Bill Overview
Title: Simplifying Student Loans Act
Description: This bill phases out existing repayment plans for federal student loans and replaces them with one fixed repayment plan and one income-based repayment plan. The Department of Education must offer all borrowers a choice between the two new plans and allow borrowers of loans made prior to July 1, 2023, the option of continuing repayment under their original plan or electing to repay under one of the new plans. The bill also establishes a 1% interest rate on federal student loans made to borrowers on or after July 1, 2023.
Sponsors: Rep. Wild, Susan [D-PA-7]
Target Audience
Population: people with federal student loans in the United States
Estimated Size: 45000000
- The bill affects all individuals with federal student loans in the United States, including those who have loans disbursed before and after July 1, 2023.
- Borrowers who currently have federal student loans will have the option to switch to one of two new repayment plans, which will likely include a significant number of people.
- New borrowers, post-July 1, 2023, will all be affected since their repayment plans will automatically fall under the new law.
- There is a segment of potential future students considering federal student loans, impacted by the 1% interest rate change.
- The U.S. Department of Education and relevant federal financial aid offices will be involved, but are not part of the target population as they are internal to enforcement rather than subjects of the policy.
Reasoning
- I considered a diverse range of interviewees representative of the demographics who have federal student loans, including a mix of current students, recent graduates, and long-time borrowers.
- The population includes people across various socio-economic backgrounds, ages, and different stages of loan repayment.
- The budgetary constraint limits large, sweeping impacts across all borrowers but should still offer significant relief or adjustment options to many through lowered interest rates and simplified plan choices.
Simulated Interviews
College Student (New York, NY)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- I think having a simplified repayment option will make managing my finances easier after graduation.
- The 1% interest rate is a huge relief; it means I won't be drowning in interest after college.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Software Engineer (Austin, TX)
Age: 34 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- I'm glad for the option to switch to an income-based repayment plan as my earnings fluctuate occasionally with contract work.
- Lowering the interest to 1% on new loans is a step in the right direction, but it would have been great for existing loans too.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Marketing Manager (San Francisco, CA)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- With the new policy, having fixed and income-based options provides a clear path to manage my debt.
- I will need to run numbers whether switching plans would benefit my situation.
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 | 7 | 6 |
| Year 20 | 8 | 7 |
High School Teacher (Chicago, IL)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 3/20
Statement of Opinion:
- The policy seems more beneficial to newer borrowers, and less impactful for someone nearing the end of repayment like me.
- It's still positive to see efforts towards lower interest rates and simplified plans for others.
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 |
College Student (Miami, FL)
Age: 19 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- Knowing I have a 1% interest rate as a future borrower gives me confidence to take the loan for better opportunities.
- I'm still trying to understand the implications of different repayment plans for my future.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Freelance Writer (Seattle, WA)
Age: 29 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- The ability to choose between a fixed plan and income-based options is critical for my variable income.
- I'm optimistic about more manageable payments, though transitioning from old plans could be cumbersome.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Entrepreneur (Raleigh, NC)
Age: 38 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- Simplified repayment plans might ease my financial stress caused by fluctuating income.
- I wish the 1% interest rate applied to existing loans or refinancing would be available.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Graphic Designer (Denver, CO)
Age: 26 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- Choosing a plan that fits my earnings is promising, though it will take time to see substantial benefit.
- It's a positive step towards streamlining the repayment process.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Medical Student (Atlanta, GA)
Age: 24 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- Knowing future loan payments are based on my potential income post-residency is comforting.
- It will still be a challenge managing debts, but this policy seems helpful for long-term planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Nurse (Philadelphia, PA)
Age: 51 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- I don’t have loans anymore, but I think the policy will benefit younger nurses looking to further their education.
- Lower interest will make a big difference over time for them.
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 |
Cost Estimates
Year 1: $5000000000 (Low: $4500000000, High: $5500000000)
Year 2: $4900000000 (Low: $4400000000, High: $5400000000)
Year 3: $4800000000 (Low: $4300000000, High: $5300000000)
Year 5: $4600000000 (Low: $4100000000, High: $5100000000)
Year 10: $4200000000 (Low: $3700000000, High: $4700000000)
Year 100: $2000000000 (Low: $1500000000, High: $2500000000)
Key Considerations
- Possible compliance issues with students navigating changes to repayment plans should be anticipated.
- The simplicity of administration could increase efficiency over time, reducing governmental operation costs.
- Interest income loss might impact federal budget allocations, requiring compensation from other sources.