Is it true the government makes a profit on student loans? (click here)
The Congressional Budget Office regularly releases projections on the costs of various loan programs. The latest calculations show that in fiscal year 2013, for every $1 lent to new borrowers, Direct Subsidized Loans are expected to bring in $1.14 in revenue, and Direct Unsubsidized Loans will bring in $1.40 in revenue. Of course, these are just estimates. For example, if borrowers have access to attractive refinance options to take advantage of historically low interest rates, these revenues would go down.
It’s worth noting that the Congressional Budget Office calculates these estimates in a way that may not include all of the operating costs of administering the loan program, so it can’t be exactly compared to the way a bank might account for its profits and losses.
The reason there is more lending for students is because of income inequality. More students come from lower incomes than before in modern history.
U.S. Sen. Kirsten Gillibrand (click here) on Sunday is renewing a call for legislation that would allow student borrowers to refinance their federal student loans at lower interest rates, urging President Barack Obama to push the effort in his State of the Union speech Tuesday.
The New York Democrat said there’s currently about $1.2 trillion in student loan debt nationwide — and the average New York graduate owes more than $27,000.
“We must strengthen our middle class families instead of forcing New Yorkers deeper into debt,” she said in a statement. “Keeping a high-quality education in New York affordable is the right thing to do.”
Last May, Gillibrand introduced the Federal Student Loan Refinancing Act, legislation she said could affect nearly nine in 10 federal student loans by allowing borrowers who have a higher interest rate to refinance at a fixed rate of 4 percent. Most rates for federal student debt are higher than 6 percent, she said....
The Congressional Budget Office regularly releases projections on the costs of various loan programs. The latest calculations show that in fiscal year 2013, for every $1 lent to new borrowers, Direct Subsidized Loans are expected to bring in $1.14 in revenue, and Direct Unsubsidized Loans will bring in $1.40 in revenue. Of course, these are just estimates. For example, if borrowers have access to attractive refinance options to take advantage of historically low interest rates, these revenues would go down.
It’s worth noting that the Congressional Budget Office calculates these estimates in a way that may not include all of the operating costs of administering the loan program, so it can’t be exactly compared to the way a bank might account for its profits and losses.
The reason there is more lending for students is because of income inequality. More students come from lower incomes than before in modern history.
U.S. Sen. Kirsten Gillibrand (click here) on Sunday is renewing a call for legislation that would allow student borrowers to refinance their federal student loans at lower interest rates, urging President Barack Obama to push the effort in his State of the Union speech Tuesday.
The New York Democrat said there’s currently about $1.2 trillion in student loan debt nationwide — and the average New York graduate owes more than $27,000.
“We must strengthen our middle class families instead of forcing New Yorkers deeper into debt,” she said in a statement. “Keeping a high-quality education in New York affordable is the right thing to do.”
Last May, Gillibrand introduced the Federal Student Loan Refinancing Act, legislation she said could affect nearly nine in 10 federal student loans by allowing borrowers who have a higher interest rate to refinance at a fixed rate of 4 percent. Most rates for federal student debt are higher than 6 percent, she said....
