA)
Age: 27 | Gender: other
Wellbeing Before Policy: 3
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- Not sure how feasible this program is for me given the property market here.
- It might assist others in less competitive markets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 3 | 3 |
| Year 2 | 4 | 3 |
| Year 3 | 4 | 3 |
| Year 5 | 4 | 3 |
| Year 10 | 5 | 3 |
| Year 20 | 5 | 3 |
Data Analyst (Chicago, IL)
Age: 46 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- The thought of having both debts aligned is appealing as a financial planner.
- I need to evaluate if the properties will match my desired location and quality.
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 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $700000000 (Low: $500000000, High: $900000000)
Year 2: $700000000 (Low: $500000000, High: $900000000)
Year 3: $800000000 (Low: $600000000, High: $1000000000)
Year 5: $900000000 (Low: $700000000, High: $1100000000)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The program's success largely hinges on the availability of eligible properties and cooperation among housing and mortgage organizations.
- Adjustments to underwriting standards could impact the risk profiles of participating financial institutions.
- The economic context, including interest rates and housing market trends, will influence the program's uptake and success.
- Integrating student loan repayments with mortgage payments requires careful planning to avoid adverse credit impacts.