Bill Overview
Title: Combating Excessive Student Debt Act of 2022
Description: This bill generally prohibits new Federal Direct PLUS Loans from being made to student loan borrowers on or after July 1, 2023. Additionally, the bill limits the percentage of institutional revenue that may be derived from these loans.
Sponsors: Rep. Rice, Tom [R-SC-7]
Target Audience
Population: People reliant on Federal Direct PLUS Loans for education financing
Estimated Size: 5000000
- The bill focuses on prohibiting new Federal Direct PLUS Loans, which are loans for graduate students or parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
- Graduate students and parents of dependent undergraduate students will be affected since they are the primary beneficiaries of Federal Direct PLUS Loans.
- Universities and colleges that rely heavily on PLUS loans for their revenue will also be impacted.
- The legislation also indirectly affects undergraduates who might seek graduate degrees, as the lack of PLUS loans represents a reduced funding option.
Reasoning
- The policy simulation aims to represent a diverse cross-section of those affected by the prohibition of PLUS loans, from students and parents who rely on these loans to schools that heavily depend on them for revenue.
- Given budget constraints and the scale of the target population, the policy is likely to have varied impacts, with more significant effects on those most dependent on PLUS loans.
- Not every person impacted by the policy will have the same level of dependency on PLUS loans, resulting in a spectrum of wellbeing changes depending upon alternative resources or plans individuals might access.
- The duration of impact will differ materially for current students near graduation versus those just beginning their education journeys, who may have longer to adapt.
- Many families already bearing education expenses without PLUS loans might experience little to no direct impact, serving as a crucial baseline for comparisons.
Simulated Interviews
Graduate Student (Indiana)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 12/20
Statement of Opinion:
- The ban on new PLUS loans means I have to find alternative funding, which is stressful.
- I may have to take a semester off to save money.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
IT Manager (California)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- We were counting on these loans for our second child. It's going to be tough to rework our finances now.
- We might have to dip into retirement savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Undergraduate (Texas)
Age: 19 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I was planning to go to graduate school, but now I'm unsure.
- My whole plan might have to change. It's disappointing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
University Financial Aid Officer (New York)
Age: 29 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- The university would suffer from decreased revenue if we don't find alternatives.
- We're exploring other financial aids to help students.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 8 |
High School Counselor (Illinois)
Age: 48 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- I worry for students who won't have these resources available.
- This will make advising a bit more challenging.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Graduate Student (Florida)
Age: 24 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- I wasn't relying on these loans, so I'm not directly affected.
- I empathize with those who are impacted.
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 | 10 | 10 |
| Year 20 | 10 | 10 |
Executive Assistant (Ohio)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 8/20
Statement of Opinion:
- We have savings, but it's not enough if the loans aren't there.
- Need to reevaluate our approach to funding education.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
College Professor (Virginia)
Age: 32 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 6/20
Statement of Opinion:
- The overall funding landscape for students is changing dramatically.
- There might be increased pressure on institutions to find alternatives.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Law School Student (Nevada)
Age: 27 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 1.0 years
Commonness: 7/20
Statement of Opinion:
- I'm nearing graduation but worried about repaying other loans.
- Luckily, I've managed to secure some assistance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 10 |
Public School Teacher (Washington)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 7.0 years
Commonness: 8/20
Statement of Opinion:
- We have a plan, and this doesn't heavily disrupt it.
- May consider additional work to cover any extra costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 10 |
Cost Estimates
Year 1: $50000000 (Low: $40000000, High: $60000000)
Year 2: $51000000 (Low: $41000000, High: $61000000)
Year 3: $51500000 (Low: $41500000, High: $61500000)
Year 5: $52000000 (Low: $42000000, High: $62000000)
Year 10: $53000000 (Low: $43000000, High: $63000000)
Year 100: $60000000 (Low: $50000000, High: $70000000)
Key Considerations
- The shift from federal to private lending sources could increase financial strain on families and potentially increase default rates in private sectors.
- Universities may have to find alternative revenue streams or decrease reliance on federal funding, affecting operating budgets and possibly admissions policies.
- Potential for increased equity disparities in higher education access due to varying financial aid capabilities and reliance on private lending options.