James Q. Lynch, The Gazette, Cedar Rapids, Iowa –
A plan for a one-year extension of the break college students get on Stafford Direct Loan interest payments is a win for students and taxpayers alike, according to members of the Iowa congressional delegation.
Democratic Sen. Tom Harkin said there’s an agreement to maintain the current 3.4 percent interest rate on the loans, which are used by more than a quarter of a million Iowa undergraduates.
“The agreement is not only great for students, but also for taxpayers since we have fully paid for the one-year extension of the current interest rate,” said Harkin, who chairs the Senate Health, Education, Labor, and Pensions Committee. If Congress and the president don’t act, the interest rate would revert to 6.8 percent on loans made after Sunday.
Republican Sen. Chuck Grassley expects the House to go along with the plan to cover the $6 billion-a-year cost by raising premiums for federal pension insurance.
“Obviously, it’s a good deal for the students because their interest rates won’t go up,” Grassley said Wednesday.
In turn, businesses are expected to go along because the agreement calls for Congress to change rules on how companies calculate their pension liabilities.
The extension that would save 7.4 million students an average of $1,000 has bipartisan support, including the backing of President Barack Obama and his challenger, Mitt Romney. However, the fight in Congress has been over how to pay for it.
Democratic Rep. Dave Loebsack of Iowa City hopes the GOP-led House, which already has passed its own plan to extend the current rate, will approve the Senate plan that “helps Iowa students, that doesn’t add to the deficit and ends the political posturing.”
Rep. Bruce Braley, a Waterloo Democrat, called the agreement a “huge victory for college students who depend on those federally insured loans” because it will reduce their debt load.
“It’s definitely a victory for higher education,” he said. “It’s also a terrific investment for taxpayers.”
Congress has made a “deliberate decision that making higher education affordable to young people pays enormous dividends to taxpayers over the long run,” Braley said.
He called it a “well-established concept” that earning increases with education attainment.
“The lifetime benefit of having more educated people in the work force can actually reduce our tax burden over the long haul,” Braley said. “That’s why it’s an appropriate investment of taxpayer resources.”
Republican Rep. Tom Latham has been tied up with floor action on a transportation funding bill. However, a spokesperson said he supported an earlier plan to maintain the lower interest rate.
