Iowa Senator Tom Harkin, a Democrat, says he is pleased with the compromise to bring down the interest rates on student loans. The compromise ties the loan rate to the government’s cost of borrowing the money. Harkin says Republicans did not get everything they wanted in the bill as their version would have cost students 15-point-seven billion dollars.
“This came down to 715-million over 10 years, so I’m not certain that they got a heck of a lot of what they wanted. I got the eight-point-two-five percent up front cap, they didn’t want any cap, except on consolidation — which wasn’t a cap at all. And we got lower interest rates for undergraduates for at least the next four or five years almost,” Harkin says.
Student loan interest rates had doubled on July first after Congress had failed to reach an agreement to deal with them. Harkin says students will save money if the measure moves forward. “For an undergraduate $1,500, for a graduate student 29-13, and for parents, 2,066.
That’s for the life of a loan if they take out a loan right now. That’s pretty good savings,” according to Harkin. He says they will likely address the student loan issue again when they take up the Higher Education Act. “We required G-A-O to do a study of student loans and report back to us in four months, taking into account the cost of money to the government, what it costs to administer the program, what would be the right add-on above government costs so that we don’t make any money off of students. So, we will have all that information by the end of the year,” Harkin says.
Iowa’s other Senator, Republican Chuck Grassley also backed the bill which passed with 81 votes. Most of the no votes were Democrats who said the bill put too much cost on students. The U.S. House is expected to take up the issue next week.