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As college costs and federal loan rates for parents and students are rising, it is critical to ensure Iowa college students and parents have multiple options to pay for college.

Federal tax-exempt qualified student loan bonds provide a pathway for doing just that. This program has allowed financing of literally tens of thousands of loans to Iowans at rates more favorable than would otherwise be available, particularly during periods when market interest rates are high.

As Congress tackles tax reform this fall, that tool could be in danger. All types of municipal bonds may be at risk of losing tax-exempt status to make way for lower rates elsewhere. Doing so would take away an important financing vehicle at a time when the cost of higher education is a pressing concern for Iowa families. We urge our congressional delegation to keep this important college-financing tool intact.

As the price tag of education beyond high school continues to rise, existing federal loan options, such as the federal direct Stafford loan, often fall short of fully covering the cost of a degree. Many Iowa families need support to help fill the gap.

Iowa is among 21 states with non-profit and state-based providers of student loans, many of whom use tax-exempt qualified student loan bonds to help families manage the cost of college. These bonds, in many cases, allow the non-profit lenders that use them to offer lower interest rates, lower origination fees, and lower monthly payments than many other lenders provide.

Our non-profit, state-based loan provider, Iowa Student Loan, offers Iowa families a range of loan options including a fixed interest rate loan with no origination fees and an annual percentage rate lower than what is calculated with the federal Parent PLUS loan program. And, we offer a range of financial literacy, college planning, and smart borrowing resources to students and families to help them be wise consumers and minimize the amount they borrow for college. In fact, all loan applicants are required to use our Student Loan Game Plan tool during the application process. We also offer a student loan refinancing program, an opportunity to save on college costs for Iowans with outstanding student debt.

Iowa Student Loan has used tax-exempt qualified student loan bonds as market conditions have warranted. In fact, since 1987, Iowa Student Loan has issued $1.4 billion in tax-exempt bonds to support programs for Iowans, bonds which are not obligations of Iowa government or taxpayers, but are retired as loans are repaid by borrowers. It is important to have continued availability of this financing tool in the future so we can continue helping Iowa families.

Iowans seeking a good job and a good life need to have access to higher education. Qualified student loan bonds, and the non-profit, state-based providers issuing them, including Iowa Student Loan, offer a proven way to fulfill that promise. As they consider tax code reforms, we call on Iowa’s congressional delegation to ensure these tools continue to be available.

 

 

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Hensley is board chairwoman and Bramley is vice chairwoman of the Iowa Student Loan Board of Directors of Iowa Student Loan.

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