More than 200,000 Iowans who have student loans saw their interest rate double this week. Due to inaction by Congress, the interest rate on federally-subsidized loans bounced from 3.4% to 6.8%. While the U.S. Senate considers a bill to bring the rates down retroactively, Gabe Etzel, a sophomore at Coe College in Cedar Rapids, says the uncertainty is troubling.
“Just looking at the numbers, they look pretty scary,” Etzel says. “Just as soon as I’m out of school, it’s not instant. You don’t just get a job all of the sudden that pays really well. If I have a rough time after college, then I’m just accumulating debt.”
With the doubling of the interest rates, it adds about a thousand dollars, on average, to the cost of paying off each loan. Iowa Senator Tom Harkin is co-sponsoring a bill which would freeze the interest rate for a full year, but it can’t go to a vote until lawmakers return from their July 4th recess.
Heather Doe, spokeswoman for the Iowa College Student Aid Commission, remains hopeful legislation will pass — soon. “We’re confident that this is something Congress is taking seriously and is going to try to do what’s best for the students,” Doe says.
“As it stands now, the concern is that subsidized Stafford loans are the need-based loans, so the increase is hitting the neediest students.” Nearly 72-percent of Iowa’s college graduates have student loan debt, the 4th highest percentage in the nation. More than 220-thousand Iowans have student loans, with an average of $29,000 in debt, the sixth highest rate in the country.