Peter1469
05-18-2013, 09:22 AM
The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers, a sum greater than the earnings of the nation's most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.
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The new profit prediction comes as Washington policymakers increasingly focus on soaring student debt levels (http://www.huffingtonpost.com/2013/04/23/student-debt-risks_n_3140898.html) and the record relative interest rates that borrowers pay as a potential impediment to economic growth. Regulators and officials at agencies that include the Federal Reserve (http://www.huffingtonpost.com/2013/04/10/student-debt-federal-reserve_n_3053153.html), Treasury Department, Consumer Financial Protection Bureau and Federal Reserve Bank of New York (http://www.huffingtonpost.com/2013/04/17/student-debt_n_3100940.html) have all warned that student borrowing may dampen consumption, depress the economy, limit credit creation or pose a threat to financial stability.
http://www.huffingtonpost.com/2013/05/14/obama-student-loans-policy-profit_n_3276428.html
It is a vicious circle. The government takes over the student loan industry, any student can get easy money, colleges and universities jack up tuition and fees because of the easy money, then students leave school with high levels of debt at a higher interest rate than they could have gotten in the market and will be challenged to even find a job.
Policymakers also are worried about the effect that high interest rates on outstanding student debt may have on the broader economy. Congress sets interest rates on federal student loans, with rates fixed on the majority of loans (http://studentaid.ed.gov/types/loans/interest-rates) at 6.8 and 7.9 percent.
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Compared to a benchmark interest rate -- what the U.S. government pays to borrow for 10 years -- student borrowers have never paid more (http://www.huffingtonpost.com/2013/04/09/student-loan-rates-debt-economy_n_3048216.html), increasing the burden of their student debt as wage increases and yields on investments and bank accounts fail to keep up with the relative increase in student loan interest payments.
****
The new profit prediction comes as Washington policymakers increasingly focus on soaring student debt levels (http://www.huffingtonpost.com/2013/04/23/student-debt-risks_n_3140898.html) and the record relative interest rates that borrowers pay as a potential impediment to economic growth. Regulators and officials at agencies that include the Federal Reserve (http://www.huffingtonpost.com/2013/04/10/student-debt-federal-reserve_n_3053153.html), Treasury Department, Consumer Financial Protection Bureau and Federal Reserve Bank of New York (http://www.huffingtonpost.com/2013/04/17/student-debt_n_3100940.html) have all warned that student borrowing may dampen consumption, depress the economy, limit credit creation or pose a threat to financial stability.
http://www.huffingtonpost.com/2013/05/14/obama-student-loans-policy-profit_n_3276428.html
It is a vicious circle. The government takes over the student loan industry, any student can get easy money, colleges and universities jack up tuition and fees because of the easy money, then students leave school with high levels of debt at a higher interest rate than they could have gotten in the market and will be challenged to even find a job.
Policymakers also are worried about the effect that high interest rates on outstanding student debt may have on the broader economy. Congress sets interest rates on federal student loans, with rates fixed on the majority of loans (http://studentaid.ed.gov/types/loans/interest-rates) at 6.8 and 7.9 percent.
***
Compared to a benchmark interest rate -- what the U.S. government pays to borrow for 10 years -- student borrowers have never paid more (http://www.huffingtonpost.com/2013/04/09/student-loan-rates-debt-economy_n_3048216.html), increasing the burden of their student debt as wage increases and yields on investments and bank accounts fail to keep up with the relative increase in student loan interest payments.