Feds Earn Exxon-Like Profit from Student Loan Interest Rates

Feds Earn Exxon-Like Profit from Student Loan Interest RatesIt’s not exactly news that the government, the Department of Education to be exact, is raking in lofty profits from student loan interest rates and making good on collecting from those who default on federal loans.
But new data puts that number even higher than initially projected.
In figures released Tuesday by the Congressional Budget Office, the government’s profit from student loans is projected at $51 billion, an amount that surpasses the earnings of the biggest U.S. companies, as the Huffington Post points out.
Exxon Mobile reported $44.9 billion in net income for 2012; Apple made $41.7 billion.
The CBO’s profit forecast this year for the Department of Education surged 43 percent to $50.6 billion, compared to its February estimate of $35.5 billion.
Meanwhile, both Democratic and Republican lawmakers are scurrying about to head off a doubling of the Stafford federally-subsidized loans on July 1 — from a 3.4 percent annual interest rate to 6.8 percent.
Republicans on a key House panel are scheduled Thursday to consider amendments for their proposed legislation that would peg student loan interest rates to the 10-year Treasury Note, similar to a proposal mentioned by President Obama in his fiscal year 2014 budget plan.
Rep. John Kline, R-Minnesota, chairman of the House Committee on Education and the Workforce, and  Rep. Virginia Foxx, R-North Carolina, chairwoman of the panel’s subcommittee, introduced the bill that would move rates to a market-based solution before the Stafford rate doubles.
“As I’ve said time and again, we’ve got to stop kicking the can down the road with short-term fixes to this interest rate problem,” Kline said. “The Smarter Solutions for Students Act is a lasting solution that will serve the best interests of students and taxpayers.
Senate Democratic leaders are pushing their own legislation, the “Student Loan Affordability Act” —  proposed by Senate Majority Leader Harry Reid, D-Nevada; Sen. Patty Murray, D-Washington; Sen. Jack Reed, D-Rhode Island; and Sen. Tom Harkin, D-Iowa —  which would extend the current low rate for federally subsidized loans for two additional years.
The Senate bill would keep interest rates for these loans at 3.4 percent.
“Today’s figures from the CBO underscore the urgent need for Congress to prevent the July 1 interest rate hike and address the crushing debt placed on students,” Tiffany Edwards, spokeswoman for Democrats on the House Education and Workforce Committee, told the Huffington Post.

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