Bill Overview
Title: Student Debt Relief and College Affordability Act
Description: This bill makes changes to the Federal Pell Grant program and addresses repayment options, loan disclosures, and loan counseling for student loans. For example, the bill (1) directs the Department of Education (ED) to provide federal student loan forgiveness and cancellation for recipients of Pell Grants, (2) increases the maximum Pell Grant award, (3) terminates interest capitalization and origination fees for Federal Direct Loans, and (4) requires ED to maintain online counseling tools that provide borrowers with entrance and exit student loan counseling.
Sponsors: Sen. Cortez Masto, Catherine [D-NV]
Target Audience
Population: Individuals involved with U.S. student loan programs globally
Estimated Size: 55000000
- The bill targets current and future students who are eligible for federal student loans and Pell Grants.
- The focus on Pell Grant recipients means these are typically low-income students, for whom increased grants and loan forgiveness are particularly significant.
- By increasing the maximum Pell Grant award, more students will likely qualify or benefit from larger grants, impacting a significant number of college students globally.
- Loan forgiveness and cancellation programs can impact a broad range of borrowers who may have previously qualified for Pell Grants, impacting both current students and potentially past students who are repaying loans.
- The termination of interest capitalization and origination fees will lower the cost of loans for all federal student loan borrowers.
- Online loan counseling tools and updated loan disclosure rules will affect all students who take federal student loans, helping them make more informed financial decisions.
Reasoning
- The policy targets Pell Grant recipients and other federal student loan borrowers, aiming to reduce the financial burden of higher education.
- The policy's financial scope is $5 billion initially and $58.4 billion over 10 years, indicating substantial but constrained funding relative to nationwide demand.
- Simulations need to include a range of people, including those directly impacted by student loans and those indirectly impacted through changes in educational affordability.
- While Pell Grant recipients represent a key target demographic, the changes in loan origination fees impact a broader base of all federal loan recipients.
- Cantril scores will indicate if the policy successfully increases individual well-being and reduces economic strain.
- The commonness factor moderates how representative each individual is of the broader population impacted.
Simulated Interviews
Recent college graduate (Chicago, IL)
Age: 23 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Forgiving my student loans would allow me to focus on my career and potentially start saving for other life goals.
- Pell Grant increases would have helped during tough semesters when I needed extra funds for books and living expenses.
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 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Software engineer (San Francisco, CA)
Age: 32 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- The removal of interest capitalization would lighten my existing repayment load, freeing up money for other expenses.
- While I'm not a Pell Grant recipient, lower loan costs in general would have sped up my payoff timeline.
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 | 7 | 6 |
| Year 20 | 7 | 6 |
Accountant (Houston, TX)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- Increased Pell Grant funding will greatly assist my children as they start college.
- This would change our financial strategy for education, potentially allowing for funds elsewhere.
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 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 5 |
College student (Boston, MA)
Age: 19 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This increases my capacity to focus on studying without working additional hours to cover costs.
- The support makes college a feasible option for more people from my background.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 4 |
Non-profit worker (Denver, CO)
Age: 27 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 13/20
Statement of Opinion:
- The changes would help federal borrowers like me manage repayments without accruing as much additional cost.
- The online counseling would have helped understand loan ramifications better when I was new to it.
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 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Current college student (Phoenix, AZ)
Age: 22 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 12/20
Statement of Opinion:
- While I don’t receive Pell Grants, the overall affordability effort is positive.
- Interest and fee restructuring might motivate more careful financial planning for loans.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Entrepreneur (Miami, FL)
Age: 35 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- The assistance would have alleviated pressures when I was juggling both student and business loans.
- Early financial literacy through counseling would be beneficial for all new students entering college.
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 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Teacher (New York, NY)
Age: 29 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 11/20
Statement of Opinion:
- Loan forgiveness is attractive as it directly relieves my debt pressures.
- Help like this can attract more people into teaching, where salaries are lower.
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 | 7 | 5 |
| Year 20 | 6 | 5 |
Software engineer (Atlanta, GA)
Age: 41 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- This is a progressive bill that would benefit many, even though I won't be directly affected.
- Increased educational access is beneficial for economic growth and innovation.
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 |
High school student (Portland, OR)
Age: 18 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 10/20
Statement of Opinion:
- This policy would make college choices less financially daunting.
- My family would benefit from Pell Grant and loan options, reshaping my college decisions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $5000000000 (Low: $4000000000, High: $6000000000)
Year 2: $5200000000 (Low: $4200000000, High: $6200000000)
Year 3: $5400000000 (Low: $4400000000, High: $6400000000)
Year 5: $5800000000 (Low: $4800000000, High: $6800000000)
Year 10: $6600000000 (Low: $5600000000, High: $7600000000)
Year 100: $8000000000 (Low: $7000000000, High: $9000000000)
Key Considerations
- Balancing the financial burden of expanded Pell Grants with the goal of increasing education accessibility.
- Evaluating the long-term economic benefits of a more educated workforce against the initial high costs of loan forgiveness.
- Potential for increased federal debt or redirection of existing education budgets to cover these new costs.
- Uncertainty around borrower behavior changes due to counseling enhancements and interest fee eliminations.