A vote in the U.S. Senate may be a matter of hours away that would reverse course on the recent doubling of student loan interest rates. Iowa Senator Tom Harkin says a bipartisan group agreed on a deal Wednesday that will bring at least temporary relief for nearly seven-million Americans with student loan debt, including 200,000 Iowans.
“We’ll have a vote sometime later today that will keep interest rates low for the next couple three years,” Harkin says. “We have a cap on interest rates for undergraduates that will be the same as the cap that we had in the 1990s.” That rate cap for undergrads would be at 8-and-a-quarter percent.
The interest rate on the federally-subsidized loans jumped on July 1st from 3.4-percent to 6.8. Under the deal, interest rates would be brought back down through the 2015 academic year, but then they’d climb again.
“So all in all, it’s a compromise, obviously,” Harkin says, “but it’s better than 6.8%, I’ll tell you that.” Harkin, a Democrat, had been backing a bill that would have frozen interest rates for a year until a better compromise could be reached, but now says he’ll support this new plan.
Almost 72-percent of Iowa’s college graduates have student loan debt, the 4th highest percentage in the country. The average Iowa student who took out loans has $29,000 in debt, the sixth highest rate in the nation.