Bill Overview
Title: Protect Student Borrowers Act of 2022
Description: This bill requires institutions of higher education (IHEs) participating in the William D. Ford Federal Direct Loan program to accept specified risk-sharing requirements for defaulted student loans, which shall include requiring certain IHEs to make payments to address the risk of such defaults. The bill also establishes in the Treasury a separate account for the deposit of such risk-sharing payments.
Sponsors: Sen. Reed, Jack [D-RI]
Target Audience
Population: People globally taking federal student loans and impacted by institutional changes
Estimated Size: 30000000
- The bill impacts institutions of higher education (IHEs) in the United States that participate in the William D. Ford Federal Direct Loan program, as they will have to comply with new risk-sharing requirements.
- Students who take loans through the William D. Ford Federal Direct Loan program may be indirectly affected due to changes in how institutions manage or possibly adjust policies in response to handling defaults.
- The number of students taking federal loans is approximately 30 million, reflecting data from recent years when federal student loans made up the predominant portion of college financial aid.
- Students whose financial aid could be affected are primarily those enrolled in U.S. higher education institutions participating in the federal student loan program.
Reasoning
- The policy is aimed at institutions of higher education participating in the federal loan program, thus the direct impact will be on these institutions. However, students may indirectly feel the effects if institutions pass on costs or change policies around financial aid.
- The budget constraints imply that this policy has to be implemented in a cost-effective manner, possibly affecting a limited set of institutions initially or focusing on those with higher default rates.
- The wellbeing of students taking federal loans may be indirectly impacted if their institutions make changes to financial assistance strategies or cost structures in response to the policy.
Simulated Interviews
College Student (Ohio, USA)
Age: 20 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 4.0 years
Commonness: 12/20
Statement of Opinion:
- I'm worried about how this will impact my tuition or fees if my college has to cover new costs.
- It sounds good in theory to make schools responsible, but I fear it will bounce back on students.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 7 | 6 |
College Administrator (New York, USA)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This policy might strain our college's budget, potentially affecting our capacity to offer new courses.
- The intention of lowering defaults is good, but execution needs clarity to avoid impacting students negatively.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 9 | 7 |
Financial Aid Officer (California, USA)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 8.0 years
Commonness: 5/20
Statement of Opinion:
- I worry that smaller institutions might close down if they can't handle the financial risk.
- If implemented well, it encourages colleges to better support their students financially.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 8 | 7 |
IT Specialist (Texas, USA)
Age: 30 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- I hope this policy leads to better loan conditions for future students.
- There might be some hurdles initially, but it feels like a step in the right direction.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 10 | 9 |
Loan Counselor (Illinois, USA)
Age: 40 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Colleges might need more tools to actually support students rather than just face penalties.
- This policy could push institutions to innovate financially, which might help in the long run.
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 | 8 | 7 |
| Year 20 | 9 | 8 |
Undergraduate Student (Florida, USA)
Age: 19 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- I'm scared that my college might increase fees to handle these new costs.
- It’s good if schools take responsibility, but it shouldn't mean I bear more financial burden.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 3 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 6 | 5 |
| Year 20 | 7 | 6 |
High School Counselor (Georgia, USA)
Age: 36 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- If colleges improve how they manage student aids, it could really benefit students.
- There’s worry about how this policy might narrow options for lower-income students if colleges cut programs.
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 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Graduate Student (Washington, USA)
Age: 27 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 6.0 years
Commonness: 9/20
Statement of Opinion:
- I'm worried colleges might make grad programs more expensive to cover these costs.
- If implemented smartly, this could ensure better financial support systems from colleges.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 8 |
Retired Educator (Pennsylvania, USA)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 6/20
Statement of Opinion:
- This is indeed a bold move that demands accountability from institutions.
- My concern is students might end up facing extra financial burdens as institutions adjust.
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 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 8 |
Recent Graduate (Tennessee, USA)
Age: 22 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- I'm interested in seeing how my college might adjust policies accordingly.
- I hope it doesn’t just equate to higher costs for current students.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 4 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 7 | 6 |
| Year 20 | 8 | 7 |
Cost Estimates
Year 1: $100000000 (Low: $80000000, High: $120000000)
Year 2: $105000000 (Low: $84000000, High: $126000000)
Year 3: $110000000 (Low: $88000000, High: $132000000)
Year 5: $115000000 (Low: $92000000, High: $138000000)
Year 10: $125000000 (Low: $100000000, High: $150000000)
Year 100: $150000000 (Low: $120000000, High: $180000000)
Key Considerations
- The administrative costs for both federal and institutional systems involved in tracking and comply with risk-sharing will be significant.
- The projected savings depend heavily on the effectiveness of IHEs in managing loan defaults and aligning student success strategies.
- There could be a transitional period where institutions struggle to balance compliance costs with the risk payments, which might temporarily affect their financial stability.