Bill Overview
Title: Student Loan Accountability Act
Description: This bill generally prohibits the Departments of Education, Justice, or the Treasury from taking any action to cancel or forgive the outstanding balances, or portion of balances, of covered loans. Covered loans refer to Federal Family Education Loans, Federal Direct Loans, Federal Perkins Loans, and loans under the Health Education Assistance Loan Program. The prohibition does not apply to targeted federal student loan forgiveness, cancellation, or repayment programs carried out under the Higher Education Act of 1965. Additionally, the bill repeals the temporary tax-free treatment of discharged student loan debt. It also prohibits tax return information from being shared for the purpose of administering a student loan cancellation plan.
Sponsors: Rep. Ferguson, A. Drew, IV [R-GA-3]
Target Audience
Population: People with federal student loans in the US
Estimated Size: 44000000
- The bill relates to federal student loans including Federal Family Education Loans, Federal Direct Loans, Federal Perkins Loans, and Health Education Assistance Loan Program.
- The bill affects anyone with outstanding balances on these federal student loans who might have expected loan forgiveness.
- The prohibition on tax-free treatment of discharged student loan debt impacts individuals with discharged debt after the repeal.
- Global effects are mostly concentrated in the US since it concerns US federal programs.
Reasoning
- The policy primarily affects individuals with outstanding federal student loans who anticipate loan forgiveness. This includes those with Federal Family Education Loans, Federal Direct Loans, and Federal Perkins Loans.
- Given the impact on tax-free treatment of discharged loans, individuals who expect their loans to be cancelled or forgiven in the future will also be affected by this change in tax policy.
- To capture a broad spectrum of impacted individuals, I'll include students nearing graduation, early-career professionals, and individuals further along in repayment.
- It is crucial to include perspectives from those unlikely to be affected by the change to understand the policy's reach and limits.
Simulated Interviews
College Student (Boston, MA)
Age: 23 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 12/20
Statement of Opinion:
- I was hoping some of my loans might be forgiven after I graduated.
- It's stressful knowing this option might not be available.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 7 |
| Year 10 | 4 | 7 |
| Year 20 | 3 | 7 |
Software Developer (Austin, TX)
Age: 29 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I had anticipated not having tax consequences for my discharged loans.
- The financial hit from taxes now stresses me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 8 |
| Year 2 | 6 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 9 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Public School Teacher (Seattle, WA)
Age: 41 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 1.0 years
Commonness: 5/20
Statement of Opinion:
- PSLF is critical for me, I hope it continues unaffected.
- I am optimistic but cautious.
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 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Healthcare Professional (Chicago, IL)
Age: 35 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- My repayment has been daunting, I hoped for some relief.
- Honestly, this policy might prolong my financial worries.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 7 |
| Year 10 | 4 | 6 |
| Year 20 | 4 | 6 |
Corporate Manager (Atlanta, GA)
Age: 52 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- This doesn't really affect me as I paid off my loans years ago.
- I do worry about broader economic impacts.
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 |
Freelancer (Raleigh, NC)
Age: 27 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 10/20
Statement of Opinion:
- Having just consolidated, I was hoping for forgiveness options.
- This policy definitely changes my repayment strategy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 7 |
| Year 3 | 5 | 8 |
| Year 5 | 5 | 8 |
| Year 10 | 4 | 9 |
| Year 20 | 3 | 9 |
Nurse (San Francisco, CA)
Age: 60 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- I'm deeply concerned about my children's debt.
- This policy makes the future more daunting for them.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 5 | 8 |
| Year 20 | 5 | 8 |
College Student (New York, NY)
Age: 19 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 14/20
Statement of Opinion:
- I'm worried I will have to deal with these loans for a very long time without the option of forgiveness.
- College is already stressful, and this adds to it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 3 | 6 |
| Year 3 | 3 | 7 |
| Year 5 | 3 | 7 |
| Year 10 | 3 | 8 |
| Year 20 | 3 | 8 |
Small Business Owner (Denver, CO)
Age: 45 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- The tax changes put me in a tougher spot than before.
- Need to find ways to manage, perhaps extending tax planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 7 |
| Year 3 | 5 | 7 |
| Year 5 | 5 | 8 |
| Year 10 | 5 | 8 |
| Year 20 | 5 | 8 |
Artist (Los Angeles, CA)
Age: 31 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I feel like my financial future is unsettled with these potential changes.
- I was counting on some relief down the road.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 7 |
| Year 10 | 5 | 7 |
| Year 20 | 5 | 7 |
Cost Estimates
Year 1: $20000000 (Low: $15000000, High: $25000000)
Year 2: $20000000 (Low: $15000000, High: $25000000)
Year 3: $20000000 (Low: $15000000, High: $25000000)
Year 5: $20000000 (Low: $15000000, High: $25000000)
Year 10: $20000000 (Low: $15000000, High: $25000000)
Year 100: $20000000 (Low: $15000000, High: $25000000)
Key Considerations
- Potential administrative costs for enforcing new prohibitions.
- Increase in federal tax revenues due to the repeal of tax-free discharged debt.
- Impact and public perception regarding changes in expected debt forgiveness.
- Possible economic and psychological impacts on borrowers anticipating forgiveness.