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President Obama's UI visit spurs student loan discussion

BY KRISTEN EAST | APRIL 26, 2012 6:30 AM

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University of Iowa students came out in full force Wednesday afternoon to hear President Barack Obama discuss college affordability and student debt.

"Helping more young people afford college should be at the forefront of America's agenda," Obama said. "And it shouldn't be a Republican or Democratic issue. This is an American issue."

 

Greeted by roughly 5,500 members of the UI community in the Field House, Obama spoke for nearly 30 minutes about the pressing federal loan situation facing college students.

Legislation passed in 2007 to keep interest rates for federal student loans at 3.4 percent is set to expire July 1. The interest rates on those loans will double to 6.8 percent if Congress doesn't act to extend the loan cut for at least another year. The legislation only applies to federal student loans, affecting 7.4 million students nationwide.

If Congress doesn't act before July 1, the average student will owe roughly $1,000 more on her or his loans for each year Congress delays action.

"Now is not the time to double the interest rates on our student loans," Obama said. "Now is the time to double down on starting investments that build a strong and secure middle class."

Sen. Tom Harkin, D-Iowa, introduced a bill Tuesday that would freeze the federal loan interest rates for at least one more year. Obama has been making several stops across the country to advocate for the renewal.

But some local and statewide Republicans protested Obama's Wednesday visit.

"No amount of campaign speeches or lofty promises can change the fact that President Obama has failed our nation's young people," Iowa GOP Chairman A.J. Spiker wrote in a news release. "Iowa students know their generation cannot afford four more years of massive debt increases and joblessness …"

Mark Warner, the director of UI Student Financial Aid, said students should be most cautious of the potential doubling of the interest rate.

"Students should always be concerned about the interest rate because the higher it is the more, overall, the student has to repay and the higher the monthly payments will be," he said.

Federal student loans represented roughly 93 percent of loans borrowed by UI students in 2010-11. Warner said the average student debt for the graduating class of 2011 was $25,446, not far off from the national student debt average of $25,000.

UI junior Saira Jaramillo, who attended the president's address, said she comes from a low-income, single-parent family, and student debt is a major concern of hers.

"I'm really in support of [Obama's] ideas," she said. "Having him here to explain it was great. A lot of people don't give him credit for what he's doing."

Warner said students and parents should only borrow what is "absolutely needed."

" 'Choice' borrowing may have repercussions down the road," he said. "If the student has borrowed when not absolutely necessary, their debt may affect the type of job they choose after graduation, where they look for and find a job, and too much debt may delay graduate or professional school plans."

UI sophomore Tricia Schneider said the president's UI visit made her more knowledgeable about loans she'll one day have to pay back.

"I didn't know a lot, but I definitely saw it from a liberal standpoint," she said. "I'll have to repay [my debt] off some day, and it's going to be more debt than I want it to be."

Schneider is not alone. Rich Williams, the higher-education advocate for U.S. PIRG, said many students aren't as knowledgeable about their loans as they should be.

Williams said students should turn to officials in their university's financial- aid office to be more informed.

"They are the financia- aid experts, so they can definitely help educate and provide students with more affordable options and just be a real good resource," he said.


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