Remember the partisan bickering in Congress last summer over student loan interest rates? Both parties accused the other of wanting to make college more expensive and lawmakers eventually chose to freeze everything for a year.
Well, a year has passed and now Iowa Senator Tom Harkin says the same problem has returned, along with the same pitting of Democrats against Republicans.
Harkin says, “The current fixed interest on Stafford loans is 3.4% but that rate will double to 6.8% on July 1st unless Congress intervenes.” He says this will impact nearly seven-million students nationwide, including 220,000 in Iowa, adding about a thousand-dollars, on average, to each loan.
Harkin is offering legislation that’s due for a vote today in the Senate which he says will bring another temporary fix to the issue of interest rates on student loans. “My bill to keep it at 3.4% is fully paid for,” Harkin says. “It will freeze need-based student loan interest rates for two years while we work out a long-term solution in the reauthorization of the Higher Education Act, which is under my jurisdiction.”
Harkin, a Democrat, is chairman of the Senate’s Health, Education, Labor and Pensions Committee. He says Senate Republicans are threatening to derail his efforts and his legislation. “The Republicans have made it clear, they intend to filibuster it,” Harkin says. “They are pushing their own bill which would more than double the student loan interest rate by 2016 in order to raise nearly $16-billion for deficit reduction.”
Harkin says the GOP plan would make college loans more expensive than if Congress simply does nothing and lets the rates go up. Harkin says 72-percent of Iowa college students have student loan debt, averaging $29,000 each.
Republicans are defending their legislation, which has already passed the House. It would tie student loan interest rates to ten-year U.S. Treasury notes. Supporters say the GOP plan would make good financial sense for new students over the next several years, but they admit it would lead to higher interest rates if the economy improves.