Bill Overview
Title: State-Based Education Loan Awareness Act
Description: This bill excludes certain arrangements or agreements regarding education loans from the definition of a preferred lender arrangement . A preferred lender arrangement is an arrangement or agreement between a lender and an institution of higher education (IHE) that receives federal funding or assistance (1) under which a lender issues education loans to students attending the IHE; and (2) that relates to the IHE recommending, promoting, or endorsing the education loan products of the lender. The bill provides that arrangements or agreements made under a state-based education loan program or that are funded, insured, or guaranteed by any federal agency other than the Department of Education do not meet the definition of a preferred lender agreement for purposes of certain required disclosures to student borrowers.
Sponsors: Rep. Sessions, Pete [R-TX-17]
Target Audience
Population: Post-secondary students taking loans
Estimated Size: 5000000
- The bill focuses on education loan arrangements, specifically those between lenders and institutions of higher education.
- The primary population that utilizes education loans are post-secondary students. These students will be impacted by changes in how loans are classified and disclosed.
- State-based education loan programs are comparatively smaller than federal loan programs like those operated by the Department of Education.
- There are approximately 200 million students globally enrolled in post-secondary education as per UNESCO data.
- Not all of these will take loans or be part of systems affected by the bill, as the bill has specific provisions related to U.S. systems and alternatives.
Reasoning
- The target population is post-secondary students in the U.S. taking state-based loans, which comprise a smaller segment compared to those taking federal loans.
- This policy will potentially impact transparency and the lending processes for students using state-based programs, indirectly affecting their decisions and perceptions about their loans.
- Considering the limited budget allocation, we expect a modest impact over time, with potential improvements in awareness and decision-making for those utilizing these loans.
Simulated Interviews
Undergraduate student (California)
Age: 19 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- I'm not entirely sure how my loans work, to be honest.
- Any improvement in transparency would be beneficial for planning my finances.
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 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Graduate student (New York)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I'm very cautious about my loan choices.
- More clarity would be great, especially if it doesn't add more confusion between federal and state loans.
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 | 7 | 6 |
| Year 20 | 6 | 5 |
Working full-time, former student (Texas)
Age: 24 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- I think I navigated my loans okay during my studies.
- This policy would have made certain things clearer when deciding which loans to pick.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 3 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 2 |
High school senior (Georgia)
Age: 18 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- I haven't decided on loans yet, but knowing more about them would help.
- The policy seems like it would provide peace of mind.
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 | 8 | 6 |
| Year 20 | 7 | 5 |
Technical school student (Illinois)
Age: 20 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- I'm nervous about debt, so any helpful information is good.
- The policy might help with understanding my obligations.
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 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Part-time student, part-time worker (Florida)
Age: 21 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I wish I knew more about my options, especially when things change.
- Improving loan transparency is crucial.
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 | 5 |
| Year 20 | 6 | 4 |
Recent college graduate (Ohio)
Age: 23 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- I really wasn't affected by loans, but I can see how it would help others.
- I'd support this policy if it means clearer loan options for students.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 7 |
Undergraduate student (Michigan)
Age: 19 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- Loans are complicated, and anything that simplifies them is a plus.
- I hope this policy helps me manage my repayments better.
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 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 4 |
Art school student (Virginia)
Age: 20 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- Art school is expensive, and loans are a necessary evil.
- Anything that could help me understand my loans better would be welcome.
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 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Senior in a public university (Washington)
Age: 22 | Gender: other
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 11/20
Statement of Opinion:
- I've got a good understanding of my debts, but there's always room to improve loan details.
- Clearer guidelines from state programs would be beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
Cost Estimates
Year 1: $5000000 (Low: $4000000, High: $6000000)
Year 2: $3000000 (Low: $2000000, High: $4000000)
Year 3: $1500000 (Low: $1000000, High: $2000000)
Year 5: $800000 (Low: $500000, High: $1500000)
Year 10: $300000 (Low: $100000, High: $800000)
Year 100: $50000 (Low: $20000, High: $100000)
Key Considerations
- The bill might simplify the loan selection process for students by excluding some loans from preferred lender arrangements.
- While there are administrative costs, they are limited by the bill's narrow focus on state-based programs.
- The exclusion from the preferred lender category could impact transparency unless well communicated to students.
- This bill's focus on a smaller segment of the student loan market means substantial costs or savings are less likely.