Your student loan payments just made a record profit for the Department of Education
As Congress can’t agree on a solution to America’s student debt crisis, and nationwide student debt tops $1.1 trillion, the Department of Education is raking in the big bucks.
In 2013, the Department of Education made $41.3 billion from student loans. This made it the third most profitable “corporation” in America, right after Exxon Mobile Corp. and Apple Inc. $41.3 billion is also about as much as the four biggest American banks-JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo-made combined.
So how did a government agency that’s supposed to help students afford a higher education end up screwing everyone over? It’s because the interest rates on student loans are at record highs. Thanks to low interest rates (less than 2%) for the government and fixed interest rates for students (above 3%), the Department of Education has made $101.8 billion from student loans in the last five years, as students graduate from college with an average of $30,000 in debt which can take up to 15 years or more to pay off.
The astounding level of student debt is threatening economic recovery for everyone. Young people are waiting to buy homes, living at home with their parents longer, and waiting to make other major purchases longer than any previous generation.