Federal Government Turns Higher Profit Than Apple on Student Loans Alone
According to a new report, the federal government made $42.5 billion in profits from student loan debt in the 2013 fiscal year. That’s more than Apple’s $37 billion in worldwide profits – and that’s a down year consider the fed brought in nearly $48 billion in interest profits a year ago.
Where does the money go? Not into improving the education system. About 25 percent of that profit, close to $9 billion, is going to funding the Affordable Care Act. Even more, around $10 billion, is going toward “reducing the deficit.” It’s as if the government has given up on trying to do anything about tax revenues and has turned its thirst for budget funds to college students who are still years away from their first entry level job.
Education Secretary Arne Duncan would disagree with that assessment. Last year he said “It’s actually neither accurate nor fair to characterize the student loan program as making a profit.” But. They are. Tens of billions in profits.
Elizabeth Warren, speaking of the near $50 billion in profits collected by the government, said “That’s more than wrong. It’s obscene… Instead of helping our students, the government is making a profit on student loans. We can hear some booing at this point.”
Stephen Spector, another representative of the Education Department, told media that “The administration has taken steps to improve college affordability, and thanks to collective efforts, students and families are paying lower rates on their loans today than they would have otherwise. More must be done to bring down the cost of college, and we look forward to continuing to work with Congress, institutions, borrowers, and other stakeholders to make college more affordable.”
Last year, Congress actually approved a plan to increase student loan interest rates, some by as much as 10 percent. The current amount of outstanding student debt in the United States is $1.1 trillion, more than credit card and auto debt combined.