Over the last 12 months, the federal government has raked in a staggering $41.3 billion in profits off of federal student loans. USA Today reported that the profits are enough money to provide the maximum pell grant of $5,645 to over seven million students.
The only two entities to bring in more money than the federal government in the world are Apple and Exxon Mobil.
Currently, the collective amount of student loan debt in the country is about $1.2 trillion.
Recently, Education Secretary Arne Duncan spoke to the issue of government profits on federal student loans. Duncan said that “It’s actually neither accurate nor fair to characterize the student loan program as making a profit.” He says this despite the numerous reports indicating otherwise.
Sen. Elizabeth Warren (D-Mass.), who’s been the darling of fiscal progressives, has been railing against the staggeringly high profit margin the government enjoys on the backs of college students. “Instead of helping our students, the government is making a profit on student loans,” said Warren in July. “That is wrong. It is morally wrong. That is obscene.”
According to the nonpartisan Congressional Budget Office, the federal government is expected to accrue about $184 billion in profit “for new loans made this fiscal year through 2023.”
Students are increasingly accepting student loans as the years continue. In the last four years, student loan disbursements have gone up 35 percent, bringing the total number of students paying tuition with loans up to almost half.
After much skirmishing in Congress over how loan rates will be set, Congress decided to tie the interest rates to the market, basing them on 10-year U.S. Treasury bond rates.
“College graduates are getting squeezed from all sides,” Warren said. “And here’s the deal: All across America, everyone — parents, teachers, even the federal government — is telling young people to get a college education, telling them to take on the debt to do it, promising that it will pay off in the long run.”
Josh is a writer and researcher with Ring of Fire. Follow him on Twitter @dnJdeli.