A group of state lawmakers is meeting in Des Moines this week to try and determine why Iowa College students have some of the highest debt in the nation. Senator Mike Connolly, a Democrat from Dubuque, believes the Iowa Student Loan Liquidity Corporation may be partly to blame. The corporation, a private non-profit group, was created by the Legislature in the 1970’S to provide low interest loans.
But, Connolly says it appears they have directed students into higher interest loans to boost salaries and pump up their reserve accounts. Connolly says,"I think a lot of kids are working jobs, they’re trying to struggle and make their way through school and if aren’t being treated fairly in the loan structure we set up to provide low interest loans for them then we need legislation to correct that."
Connally says he won’t hesitate to take action. Connolly says the corporation was created by legislation, and it can be taken away or amended, or change with legislation, and Connolly says if it is found to not be working, that’s what they’ll do.
But Iowa Student Loan C-E-O Steve McCullough says they’re being unfairly lumped in with the for-profit loan providers currently under scrutiny in other states. McCullough says a recent state audit shows I-S-L is a well run organization that’s not to blame for highs student debt load. He says the reasons for the high debt are that the average income in Iowa is lower than the rest of the nation, cost of tuition has gone way up, the amount of scholarships and grants have been relatively constant and people simply haven’t had the money to pay out of pocket and have had to turn to loans.
Iowa’s Deputy Auditor Warren Jenkins says his office did not uncover any wrongdoing at Iowa Student Loan, but is recommending changes to the board of directors of the organization to avoid any conflicts of interest. McCullough says they welcome the recommendations. A national expert on student debt told legislators too many college students are taking out private loans to get through school.
Robert Shireman, the president of the Institute for College Access and Success, says too many universities now present private loans as part of their financial aid package to make it appear like the student or parent is paying less out of pocket.
Shireman says the loans are there and it’s easy to sign on the dotted line. Shireman says most students would be better off applying for federal loans that include a fixed interest rate and a repayment plan based on income.