Lowering Obstacles to Achievement Now Act; LOAN Act
Summary
The LOAN Act aims to amend the Higher Education Act of 1965, primarily focusing on reducing the burden of student loans and increasing access to higher education. Key provisions include doubling Pell Grant amounts, improving the Public Service Loan Forgiveness program, reducing interest rates, and allowing 'Dreamer' students to be eligible for federal aid. The Act also seeks to streamline income-driven repayment plans and eliminate interest capitalization on student loans.
Expected Effects
If enacted, the LOAN Act would significantly alter the landscape of federal student aid. It would increase the financial assistance available to students, particularly those from low-income backgrounds, and simplify the repayment process for federal student loans. Additionally, it would provide relief to borrowers in default and those pursuing public service careers.
Potential Benefits
- Increased Pell Grant amounts would make college more affordable for low-income students.
- Improved Public Service Loan Forgiveness program would incentivize graduates to enter public service.
- Reduced interest rates on federal student loans would lower the overall cost of borrowing.
- Automatic enrollment in income-driven repayment plans would help borrowers manage their debt.
- The elimination of interest capitalization would prevent loan balances from growing rapidly.
Potential Disadvantages
- Doubling Pell Grants and other provisions could substantially increase the federal budget deficit.
- Reduced interest rates might make student loans more attractive, potentially leading to increased borrowing.
- Some provisions, like federal aid for Dreamer students, may face legal challenges or political opposition.
- The complexity of the new income-driven repayment plan could create confusion for borrowers.
- The long-term effects of eliminating interest capitalization are uncertain and could have unintended consequences.
Most Disadvantaged Areas:
Constitutional Alignment
The LOAN Act's alignment with the Constitution is primarily based on the General Welfare Clause (Article I, Section 8), which grants Congress the power to provide for the general welfare of the United States. The Act's provisions related to education and student loans could be argued as promoting the general welfare by increasing access to higher education and reducing financial burdens on citizens. However, the Act's potential impact on the federal budget deficit could raise concerns about fiscal responsibility and the long-term economic stability of the nation.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).