Legislation that would kill a looming interest rate hike on student loans is being rolled out today by Iowa Senator Tom Harkin. The pending doubling of interest rates was the focus of President Obama’s visit to the University of Iowa on Wednesday.
Harkin, a Democrat, says the bill is designed to eliminate the rate increase that’s scheduled to take effect on July 1st. “More than 7.4-million American students, including an estimated 255,000 students enrolled in Iowa colleges and universities, would be required to pay an average of $1,000 more per year of school,” Harkin says.
The interest rate on federal student loans will jump from 3.4% to 6.8% in about two months. Harkin says such an increase is “unacceptable.”
“Our bill is straight forward and fully paid for,” Harkin says. “It keeps the interest rate at 3.4% and that cost is offset by closing a tax loophole that benefits certain high-income professional service providers.” The legislation is called the Stop The Student Loan Interest Rate Hike Act of 2012.
Harkin says in today’s global economy, a college education is no longer an option, it’s a necessity.”We know that a worker with a bachelor’s degree makes an average of 85% more than a high school graduate,” Harkin says.
“Almost two-thirds of the job vacancies between now and 2018 will require some post-secondary education. More than ever, a college degree is the key to entry in the middle class, but the cost of this key in terms of student loan debt has reached oppressive levels.” Harkin says student loan debt now exceeds one-trillion dollars and has surpassed total credit card debt for the first time.
He adds, 72% of Iowa college graduates have student loan debt, the fourth-highest percentage in the nation. They owe an average of $30,000, which is the third-highest amount in the U.S.