Bill Overview
Title: Fairness for Responsible Borrowers 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.
Sponsors: Rep. Grothman, Glenn [R-WI-6]
Target Audience
Population: Individuals with federal student loans in the United States
Estimated Size: 45000000
- The bill impacts borrowers of federal student loans including Federal Family Education Loans (FFELs), Federal Direct Loans, and Federal Perkins Loans.
- The bill also impacts borrowers under the Health Education Assistance Loan Program.
- The total U.S. student loan borrowers number around 45 million.
- The prohibition on loan forgiveness suggests that borrowers who depend on widespread loan cancellation policies might be affected.
- The exclusion of targeted forgiveness programs under the Higher Education Act suggests not all borrowers will be affected equally.
- Globally, the impact is likely confined largely to U.S.-based borrowers given the nature of federal loans covered.
Reasoning
- The policy effectively acts as a ceiling on widespread loan forgiveness, limiting the scope for large-scale debt relief initiatives.
- As a result, borrowers who were anticipating or relying on comprehensive forgiveness programs may see longer repayment periods and greater long-term financial strain.
- On the other hand, those expecting to benefit from targeted forgiveness programs might not experience a significant impact.
- Given the budget constraints, impacts are mainly felt by borrowers with higher debt, particularly from professional or graduate studies, who might have expected broader forgiveness.
- Borrowers without strong reliance on potential widespread forgiveness, such as those with stable incomes capable of managing payments, might see no change in their well-being.
- The policy's impact is also shaped by individual financial circumstances, future changes in repayment programs, and employment landscapes.
Simulated Interviews
Graduate Student (New York, NY)
Age: 24 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- I am worried about how the lack of widespread forgiveness could affect my financial situation after graduation.
- While I am hopeful to benefit under targeted forgiveness as a teacher, there's always uncertainty.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 9 |
Software Engineer (Austin, TX)
Age: 30 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 1.0 years
Commonness: 15/20
Statement of Opinion:
- The policy doesn't really impact me much as I earn enough to keep up with payments.
- While forgiveness would have been nice, I'm not dependent on it.
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 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Nurse Practitioner (Chicago, IL)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 6/20
Statement of Opinion:
- I was really counting on some sort of widespread forgiveness to ease my financial burden.
- Even targeted programs seem uncertain, and this policy dampens hope for change.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 6 | 8 |
| Year 20 | 7 | 9 |
Public School Teacher (Seattle, WA)
Age: 40 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- As someone who qualifies for a targeted forgiveness program, I feel somewhat secure in my situation.
- This policy may affect my colleagues who aren't in similar programs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Freelance Journalist (Denver, CO)
Age: 29 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- I'm deeply concerned as flexible income might not suffice with stringent policies.
- I was hoping for some kind of substantial relief that seems less likely now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 4 | 5 |
| Year 3 | 4 | 6 |
| Year 5 | 5 | 6 |
| Year 10 | 5 | 7 |
| Year 20 | 6 | 7 |
Small Business Owner (Miami, FL)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- While things are stable now, the lack of forgiveness could become a burden if my business faces downturns.
- I would prefer the flexibility to have had some part of the loan forgiven.
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 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 8 |
Biotechnologist (Boston, MA)
Age: 27 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- The policy restricts blanket forgiveness, raising concerns about loan repayment sustainability.
- Hoping my career trajectory offsets the financial pressures.
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 | 6 | 8 |
| Year 20 | 7 | 9 |
Retired Engineer (Phoenix, AZ)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- I'm mostly relying on targeted programs for my grandchildren, and this does not affect my overall plans.
- Retirement savings give me more flexibility than others.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 9 |
| Year 3 | 8 | 9 |
| Year 5 | 8 | 9 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Recent College Graduate (Los Angeles, CA)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- It's a relief that targeted programs might still help because the future is uncertain.
- The policy feels restrictive, yet something is better than nothing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Environmental Consultant (Houston, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 13/20
Statement of Opinion:
- The policy doesn't drastically change my financial planning since I have the means to manage payments.
- I remain hopeful that targeted programs might be an option.
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 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 9 |
Cost Estimates
Year 1: $25000000 (Low: $10000000, High: $50000000)
Year 2: $25000000 (Low: $10000000, High: $50000000)
Year 3: $25000000 (Low: $10000000, High: $50000000)
Year 5: $25000000 (Low: $10000000, High: $50000000)
Year 10: $30000000 (Low: $15000000, High: $60000000)
Year 100: $35000000 (Low: $15000000, High: $70000000)
Key Considerations
- The bill effectively maintains current revenue streams and prevents potential taxpayer liabilities from loan forgiveness.
- While not creating immediate costs, the bill indirectly influences broader financial conditions in sectors impacted by borrower spending behavior.