Bill Overview
Title: Student Loan Earned Relief Act
Description: This bill revises the Public Service Loan Forgiveness (PSLF) program by providing for partial loan cancellation and providing statutory authority for certain limited waiver flexibilities. Specifically, the bill directs the Department of Education (ED) to cancel 50% of the principal and interest due on a borrower's Federal Direct Loans after the borrower makes 60 monthly loan payments while employed in a public service job. ED must cancel the remaining balance on these loans after the borrower makes an additional 60 monthly payments. The bill also provides statutory authority for the Limited PSLF Waiver, which was carried out by ED beginning on October 6, 2021, and ending on October 31, 2022. This waiver allowed borrowers to receive credit for certain past periods of repayment on loans that would otherwise not qualify for the PSLF program.
Sponsors: Rep. McNerney, Jerry [D-CA-9]
Target Audience
Population: People worldwide working in public service with Federal Direct Loans
Estimated Size: 4000000
- The bill impacts borrowers with Federal Direct Loans who are employed in a public service job.
- The Public Service Loan Forgiveness (PSLF) program generally targets individuals working in government, education, and non-profit sectors.
- Public service jobs include roles such as teachers, firefighters, and government employees.
- As of recent data, there are over 1 million applicants for PSLF, though not all may qualify under the new modifications.
- The Limited PSLF Waiver potentially increases the number of qualifying participants by allowing past payments to count.
Reasoning
- The policy primarily impacts individuals with Federal Direct Loans working in public service jobs. This includes sectors like education, government, and non-profits.
- The initiative facilitates debt reduction, which should enhance financial well-being for those who qualify by reducing their loan burden over a decade.
- The Limited PSLF Waiver increases accessibility, potentially benefiting people who previously made ineligible payments.
- Initial implementation costs are significant, but the long-term financial relief could provide motivational benefits for public service retention.
- We simulate a variety of individuals in different stages of their careers and with diverse personal circumstances, including those who might not directly benefit from the policy.
Simulated Interviews
Public School Teacher (San Francisco, CA)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- I entered teaching because I want to make a difference, but my student loans are a huge stress.
- Getting half of my loan forgiven midway would be a huge relief and let me focus more on my students.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Firefighter (Atlanta, GA)
Age: 35 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- This policy feels like it gives me a second chance; my early payments didn't count before the waiver.
- Financial relief is great, and it would ease the pressure of saving for my kids' college fund.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 7 | 6 |
Non-profit Administrator (Chicago, IL)
Age: 42 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I already paid off most of my loans, so the benefits here would be marginal for me.
- I'm happy for those who will benefit, but I don't expect any major change.
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 |
Government Employee (Boston, MA)
Age: 31 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 15.0 years
Commonness: 12/20
Statement of Opinion:
- This policy directly affects me; having my loan partially forgiven in the short term is incredibly helpful.
- I can start planning for home ownership much sooner.
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 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
University Professor (Seattle, WA)
Age: 50 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- I am counting on this program to ease my financial burdens as I near retirement.
- The earlier waivers help, but my age gives me fewer years to pay down my loans.
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 | 8 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 7 | 6 |
Healthcare Worker (Phoenix, AZ)
Age: 26 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 20/20
Statement of Opinion:
- I don't have any loans, so this doesn't affect me directly.
- It's great for my colleagues who do have loans, but my job stability is unaffected by this policy.
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 |
Police Officer (Miami, FL)
Age: 29 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 12/20
Statement of Opinion:
- Before this policy, I didn't think I would qualify for any major forgiveness.
- Now, debt relief seems possible, and I can breathe a little without all the financial pressure.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 7 | 5 |
Social Worker (Houston, TX)
Age: 37 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 11/20
Statement of Opinion:
- This is a significant step forward, as the older requirements completely missed my situation.
- The policy will directly relieve my workload and provide stress relief as I also care for family.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 6 | 5 |
Public Health Official (Philadelphia, PA)
Age: 39 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- The significant partial forgiveness early on is the primary benefit for me.
- I feel encouraged to stay in public service, knowing future debts will decrease.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 7 | 5 |
Public Defense Attorney (New York, NY)
Age: 32 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- This is pivotal for my career path — continuous support hopefully boosts retention.
- Policy changes directly facilitate continued work without much financial concern.
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 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Cost Estimates
Year 1: $15000000000 (Low: $10000000000, High: $20000000000)
Year 2: $15000000000 (Low: $10000000000, High: $20000000000)
Year 3: $15000000000 (Low: $10000000000, High: $20000000000)
Year 5: $10000000000 (Low: $5000000000, High: $15000000000)
Year 10: $5000000000 (Low: $2500000000, High: $7500000000)
Year 100: $0 (Low: $0, High: $2000000000)
Key Considerations
- The estimated cost and savings vary significantly depending on the uptake of the PSLF program.
- Borrowers' salaries in public service roles, repayment periods, and other economic factors could alter impact scales.
- The act's indirect impacts on the labor market, particularly the public sector, should be considered for long-term forecasting.