A watchdog group released new figures today it says show how damaging it will be to Iowa college students — and to the economy — if Congress fails to take action on student loan interest rates. Sonia Ashe, spokeswoman for Iowa Public Interest Research Group (PIRG), says the interest rate on federal student loans is scheduled to double on July first, jumping from 3.4% to 6.8%.
“Here in Iowa, 72% of graduates are carrying student loan debt with an average of $29,598 per borrower, which is above the national average at this point,” Ashe says. It’s estimated 255,000 students enrolled in Iowa colleges and universities would be required to pay about one-thousand dollars more per year of school, if the interest rates bounce in July.
Combined, that means Iowa students would owe an additional $255-million under the increase. Laurie Wolf, a financial aid officer at Des Moines Area Community College, says more than 700 students graduated from “D-MAC” on Wednesday, including a 33-year-old woman in the dental assistance program.
“It took her six years to get through the program because she’s raising five children,” Wolf says. “She took out student loans in order to help pay for her education, her books, her transportation to clinicals, and to help support the child care that she needed to take care of her five children while she was in school.”
Wolf says that woman will face serious financial hardship if the interest rate on her loans doubles. Des Moines native Jessie Tobin is a student at the University of Iowa, majoring in international relations and politics.
Tobin says the looming interest rate hike is making her reconsider continuing her higher education in grad school after she finishes her undergrad studies next year. “As students, what we really need is for our leaders to step in and realize that this isn’t a right or a left matter and it’s not something to worry about just with the upcoming elections,” Tobin says.
“It’s a real problem affecting 7-million-plus students and their prospects of obtaining a college degree and a more prosperous future.” Student loan debt exceeds one-trillion dollars and has surpassed total credit card debt for the first time. Legislation that would kill the interest rate hike was rolled out last week by Iowa Senator Tom Harkin.
The legislation is called the Stop the Student Loan Interest Rate Hike Act of 2012. A vote in the Senate may come as soon as Tuesday.