A debate about how to resolve a looming spike in interest rates for federally subsidized student loans played out in Iowa on Saturday as Sen. Tom Harkin blasted a GOP filibuster during several public appearances.
“This is another kind of tsunami about to happen,” Harkin said before about 20 people at the Des Moines Area Community College campus in Des Moines.
The fixed interest rate on Stafford subsidized loans will double, to 6.8 percent, on July 1, unless Congress takes action. The rate was lowered by a 2007 law approved by a Democratic Congress that lowered the rates but set a date to increase them again because of concerns about costs.
Democrats and Republicans alike have voiced support to keep the loans, which help low- and middle-income families finance college, at lower rates. But both sides are in a tussle over how to pay for the $6 billion in costs.
Republicans oppose a plan that Democrats say closes a tax loophole by forcing high-earning stockholders in some privately owned corporations and professional practices to pay additional Social Security and Medicare payroll taxes.
Democrats, on the other hand, oppose a Republican effort to pay for the lower rates through cuts to a preventive health program created by the 2010 health care overhaul, which President Barack Obama has said he would veto.
Senate Republicans earlier this month blocked debate of the Democratic plan, which required 60 votes to proceed.
Harkin on Saturday met with students at DMACC’s Des Moines and Boone campuses. He noted that more than 70 percent of Iowa’s college graduates have student loan debt, the fourth-highest percentage in the nation. Those borrowers carry an average of $30,000 in student loan debt, he said.
DMACC student Marie Anderson returned to school about 2½ years ago. She told Harkin she already has roughly $25,000 in loans and fears the results if rates increase. She is a single mother with a teenager.
“I ask that question every day: Is is it worth it?” Anderson said to Harkin. “Because I have a teenager daughter, I think it will be worth it. She looks up to me, and I just want her to feel that education is always the best solution no matter what.”
Republican Party of Iowa spokeswoman Megan Stiles said Republicans share in the goal to keep rates down but said the party also wants to find a responsible way to pay for the costs. She said Harkin has missed the bigger point that job creation would do even more to help college students.
“I think the larger issue here is that young people in particular have been hit really hard with this economy,” Stiles said. “It doesn’t really matter what the interest rate is if you don’t have a job.”
Congress is expected to take up the education bill by early June, Harkin said.