SB 2017-085: Student Loan Reform Act (Passed)

[Associate Justice PiT]

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     Sponsor: PiT

     I hereby open the floor for debate.

[Associate Justice PiT]

     I propose this bill to reform the student loan system, the incomprehensible nature of which has played a major role in the explosion of higher ed costs. Under no other circumstance could an 18 to 22-year old borrow six figures in unsecured debt; this system thrives because the risk is transferred from the banks to the taxpayer. Making student debt dischargeable and capping federal loans will help remove market distortions that have artificially inflated the cost of college and prevent our nation's youth from taking on mountains of ruinous debt.

[Associate Justice PiT]

1) The cap is intended to be reasonable but firm for tuition for in-state universities, though there are other costs as well. We could set up a regimen that steps down the cap to soften the impact for both students and universities.

2) Private loans are an option, though funding college with those would be tricky with these stipulations. As I stated above, student loans are a good bet for lenders because of the nondischargability of debt. I expect that the private market for student loans will wither quickly because nobody would trust a college student to take on tens of thousands in debt and manage to pay it back.

[Associate Justice PiT]

     I did some more research into this matter and I found this chart for annual lending limits, which indicates that the loan limits I proposed would actually tend to increase the amounts that students might end up borrowing:



     The lending limits and costs for graduate/professional and medical school are awfully high, though I wonder how useful reducing those caps would be in applying downward pressure on tuition. In the case of certain degrees (e.g. MBA, MD), private lenders may nevertheless be willing to take up the slack.

[Associate Justice PiT]

     I realized that the limits in that graph do not include Perkins loans, so they are effectively $5,500 higher than they should be, so a $10,000/yr cap would work to lightly limit lending.

I'm also concerned about how the cap should be adjusted—as the cost of attendance increases, Siren's concern about students being pushed to private lenders grows more relevant, but including a provision to adjust the cap to match the increase in tuition would also hinder its ability to drive costs down.

     A big factor driving increases in the cost of attendance on the supply-side is the easy availability of student loans. Of course, limiting this would not deal with demand-side factors, such as student life and administrative bloat. We could cap and then index it to inflation, though I am unsure of how that would interact with the current growth of costs, which far exceeds inflation.

[Associate Justice PiT]

     I will propose an amendment to clarify the nature of what we cover in terms of loans and to handle the issue of inflation:

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     As the sponsor, it is naturally friendly. Senators have 24 hours to object.

[Associate Justice PiT]

This is fairly agreeable, though I wonder if this is just pre-cursor legislation to making public education in Atlasia tuition-free. Perhaps we could work on something like that instead.

     This affects private schools and former students as well. It is a different project from public school tuition, though one with some overlap.

[Associate Justice PiT]

     The amendment is adopted.

[Associate Justice PiT]

This is fairly agreeable, though I wonder if this is just pre-cursor legislation to making public education in Atlasia tuition-free. Perhaps we could work on something like that instead.

In the queue! Though as PiT said, there's significant areas of difference between this bill and the one I'm sponsoring.

Your bill is what is keeping me from being a committed yes on this.  I don't oppose this bill per se, but I do think that the College For All Act would be more effective in solving the student debt crisis.

     There are a few different tacks that will be necessary to solve the problem. Tackling tuition directly is part of it, but not the only lever we should be pulling.

[Associate Justice PiT]

     Are there any more comments on this? If not I can move it to a final vote in 24 hours.

[Associate Justice PiT]

     The final vote is now open. Senators have 72 hours to vote aye, nay, or abstain.

[Associate Justice PiT]

     Aye

[Associate Justice PiT]

     This has enough votes to pass. Senators have 24 hours to change their votes (late to this, but I have been having computer troubles).

[Associate Justice PiT]

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