Bill Overview
Title: Making College More Affordable Act
Description: This bill creates federal interest-free education loans for undergraduate students. The loans must generally have the same terms and conditions and benefits to borrowers as Federal Direct Stafford Loans. Interest on these loans may only accrue during periods when a borrower is earning taxable income, is in repayment on such loans, and is not making payments under a repayment plan. The Department of Education (ED) must carry out a repayment plan program for the interest-free loans under which loan payments are automatically withheld from the wages of the borrower. ED must cancel any outstanding balance of principal or interest due on those interest-free loans made to a borrower who has made 360 monthly payments. The bill also allows for a tax deduction for amounts paid on these loans.
Sponsors: Rep. Cicilline, David N. [D-RI-1]
Target Audience
Population: individuals seeking tertiary education loans globally
Estimated Size: 12000000
- The bill directly impacts undergraduate students who are seeking federal student loans for their education.
- It introduces a new type of loan, which is interest-free unless the borrower is earning taxable income. This could significantly impact those who would otherwise accrue interest during periods of no income, like while studying or unemployed.
- There are existing loan programs like Federal Direct Stafford Loans, and this bill provides an alternative with potentially less financial burden over time due to the interest-free nature.
- The provision for loan balance cancellation after 360 payments means long-term borrowers can also benefit significantly, reducing lifelong debt.
- Indirectly, the bill can affect families of students, educational institutions, and the overall economy due to potential changes in loan demand and repayment behaviors.
- Those utilizing the tax deduction for repayments on these loans would experience financial benefits.
- Currently, data indicates there are approximately 20 million college students in the U.S., though the exact number affected will depend on the uptake of this specific loan type.
Reasoning
- The population primarily impacted by this policy will be current undergraduate students or those about to enter college who require financial aid through federal loans.
- The estimated target population includes approximately 12 million students in the U.S., given that 60% of college students use some form of federal student aid.
- This bill would be highly beneficial for low to middle-income families, reducing the financial burden of education due to the interest-free nature of these loans.
- There is likely to be a diverse range of impacts due to the varied financial situations of students, including those currently using private loans, students whose families can afford higher education without loans, and students already benefiting from federal loans but with interest.
- Some individuals will not be directly impacted by the policy, such as those who do not take loans either because of scholarships or personal savings.
- Long-term, this policy could improve overall well-being for those heavily burdened by student debt as it decreases the amount of accrued interest and provides a path to eventual loan forgiveness.
Simulated Interviews
Undergraduate Student (Chicago, IL)
Age: 19 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 12/20
Statement of Opinion:
- This policy sounds like it could really help my family and me manage college costs without worrying about interest piling up.
- The interest-free part is what makes it different and more beneficial than other loans.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Undergraduate Student (Austin, TX)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- I like the idea of loans being interest-free while I'm still in school and not making much money.
- Automatic withholding could be convenient but also concerning if low pay makes it hard to cover essentials.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Parent of College Student (Los Angeles, CA)
Age: 45 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This policy could relieve much of the financial worry I have about my child's education costs.
- I'm relieved my child won’t be buried in interest and debt when they graduate.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 7 |
Graduate Student (Seattle, WA)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 4/20
Statement of Opinion:
- I just finished my undergrad study with a lot of loans, this doesn't affect me directly but could help future students.
- Interest-free loans would have been amazing during my time in college.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Private Loan Officer (New York, NY)
Age: 30 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Federal interest-free loans could reduce demand for the private loans I offer.
- The banking sector might witness a decline in business as federal options become more advantageous.
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 | 6 |
| Year 20 | 5 | 6 |
University Financial Aid Officer (Boston, MA)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- The policy would require changes to our counseling and advice for students.
- It could simplify loan counseling by offering a potentially more beneficial option for students.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Undergraduate Student (Miami, FL)
Age: 21 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- Interest-free loans sound great, but I'm concerned about automatic deductions and how they might affect my budget later.
- I’ll graduate with less debt but depend on how swiftly I can repay.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 6 |
| Year 20 | 7 | 6 |
High School Senior (Philadelphia, PA)
Age: 18 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 11/20
Statement of Opinion:
- Knowing these loans are interest-free makes college seem more accessible financially.
- This policy makes deciding to go out of state for college less scary because of lesser debt.
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 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Tech Start-Up Entrepreneur (San Francisco, CA)
Age: 34 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- I don't see how this policy would affect someone like me personally.
- From a business perspective, it might influence company hiring practices if graduates have less financial stress.
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 |
Recent Graduate and Job Seeker (Atlanta, GA)
Age: 24 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- If these loans were available earlier, I would have had less stress about interest accumulation while studying.
- Going forward, knowing newer students won't face high debt accumulation is positive.
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 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Cost Estimates
Year 1: $12000000000 (Low: $10000000000, High: $14000000000)
Year 2: $12240000000 (Low: $10200000000, High: $14420000000)
Year 3: $12484800000 (Low: $10404000000, High: $14852600000)
Year 5: $12984819200 (Low: $10816080000, High: $15860704000)
Year 10: $14203849530 (Low: $11854488000, High: $17938856920)
Year 100: $28407699060 (Low: $23708976000, High: $35877713840)
Key Considerations
- Administrative costs for implementing and managing new loan programs may be substantial, especially in the initial years.
- Uncertainties in future higher education costs and enrollment rates may affect the budgetary impact variably.
- Fiscal impacts due to loan forgiveness provisions will be felt in the long term, beyond the immediate budget periods considered.