Bill Overview
Title: Degrees Not Debt Act of 2022
Description: This bill increases the maximum federal Pell Grant award. The bill also repeals the increased alternative minimum tax exemption for individuals and the increased estate and gift tax exemption.
Sponsors: Rep. Carbajal, Salud O. [D-CA-24]
Target Audience
Population: Undergraduate students receiving Pell Grants in the U.S.
Estimated Size: 7000000
- The Pell Grant program provides financial aid to undergraduate students in the U.S. who have not yet earned a bachelor's, graduate, or professional degree. Increasing the maximum federal Pell Grant award will benefit those who qualify for these grants.
- As of 2020, approximately 7 million American students received Pell Grants annually, indicating a direct impact on their aid packages and college affordability.
- Repealing the increased alternative minimum tax exemption and increased estate and gift tax exemption will affect individuals who are currently benefiting from these higher exemptions, typically affecting higher-income and wealthier families.
Reasoning
- The increase in Pell Grant awards is poised to directly impact students from low- to middle-income families who rely on these grants to afford college. The removal of certain tax exemptions will primarily affect higher-income families, potentially offsetting some of the costs of the increased Pell Grants.
- To reflect a realistic scenario, the sample will include a mix of undergraduate students who are eligible for Pell Grants and individuals from higher-income families affected by the tax changes.
- It is crucial to capture different perspectives and levels of impact, such as students heavily reliant on financial aid, students with partial aid needs, and wealthier individuals experiencing a tax increase.
- The Pell Grant increase will have an immediate effect within the first few years, as more students can afford tuition without accruing debt. On the other hand, tax changes may not significantly alter the well-being of wealthier individuals because their financial flexibility remains substantial.
Simulated Interviews
Undergraduate student (Chicago, IL)
Age: 19 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- The increased Pell Grant will significantly help me cover my tuition and reduce my need for student loans.
- I'm optimistic about being able to focus more on my studies rather than worrying about finances.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 5 |
| Year 20 | 9 | 5 |
Undergraduate student (Los Angeles, CA)
Age: 21 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 8/20
Statement of Opinion:
- Any increase in my Pell Grant will alleviate some of my tuition burden.
- I'm worried about the debt piling up, so this policy seems like a positive step.
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 | 4 |
| Year 10 | 8 | 4 |
| Year 20 | 8 | 4 |
Undergraduate student (New York, NY)
Age: 18 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The policy is a double-edged sword for my family. On one hand, my education is more secured; on the other, the estate plan needs adjustments.
- Overall, it's a good trade-off for our situation.
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 | 8 |
| Year 20 | 9 | 8 |
Lawyer (Dallas, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- I'm concerned about the changes in tax exemptions, but we're prepared to absorb the impact.
- Our focus will shift to ensuring our kids benefit from the Pell Grant changes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 8 | 9 |
| Year 3 | 8 | 9 |
| Year 5 | 8 | 9 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Undergraduate student (Miami, FL)
Age: 20 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- This policy would drastically reduce my financial stress, allowing me to continue my education without interruption.
- I would finally be able to cut back on work hours to focus more on my daughter and studies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 8 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 4 |
| Year 20 | 9 | 4 |
Undergraduate student (Seattle, WA)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- Increasing the Pell Grant serves as a relief during uncertain economic times for our family business.
- I support the policy as it will lessen the financial strain on me significantly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 9 | 5 |
Undergraduate student (Austin, TX)
Age: 21 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 8/20
Statement of Opinion:
- This policy helps relieve some pressure from my parents who are struggling to support all of us.
- I'm grateful that we will potentially avoid deeper debt as a family.
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 | 4 |
| Year 20 | 8 | 4 |
Tech company employee (San Francisco, CA)
Age: 25 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- The repeal of tax exemptions is noticeable but does not fully alter our financial plans.
- I see the Pell Grant change as beneficial for many, including potentially myself if I pursue further education.
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 |
Wealth manager (Boston, MA)
Age: 50 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 1/20
Statement of Opinion:
- I think the trade-off between Pell Grant increases and tax exemption repeals aligns with values of equitable education access.
- It's unlikely anyone wealthy enough to be impacted will see a drastic lifestyle change.
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 |
Small business owner (Nashville, TN)
Age: 35 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- Our family might be affected in terms of estate planning long-term, but the immediate impact is minimal.
- I hope the Pell Grant increase aids those who need it the most.
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 |
Cost Estimates
Year 1: $4200000000 (Low: $4000000000, High: $4500000000)
Year 2: $4326000000 (Low: $4100000000, High: $4600000000)
Year 3: $4455780000 (Low: $4230000000, High: $4750000000)
Year 5: $4711067400 (Low: $4460000000, High: $5030000000)
Year 10: $5234588249 (Low: $4950000000, High: $5590000000)
Year 100: $8687001621 (Low: $8230000000, High: $9260000000)
Key Considerations
- The balance between increased educational attainability via Pell Grants versus increased tax burden on higher-income individuals.
- Short-term versus long-term economic impacts from education and tax policy adjustments.
- Potential for state-level impacts based on changes in federal tax policy.