Federal Government Makes Money On Student Loans

Interesting - the federal government actually makes money on student loans.

No wonder those in power seem to want the interest rates to double:

The interest rate on many student loans is scheduled to double on July 1, to 6.8 percent from 3.4 percent — just as it was last year, when in the midst of an election campaign, Congress voted to extend the lower rate.

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On Tuesday, the day before the White House plans to send its budget to Congress, student advocacy groups are releasing an issue brief charging that the federal government should not be profiting from student loans, while more and more students bear a crushing debt burden. 

The brief, citing a February report from the Congressional Budget Office, said the federal government makes 36 cents in profit on every student-loan dollar it puts out, and estimates that over all, student loans will bring in $34 billion next year.

“Higher education loans are meant to subsidize the cost of higher education, not profit from them, especially at a time when students are facing record debt,” said Ethan Senack, the higher education advocate at the United States Public Interest Research Group, which is issuing the brief with the United States Student Association and Young Invincibles, an organization for people 18 to 34.

“The revenue from student loans should be used to keep education affordable, and should never be used to pay down the deficit or for other federal programs,” Mr. Senack said. 

While it has long been known that the government makes money on student loans, the numbers in the issue brief are surprising, said Terry Hartle, senior vice president of the American Council on Education. 

“If the numbers are accurate, the government will make more money on student loans than Ford makes on automobiles,” he said. “Using student loans to create a profit center is not what anybody intended.

Seems like everybody is making money off the college students.

There's the College Board and the SAT prep companies and the colleges themselves and the companies that hire these students or graduates as interns and pay them nothing and now we see that the government makes more money off loans than Ford makes off cars.

Generation Debt really is screwed.