Bill Overview
Title: Affordable Loans for Any Student Act
Description: This bill addresses repayment options, loan disclosures, and loan counseling for student loans. The bill revises requirements concerning repayment options for student loan borrowers. For instance, the bill terminates interest capitalization and origination fees for Federal Direct Loans, provides assistance to low-income borrowers or borrowers who are delinquent on loan payments, and replaces the existing income-based repayment plans with two new plans. Under the new plans, borrowers may choose (1) a fixed repayment plan with equal monthly payments paid over a period of 10 years, or (2) an income-based repayment plan with monthly payments equal to 10% percent of their income above the poverty level. The income-based plan is capped at 20 years of payments. The bill also revises requirements concerning student loan disclosures and student loan counseling for borrowers. For instance, the bill requires the Department of Education to maintain online counseling tools that provide borrowers with entrance and exit student loan counseling.
Sponsors: Sen. Merkley, Jeff [D-OR]
Target Audience
Population: Individuals with student loans or potential student borrowers globally
Estimated Size: 50000000
- The bill directly impacts individuals who are currently holding or will hold student loans, particularly those with Federal Direct Loans.
- It emphasizes repayment plans, which affects borrowers who are in the repayment phase of their loan.
- The provision for improved loan disclosures and counseling affects both current and future student loan borrowers, providing them with better information and support.
- Low-income borrowers or those who are delinquent will benefit specifically from the assistance programs outlined in the bill.
- The cap on income-based repayment plans will primarily affect borrowers whose payment periods could extend beyond 20 years under current regulations.
Reasoning
- The policy primarily impacts individuals who are actively involved with Federal Direct Student Loans, either currently repaying or about to enter repayment. This focuses our simulation around young adults primarily, recent graduates, and individuals in financial difficulties due to student debt.
- The policy budget constraints mean the scale of the program is quite large, effectively needing to impact a significant portion of the borrower population, but it will particularly focus on lowercase income and delinquent borrowers who will see the most direct benefit from no origination fees and interest capitalization.
- Considering the scope, the policy will likely see varying impacts over time, with immediate relief for low-income groups and more structured improvements for all borrowers as counseling and information systems take effect.
- Different geographic areas in the US have varying levels of access to higher education loans and diversity in economic conditions, affecting how individuals perceive and experience the impact.
Simulated Interviews
Junior Accountant (Chicago, IL)
Age: 25 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- The policy would significantly help me manage my monthly budget by offering a stable repayment plan.
- I'm excited that there's no more interest capitalization because that will save me money in the long run.
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 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Software Engineer (San Francisco, CA)
Age: 32 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- I appreciate the option to pay 10% of my income, which varies due to my freelance work.
- I value the online counseling tools as they help me manage my loans better without needing to contact support.
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 | 8 | 6 |
| Year 20 | 8 | 6 |
Freelance Graphic Designer (Atlanta, GA)
Age: 28 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- The new repayment plans allow me to plan better despite variable income.
- I welcome the termination of origination fees. It's a relief knowing I won't incur extra costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 8 | 5 |
Marketing Manager (Dallas, TX)
Age: 40 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Fixed monthly payments are preferable as they offer predictability.
- The policy helps in long-term financial planning when dealing with multiple family expenses.
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 | 7 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
College Student (Boston, MA)
Age: 19 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- The revised counseling tools are really useful for future planning.
- It's reassuring to understand that future repayment will have safety nets and caps.
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 |
Public School Teacher (Phoenix, AZ)
Age: 50 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Hopeful that the policy will lessen my monthly expenses and it’s great not to have interest capitalization, although I wish for more immediate reduction in loan amount.
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 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Financial Analyst (New York, NY)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 11/20
Statement of Opinion:
- Income-based plan allows flexibility and rebuilds credit importance.
- Capping interest prevents spiraling debt.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 5 |
| Year 20 | 9 | 5 |
Nurse (Denver, CO)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- Policy helps but my repayment journey is nearly decided already, however, the counseling aspect stands to benefit less experienced borrowers.
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 | 7 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Barista with part-time studies (Los Angeles, CA)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- As a part-time student, future loans are a concern, this policy gives me assurance about foreseeable terms.
- Access to counseling is beneficial to plan smarter applications and borrowing.
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 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Freelance Writer (Seattle, WA)
Age: 30 | Gender: other
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- Better understanding through online counseling and access to a fixed 10-year plan offers better life control.
- Relief from origination fees is a major stress reliever.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Cost Estimates
Year 1: $1800000000 (Low: $1500000000, High: $2000000000)
Year 2: $1700000000 (Low: $1400000000, High: $1900000000)
Year 3: $1600000000 (Low: $1300000000, High: $1800000000)
Year 5: $1500000000 (Low: $1200000000, High: $1700000000)
Year 10: $1300000000 (Low: $1000000000, High: $1500000000)
Year 100: $800000000 (Low: $500000000, High: $1000000000)
Key Considerations
- Implications on federal revenues and budget allocations for other education programs.
- Potential challenges in effectively implementing new repayment systems and counseling tools.
- Ensuring sufficient outreach and education for borrowers about new options.