Here Are Three Ways To Reduce Student Loan Debt In Iowa
Posted at 5:03 p.m. CT on October 23, 2019
Grant and Katelyn Hobin work several jobs to pay off student loans while they wait to start a family.
With $ 1.6 trillion in outstanding debt, it’s no secret that student loans are a problem. Coupled with stagnant salaries and a rising cost of living, many graduates are wondering how they’re going to pay their bills – all despite graduation.
According to LendEDU’s annual Student Loan Debt by School by State report, the average student loan borrower has an average student loan debt of $ 28,565 (up $ 277 from last year). For graduates residing in Iowa, that number is even higher.
In 2018, the same study shows that Hawkeye State borrowers have an average student debt of $ 29,821, which ranks the state 32nd nationally from lowest to highest. For some students, like those who attended Buena Vista University ($ 38,938), Wartburg College ($ 39,559) or Clarke University ($ 39,907), the debt is even higher.
Across the country, growing student loan debt will continue to negatively impact the economy, but there are things Iowa officials can do to turn the tides.
Senate File 539 Should Be Approved
One of the main issues that often exists between borrower and lender is a clear line of communication, especially when it comes to complaints or just navigating what can be a complex and confusing repayment process. Also, after receiving student loans, some borrowers may not know which student loan manager is in control of their loans. This can complicate repayment and lead to increased fees and growing interest.
One way that Iowa officials may be able to resolve this issue is through Senate Case 539, which calls for the creation of a student loan ombudsperson on the Student Aid Commission. of Iowa College. Ultimately, this ombudsman would act as an intermediary between the borrower and the credit manager, offering the former an accessible and reliable resource, in addition to an ally in loan management.
Authorize student loan managers in Iowa
In recent years, there has been a wave of complaints against student loan managers, including a lack of transparency, mismanagement, and misinformation about borrowers. To allay these problems, many states have implemented their own version of a Student Loan Bill of Rights, and often included in this bill is a student loan manager license requirement.
Ideally, these licensing requirements will prevent unsavory organizations from making loans in the first place, besides acting as a permanent form of liability that would eliminate managers who engage in deceptive, unfair, or otherwise predatory activities. Over time, this would have a direct and indirect impact on the cost of a loan, including fees, interest rates, etc.
Support the Debt Free Colleges Act
In March 2019, US Senator Brian Schatz (D-Hawaii) and Representative Mark Pocan (D-Wis.) Reintroduced what has been dubbed the “Debt-Free College Act”. This legislation represents a partnership between the states and the federal government that would provide qualified students with the opportunity to earn a debt-free degree through a dollar-for-dollar federal-state matching program.
If passed, it would be a game-changer for the millions of students who rely on federal student loans for education. And although he is currently backed by 40 lawmakers, including Senator Elizabeth Warren, he will need more support, including the congressional delegation from Iowa.
When it comes to student debt, the Iowans may not carry the highest numbers, but they bear more than the national average. Obviously, student debt has a negative impact on the borrower, but over time student debt issues will continue to erode both state and local economies. As such, Iowa, like other states, must act now to address the student debt crisis both at home and across the country.
Mike Brown works at LendEDU, where he uses data, typically from surveys and publicly available resources, to identify emerging personal finance trends and tell unique stories.
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