Feds Student Loan Program: $51 Billion Profit This Year!

According to an article written by Shahien Nasiripour for the Huffington Post the CBO indicated that "The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers" by the end of this year. The article goes on to point out that this is more then Exxon Mobile or the nation's four largest backs combined will make in net profit!


Pardon me but I never thought the United States student loan program was suppose to become a huge for-profit banking enterprise for the U.S. government. Either government should rebate these students the entire amount, since they apparently overcharged them. Or take that $51 billion and distribute it to the local school districts that they've previously cut funding for OR some combination of both.

Is it any wonder why today's graduates can't look forward to owning a home anytime soon?

Chart Courtesy "National Multi Housing Council"

Ever wonder Why aren’t younger Americans driving anymore?

Kelly McParland wrote for the "National Post"..."Student debt now exceeds aggregate auto loan, credit card, and home-equity debt balances—making student loans the second largest debt of U.S. households, following mortgages... the average student loan balance among those twenty-five-year-olds with student debt grew by 91 percent over the last 10 years from $10,649 in 2003 to $20,326 in 2012.

Bernice Napach at the 'Daily Ticker' wrote, "College costs have been rising nearly 5% a year for the past 10 years—more than double the rate of inflation.... Still, that doesn’t seem to have hurt the paychecks of the presidents of public universities. Their median pay packages jumped 5% to $441,392 for the 2011-2012 fiscal year, and a growing number of those presidents took in more than $1 million.

Over at MSN's Money Watch Donna Freedman wrote "Half of college grads aren't earning enough to make loan payments." She goes on to warn graduates if they "Stop making loan payments and your credit score could dive as much as 100 points which in turn results in "Higher rates for auto loans or mortgages mean reduced buying power.

It's bad enough colleges have become cash cows, does the U.S. government need to get in on the act by gouging today's youth as well!

All of this is like a ticking time bomb for the nation's economy in a number of ways. The first impact is on the recent graduates who are 10,000's of dollars in debt and who's unemployment rate is about 8.8% which is 1.2% above the national average. The secondary impact will come in the form of higher costs to consumers by professionals such as doctors and others who need to pay back their student loans. Even more of concern is if this federal student loan program implodes. Taxpayers will be forced to cover debt forgiveness.

This morning Reuters reported Deficit To Shrink Rapidly Through 2015 Due To Rising Revenues: The CBO said the deficit will fall to $378 billion by 2015 with no congressional action. That's great news for the U.S. treasury, but apparently billions upon billions of that comes on the backs of our young before they even have a chance at their first job.

I'm all for deficit reduction but I'm against a sneaky backdoor scheme. One that over burdens our young while at the same time shortchanges our local school districts by ever reduced funding. Funding which local communities are struggling with all kinds of ways to come up with revenue. This is a perfect example of the government putting money in our top pocket while their hand reaches into our back pocket to take two more.

Yes I understand we need to reduce our deficit. There are two ways to go about that. One method comes through further government budget cuts and raising revenues. The other through increasing the economy (GDP) which results in more tax revenue via trade agreements that encourage more American business to expand here. Allowing young workers to have $51 billion more in their pockets to spend. Encouraging trade schools which can decrease a student's education debt by two years. Restore funding to local schools which results in having more money to spend by real estate owners (both landlords and residents). I could probably name a dozen more, but you get the idea.

Let me pout this in a nutshell. I see no good coming out of this from having a kid lose 4 years of earnings while they go to college only to end up $10,000's in debt before they even get out of the gate, even if everyone of them could find a job right away. If college is a requirement to find a job these days and we don't want to offer to pay it for them... at least don't screw them for 51 billion dollar$!!!