Bill Overview
Title: STUDENT Act
Description: This bill requires loan disclosure forms for federal student loans to include the total amount of interest that would be paid over the life of the loan based on a standard 10-year repayment plan.
Sponsors: Rep. Feenstra, Randy [R-IA-4]
Target Audience
Population: Individuals with federal student loans globally
Estimated Size: 40000000
- The bill targets individuals with federal student loans, impacting current and future students.
- Only individuals who take out federal student loans and repay them under the standard 10-year plan will be directly impacted.
- Other types of loans or repayment plans are not addressed in this bill.
- Many people take out federal student loans, especially in the United States where higher education often requires such financial aid.
- The current population of post-secondary students and recent graduates will likely be most affected as they are recent or potential loan recipients.
Reasoning
- Loan disclosure transparency can lead to better financial decision-making by borrowers, potentially reducing stress and improving financial planning.
- The majority of individuals impacted will be those directly managing federal student loans under a 10-year repayment scheme
- Not all students are equally impacted; for example, some may already be well-informed about their loan terms or have alternative repayment strategies planned.
- The policy's impact would vary depending on an individual’s financial literacy and the size of their loans.
- The restriction of the policy budget to $7,000,000 over 10 years suggests targeting communications and resources to reach a specific segment of borrowers.
Simulated Interviews
Public School Teacher (Chicago, IL)
Age: 35 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- I wish I'd known the total interest upfront, it would have helped me budget better over the years.
- Transparent information is always beneficial for complex financial decisions like loans.
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 | 7 | 5 |
Software Engineer (San Francisco, CA)
Age: 28 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- Knowing the interest might not drastically change my payment plan, but it would offer clarity.
- It seems like a good step to make the borrowing process clearer to students.
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 |
College Student (New York, NY)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- It would be great to know ahead how much total interest I'll be paying, I feel anxious about unknowns in my finances.
- I believe transparency fosters trust which is crucial in financial decisions.
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 | 6 |
| Year 20 | 9 | 6 |
Accountant (Austin, TX)
Age: 40 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- During my loan repayment, having the total interest upfront would have made it easier to evaluate alternative repayment options.
- I support this move for future borrowers.
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 |
Part-time Retail Worker and Student (Phoenix, AZ)
Age: 24 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Anything that helps me plan better financially is a win. Loan interests can be overwhelming, and knowing the full figure could guide me in working extra shifts.
- I hope this policy is effectively communicated.
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 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 9 | 5 |
Lawyer (Miami, FL)
Age: 50 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- Knowledge of interest payments is crucial for financial planning; my advisees will definitely benefit from knowing this.
- It was a long time ago for me, but this is great for today's students.
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 | 9 | 9 |
| Year 20 | 9 | 9 |
Freelance Writer (Seattle, WA)
Age: 31 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- Knowing the real cost of my loan would have geared me towards refinancing sooner or seeking advice.
- It's a thoughtful policy for proactive people.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Graduate Student (Boston, MA)
Age: 26 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- Having the interest details even while deferring can help understand what lies ahead financially.
- This could help plan whether I should switch to a different repayment plan later.
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 |
College Freshman (Atlanta, GA)
Age: 19 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- Total interest can help me decide how much to borrow each year more wisely.
- Financial awareness can prevent falling into long term debt traps.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 9 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
HR Director (Denver, CO)
Age: 45 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 3/20
Statement of Opinion:
- My student debt days are behind me, but I'm concerned about the clarity future borrowers have when entering similar agreements.
- The policy could serve as an educational tool.
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 | 9 | 9 |
| Year 20 | 9 | 9 |
Cost Estimates
Year 1: $2000000 (Low: $1500000, High: $2500000)
Year 2: $1000000 (Low: $800000, High: $1200000)
Year 3: $500000 (Low: $400000, High: $600000)
Year 5: $500000 (Low: $400000, High: $600000)
Year 10: $500000 (Low: $400000, High: $600000)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Enhanced transparency could potentially improve repayment rates, though direct fiscal impact is difficult to quantify.
- The updates mainly involve digital disclosure forms, minimizing physical material costs.
- Policymakers should consider the capacity to adapt software and administrative systems efficiently to incorporate the necessary changes.