Feds Profit Mightily from Student Loans

The Left once railed against "big banks" for the profits they made on student loans. Now look who's raking in all those profits. Reports education reporter David Jess of the Detroit Free Press:

The federal government made enough money on student loans over the last year that, if it wanted, it could provide maximum-level Pell Grants of $5,645 to 7.3 million college students.

The $41.3-billion profit for the 2013 fiscal year is down $3.6 billion from the previous year but still enough to pay for one year of tuition at the University of Michigan for 2,955,426 Michigan residents.

It’s a higher profit level than all but two companies in the world: Exxon Mobil cleared $44.9 billion in 2012, and Apple cleared $41.7 billion.

It's an even rosier picture for the greedy federal government over the next decade:

This summer, Congress passed a law tying interest rates on loans to the market. The law set rates for all the loans at different levels, but based them all on the 10-year U.S. Treasury rate and allowed rates to change each year.

For Stafford loans, both the subsidized and unsubsidized, the interest rate is the Treasury rate plus 2.05%, with a cap of 8.25%. Graduate student loan rates are the Treasury rate plus 3.6%, with a cap of 9.5%, and the parent loans are the Treasury rate, plus 4.6%, with a cap of 10.5%.

While offering immediate relief to students, those rates are expected to rise in coming years and give the federal government $175 billion in profits from student loans over the next decade.

That’s got students who are paying steamed.

“Instead of making a profit on student loans, why doesn't the government try to help out the millions of students who are struggling financially and at the very least, lower the interest rates?” Wilk said “I don’t understand how the government expects this generation to support themselves after graduation, starting out with a mound of debt and in a lot of areas, no job.”