By Jennifer Wang
This past February, the Congressional Budget Office (CBO) projected that the federal government would make roughly $36 billion off of student loans in 2013. When they pulled back out their calculators, they found that they were off by a few billion. If rates stay the same, they found that the government would make $51 billion off of student loans.
Let’s put this $51 billion dollar figure in perspective. For instance, Exxon Mobil is the most profitable corporation in the United States. Last year, Exxon Mobil made roughly $45 billion. In other words, the federal government’s student loan program is more profitable than many of our richest corporations. The interest alone that students pay on their loans to the federal government equals the combined net income of the four largest U.S. Banks: JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. And over the last five years, the federal government has made roughly $120 billion in profit off of student loan borrowers. Why? A combination of low interest rates in the market, high interest rates for student borrowers, and aggressive practices when struggling borrowers default or simply cannot pay (think wage garnishment).
To make matters worse, student debtors are drowning deeper in debt. Student debt in this country just surpassed the $1 trillion mark. That means that there’s more student debt in this country than any other type of household debt, and mortgage debt is the only debt that beats out student loan debt in the U.S.
Students are struggling with the high cost of a college education. Tuition is skyrocketing, and interest rates could also skyrocket in the next few years if lawmakers refuse to come together to keep costs low.
We can’t let that happen. If you’re in DC, join us on Capitol Hill for Student Debt Day on June 5th from 8am to noon. You can register here – hope to see you there!