Joni Ernst Wants to Eliminate Federal Student Loans and Pell Grants that Hundreds of Thousands of Iowans Rely On; Give Windfall to Wall Street
Des Moines – Did Joni Ernst benefit from Pell Grants and Stafford Loans for her college education? Now, Ernst wants to take that opportunity away for every other Iowan.
As the fall semester for Iowa college students is just beginning, Joni Ernst wants to put an end to federal student loans and Pell Grants – a move that would dramatically increase the cost of college for Iowa students and give a massive windfall to Wall Street banks.
Ernst described these Tea Party ideas at a candidate forum in April at Iowa State University, saying:
“The federal government has to get out of the student loan business… our students, as they’re going off to whether it’s a two-year institution, a community college, whether it’s a four-year institution and beyond, we need to ensure that they’re able to find student loans at reasonable rates within private banking entities. So let’s get the federal government out of the business of student loans.”
Just like her plans to privatize Social Security, Joni Ernst would put Wall Street banks in charge of college loans, putting their profit in between Iowans and a college education. Switching from federally backed student loans to all-private student loans would be a dramatic, costly shift for Iowa students. Private loans can mean thousands more in payments over the life of the loan, as compared to federal student loans.
But Ernst wouldn’t stop there. She has repeatedly said that she would eliminate the Department of Education, putting an end to Pell Grants for over 111,000 Iowa students and over 228,000 federal Stafford loans for Iowa students. Ernst bragged that she has the “intestinal fortitude” to make those cuts, but that’s something Iowans simply won’t stomach.
“Rising college costs and crushing student debt is putting Iowa graduates further behind at graduation. If Ernst wants to take away federal loans that benefit hundreds of thousands of Iowans, she needs to disclose if she benefitted from some of these same programs,” said Iowa Democratic Party Chair Scott Brennan. “Ernst would jeopardize Pell Grants for 111,000 Iowa students and believes we should eliminate federal student loans entirely, increasing the cost of a college education and putting a college education out of reach for some. Joni Ernst would rather put Wall Street profits ahead of reducing college costs for Iowa students. That’s wrong for Iowa.”
Across Iowa, more than 111,000 students received almost $359 million in Pell Grants, more than $3,200 each on aver, during the last school year. In the 2012-2013 school year, students attending Iowa schools received 228,620 federal Stafford loans worth more than $1 billion.
According to the Project on Student Debt, students attending four-year colleges and universities in Iowa graduate with an average student debt of $29,456, and 71% of students graduate with some form of debt.
Ernst: “The Federal Government Has To Get Out Of The Student Loan Business.” In April 2014 at the Iowa State College Republicans Senate Forun, Ernst responded to a question about student loans, saying, “Great question because right now in the United States there is about $1.2 trillion of student loan debt and so it is a very serious issue. And I agree; the federal government has to get out of the student loan business. Every time the federal government comes into situations like this, we see what happens. But what we need to ensure is that our students, as they’re going off to whether it’s a two-year institution, a community college, whether it’s a four-year institution and beyond, we need to ensure that they’re able to find student loans at reasonable rates within private banking entities. So let’s get the federal government out of the business of student loans.” [Iowa State College Republican Forum, 4/2/14] (Video)
Ernst Said She Had The “Intestinal Fortitude” To Eliminate The Department Of Education. In August 2013, Obradovich wrote in the Des Moines Register, “[Ernst] said she had the ‘intestinal fortitude’ to take a hard look at the budget. When asked for specifics, she said Tuesday she wanted to eliminate the Department of Education.” [Des Moines Register, Obradovich column, 8/21/13]
POLITIFACT: “Does Joni Ernst Want To Abolish The Education Department And The EPA?” “True.” In June 2014, Politifact reported, “A new ad from a coalition of environmental groups tries to paint Iowa’s Republican Senate candidate Joni Ernst as too extreme. The groups, which include the League of Conservation Voters, the Sierra Club, and the Environmental Defense Action Fund, kicked off a nearly $1 million campaign with a 30 second TV spot on June 23, 2014. The ad raises concern over Ernst’s promises ‘to shut down the Department of Education and abolish the EPA.’ It claims that these promises are ‘why extremist Sarah Palin and the billionaire Koch brother want Ernst in Washington.’ All in all, the ad concluded that Ernst is ‘Too extreme for Iowa.’ It’s not unusual for political ads to distort candidate’s positions. Does Ernst really call for the abolition of the U.S. Education Department and the Environmental Protection Agency? Our research showed that the ad was right on track. Ernst called for the closure of both agencies in April.” [Politifact, 6/27/14]
2013-2014 Award Year: 111,173 Students Received $358,721,783 In Pell Grants To Attend Iowa Schools. [Department of Education, 2013-2014 Award Year Grant Volume by School, 4/10/14]
2012-2013* School Year: Students Attending Iowa Schools Received 228,620 Federal Loans Worth $1,006,293,035. [Iowa College Student Aid Commission, Annual Financial Aid Survey, 2012-2013 School Year Survey]
- 2012-2013 School Year: Students Attending Iowa Schools Received 108,086 Federal Subsidized Loans Worth $368,920,755. [Iowa College Student Aid Commission, Annual Financial Aid Survey, 2012-2013 School Year Survey]
- 2012-2013 School Year: Students Attending Iowa Schools Received 120,534 Federal Unsubsidized Loans Worth $637,472,280. [Iowa College Student Aid Commission, Annual Financial Aid Survey, 2012-2013 School Year Survey]
Stafford Loan Rates “Are Cheaper Than Most Fixed-Rate Private Loans” At A Rate Of 4.66%. In August 2014, The Wall Street Journal reported, “Stafford loans—the most popular federal student loans—still are cheaper than most fixed-rate private loans, though their interest rates have increased to 4.66%, from 3.86%, for undergraduates in the 2014-15 academic year.” [Wall Street Journal, 8/7/14]
At One Private Lender, The “Most-Creditworthy” Students Receive Interest Rates A Full Percentage Point Higher Than Stafford Loans, At 5.75%. In August 2014, The Wall Street Journal reported, “The largest private student-loan lender in the U.S., Sallie Mae, SLM -1.51% formally known as SLM Corp., is charging its most-creditworthy applicants fixed interest rates of as low as 5.74%, while Citizens Financial Group charges as little as 5.75%. Both rates are unchanged from a year ago. Other lenders have lowered their rates. In June, Discover Financial Services reduced its lowest interest rate on its fixed-rate loans to 5.99% from 6.74%. That same month, SunTrust Banks dropped its lowest fixed interest rate to 4% from 4.75% for applications submitted through the end of August.” [Wall Street Journal, 8/7/14]
“Borrowers With Less Than Excellent Credit” Applying For Private Fixed-Rate Loans Received Interest Rates “Often Up To Around 12%.” In August 2014, The Wall Street Journal reported, “Borrowers with less than excellent credit who get approved for private fixed-rate loans are likely to receive rates that are higher than the Plus loan, often up to around 12%.” [Wall Street Journal, 8/7/14] *Most recent data available.