February 19, 2014 by Latasha Myers
The U.S. Government Accountability Office (GAO) recently released a report revealing that the federal government stands to make $66 billion in profits from student loans that originated between 2007 and 2012.
Soon following, a group of nine Senators strongly responded to the report, advocating for policies that address student loan debt, loan refinancing, and lower interest rates. Sen. Elizabeth Warren (D-MA), states, "This is obscene. The government should not be making $66 billion in profits off the backs of our students. The report issued today reinforces what we already knew - instead of investing in our children and their futures, the government is squeezing profits out of our young people and adding to the mountain of debt they will spend their lives struggling to repay."
The GAO report notes that due to fluctuations in the actual and expected costs of the loans, Congress cannot realistically set interest rates that will only allow the federal government to cover the expenses of the loan program and break even.
According a Chronicle of Higher Education article, the report continues a two-year debate about how the federal government should set student loan interest rates; "Depending on how the numbers are crunched, the government either makes tens of billions of dollars through student-loan interest or breaks even.”
However you want to spin it, the federal government is not a bank, and it should not be making billions of dollars off of students who rely on student loans to pay for a college education. And anyone who has a student loan knows all too well that interest rates can add thousands of dollars on top of the actual amount borrowed.
But the other problem remains that state disinvestment in higher education has been the primary driver of rising tuition costs, and subsequently the reason why students have to pack on so much debt from the onset. Luckily, legislation has been popping up in a number of states, Wisconsin, Virginia, and Colorado among them, that are hopefully aimed at reversing this trend.
So let’s do something about state disinvestment. Sign the petitions below to support state-based initiatives to help lower the cost of college. Even if you do not live in these states, all initiatives that help students to better afford a college education should be supported.
Photo Credit: Profits. Used under Creative Commons Attribution license. Originally posted on Flickr by Simon Cunningham.