Bill Overview
Title: Parent PLUS Loan Fairness and Responsibility Act
Description: This bill allows parent borrowers to transfer their parent PLUS loans to their child under certain circumstances. Among other requirements for a transfer, the child must demonstrate the ability to repay the loan, as determined by the Department of Education. Additionally, the bill makes these transferred loans eligible for income-driven repayment plans.
Sponsors: Rep. Foster, Bill [D-IL-11]
Target Audience
Population: Parents and children involved with Parent PLUS loans
Estimated Size: 3600000
- Parent PLUS loans are designed for parents of undergraduate students to help pay for education expenses not covered by other financial aid.
- In the United States, as of 2021, there were approximately 3.6 million Parent PLUS borrowers.
- The legislation allows these loans to be transferred to the children of the borrowers, which adds the children as a new category of people impacted.
- Not all Parent PLUS borrowers will transfer their loans to their children under this legislation, as it involves meeting specific criteria like the child's ability to repay.
- Transferred loans become eligible for income-driven repayment plans, impacting the financial planning of borrowers.
- The number of children who are capable and prefer to take on these loans will influence the true impacted population size.
Reasoning
- The target population for this policy includes parents currently holding Parent PLUS loans as well as their children who may be able to take over these loans. It's crucial to understand that not all current borrowers will be impacted, as only families where the children can demonstrate the ability to repay and choose to take on the debt will be affected.
- The loan transfer could provide immediate relief for some parents by reducing their financial burden but could also introduce financial responsibility to children earlier than otherwise planned.
- Given the specific budgetary constraints, the policy may initially reach only a fraction of the eligible population, focusing on those with the highest potential benefit.
- We simulate diverse perspectives to capture varying impacts based on different personal and financial situations.
Simulated Interviews
school teacher (Ohio)
Age: 53 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- This bill could help alleviate some of the financial stress I experience every month. Transferring the loan to my daughter once she graduates and starts working would allow me to plan for my retirement better.
- I'm concerned about my daughter's potential financial burden, but she has expressed willingness to take it on in partnership with the income-driven plans available.
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 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
engineer (California)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- As an engineer, I am financially stable, and the loan transfer is not a pressing necessity for our family. However, the option could provide flexibility if my child finds it beneficial post-graduation.
- I see the policy as potentially beneficial, but I am cautious about transferring financial responsibility to my child.
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 | 6 |
| Year 20 | 6 | 5 |
recent graduate (New York)
Age: 22 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 5/20
Statement of Opinion:
- I would like to support my parent by taking on the loan through income driven repayment. This bill makes it feasible for me after landing a job.
- It's a huge responsibility, but with a job offer in hand and income-driven options, I believe it's manageable.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 4 |
| Year 5 | 8 | 4 |
| Year 10 | 7 | 3 |
| Year 20 | 6 | 2 |
software developer (Texas)
Age: 28 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 8/20
Statement of Opinion:
- I am capable of taking on the loan and welcome the opportunity to relieve my parent of this burden. Income-driven repayment plans offer a safety net that makes it less daunting.
- The legislation offers a structured way to handle the debt through my career growth.
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 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
retired (Florida)
Age: 60 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- Since retiring, I've struggled to make the payments, and transferring the loan to my son as he starts his career would be a relief.
- I worry about him starting off with debt, but it's promising if he enters an income-based plan.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 6 | 3 |
| Year 20 | 5 | 2 |
factory worker (Minnesota)
Age: 41 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- I don't expect my child to take on the loan as they are struggling themselves to make a stable career.
- The policy gives an option but we might not benefit, as my child's future earnings are uncertain.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 4 |
| Year 5 | 4 | 4 |
| Year 10 | 4 | 3 |
| Year 20 | 3 | 2 |
nurse (Georgia)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 20/20
Statement of Opinion:
- I do not have children, so this policy doesn’t impact me directly, but it's good for other families.
- The legislation might offer options for people with different familial structures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
small business owner (Illinois)
Age: 47 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- I'm overwhelmed with current economic challenges and this policy might offer some relief if my children can take on some of the loan burden.
- It's uncertain how their financial situation will improve, but having an option is reassuring.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 3 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 2 |
retired (Oregon)
Age: 62 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- I believe transferring the loan to my stepchild after graduation could ease my financial stress. They are on track for a job where repayment is feasible.
- The option provides peace of mind in retirement but depends much on my stepchild's career prospects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 3 |
| Year 5 | 6 | 3 |
| Year 10 | 5 | 2 |
| Year 20 | 4 | 1 |
accountant (Washington)
Age: 32 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- The idea of income-driven plans is appealing as it offers flexibility to manage the inherited loan better.
- I took it over out of responsibility and this policy aligns well with what I am already doing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Cost Estimates
Year 1: $100000000 (Low: $75000000, High: $125000000)
Year 2: $150000000 (Low: $110000000, High: $200000000)
Year 3: $200000000 (Low: $150000000, High: $250000000)
Year 5: $270000000 (Low: $200000000, High: $350000000)
Year 10: $400000000 (Low: $300000000, High: $500000000)
Year 100: $800000000 (Low: $600000000, High: $1000000000)
Key Considerations
- The ability for children to demonstrate repayment capability will be critical in determining policy uptake and impact.
- Income-driven repayment plans shift payment structures, potentially reducing short-term recovery for the government.
- The exact number of loan transfers will significantly influence cost outcomes.