A nonpartisan government report has shown that the Department of Education is forecasted to earn a record $51 billion profit off student borrowers this year. The Huffington Post highlighted the estimate by the Congressional Budget Office, which showed that the Education Department was forecast to report higher earnings this year than Exxon Mobil and nearly as high as those of the four biggest U.S. banks combined!
Congressional Democrats are scrutinizing President Obama’s latest student loan policy and urging for structural reforms. One member of the House of Representatives stated, “We don’t see students or their parents as profit centers, and we don’t think it’s an appropriate concept to be acting like a market-driven bank here.”
The increasing gap between what students and families pay to finance a college education and what the U.S. government pays to borrow has led to record profits for the Treasury. President Barack Obama’s plan, features lower rates than the House Republicans’ plan, though unlike the Republicans’ plan it does not cap interest rates in case the U.S. government’s borrowing costs rapidly increase. The president’s plan would expand a program signed into law by George W. Bush that would tie monthly repayments of federal student debt to borrowers’ income. However, that part of Obama’s proposal was not seriously pursued during the education committee meeting.
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