Democrats Work to Cut Interest Rates on Student Loans

The Des Moines Register has a story about Democrats in Congress plan on cutting interest rates on student loans.

Democrats plan to propose legislation this week cutting interest rates in half on subsidized Stafford undergraduate loans, from a fixed rate of 6.8 percent to 3.4 percent by 2011.

The proposal - one of a handful of issues Democrats have vowed to raise in their first 100 hours in session - would affect more than 50,000 Iowa undergraduates who took out subsidized loans in 2004-05 and about 5.5 million students nationwide, according to the U.S. Public Interest Research Group.

All three of Iowa's Representives support this legislation. Rep. Boswell and Rep. Braley are co-sponsoring the legislation. It will be interesting to see what Tom Latham does considering Iowa State University is in his district. Rep. Loebsack had this to say...

"It clearly makes college more accessible," said U.S. Rep. Dave Loebsack, a Democrat from Mount Vernon.

Financial barriers will prevent at least 4.4 million high school graduates from attending a four-year public college over the next decade, and prevent another 2 million high school graduates from attending any college at all, Loebsack said, citing the Congressional Advisory Committee on Student Financial Assistance.

State 29 disagrees with this legislation and basically says that if people take out students loans then they are too stupid to realize they need to save for college. State 29 completely ignores the fact that tuition has doubled over the past 5 or 6 years while income for middle class families have been stagnant. These families could have been saving for college, but when tuition increases so fast over such a short period of time, the only thing that can be done is to take out loans. This legislation helps ease the burden of the loans.

This legislation is just a bandaid attempt to solve the issue of student loan debt. The real issue is the dramatic increase in college tuition and decrease in state funding for higher education. This will continue to be a problem until we make the decision that it is important to have affordable college education and invest in our future.

I was lucky to make it through college with very little student loan debt. However, I know a couple people that have said they are basically paying two mortgage payments, one for their home and one for their loans. Consider, how they could be growing the economy with that money if it wasn't going towards student loan debt.