Hello my name is Cameron Flann,

Today I will be discussing bill 1-2016, The Endorsement of

Student Financial Incentives to give my advice for the Health,
Education, Labor, and Pensions Committee. I have a PHDs in
Economics and Education from Harvard and Stanford
respectively. I fully support the bill with the exception of a few
errors.
70% of students who graduate from college need some sort of
loan. On average students take loans totalling over $25,000 which
can be overwhelming for students entering most careers. The
Endorsement of Student Financial Incentives bill offers some
good solutions to alleviate the student college debt crisis, but
there are some sections that I would recommend some
adjustment.
Currently college loans have very high interest rates which are
crushing students who can not afford to pay them. The student
loan interest rate is 3.76% for students and this bill proposes in
Section 3, Subsection A, that interest is lowered to 2.05%. I
support the lowered interest rates because it should lower the
amount of defaults or missed payments. I do believe that the
immediate change in percentage is unreasonable for the loan
providers. This change that the bill proposes causes a 58%
difference in income for loan providers. Changing this dramatically
could hurt the availability of loans to students due to providers
being concerned about making their money back. This will cause
less students to attend college which will raise college cost

dramatically and add to the existing problem. I suggest instead

that the college loan interest rates are lowered at 0.25% per year
until the 2.05% mark is met. This should allow for the providers to
adjust adequately over the 7-year adjustment time frame while
allowing students to still have the same access to loans as they
currently do today.
Direct subsidized loans are one of the many options for students
attending college and this bill proposes an income based
repayment system for these loans in Section 3, Subsection A. In
this section, the bill proposes that the government will implement
a system that all students will have equal access to the
repayment system. But, the bill doesnt state exactly what the
repayment system is just the income thresholds that the system
includes. I would recommend that some sort of repayment system
is specified. Possibly make the repayment system have multiple
requirements such as the student must have received a degree to
qualify or be educated by the school about the repayment system.
This clarification will allow for a clear income-based repayment
system.
In Section 4, Subsection C, the bill states that the U.S.
government will pay for the interest on the direct subsidised loans
but there isnt a stated implementation of funding for how the
Department of Education will pay to the interest. To solve this
issue I would recommend an amendment that defines an
allocation of funds from the 200 billion dollars granted in the
removal of the redundant F-35 Jets in Section 2. An estimated 10
billion dollars should be adequate and lower every year with the

interest rate cap. I would recommend some sort of amendment for

this section to include adequate funds for the repayment system.
College costs are increasing and should be capped but at the
current moment adjusting this bill in the ways I have proposed will
alleviate a lot of the debt issues for the college student population.
Changing the loan percent interest will allow for loan providers to
adequately adjust while still providing loans. Lastly, the allocation
of funds for government paid interest will make for an effective
college crisis solution. Adding these additional changes should in
my opinion should allow for bill 1-2016, the Endorsement of
Student Financial Incentives the pass the senate committee and
floor.
Thank you.