The Government Doesn't Know How Much Its Student Loans Cost

[Riddick]

Depending on whom you ask, the government either makes tens of billions of dollars on the backs of student borrowers, or more or less breaks even. The debate, which boils down to the arcana of accounting techniques, was hotly contested last year, with Democrats such as Massachusetts Senator Elizabeth Warren decrying how the government “profits” off student loans.

The controversy caused Congress to ask the Government Accountability Office to weigh in, which led to a report released today. The GAO came back with a non-answer, finding that there’s no good way to know how much the government spends or makes on funding student loans.The GAO said it could take as long as 40 years to figure the true costs of the program because there are so many variables, from the overall interest rate environment to the number of students who take advantage of different repayment options.

In the meantime, the government is stuck using estimates that can vary greatly based on several factors, most important the amount students pay in interest and what it costs the government itself to borrow. The government readjusts its models each year based on more recent data, which can lead to highly volatile results. One year the budget assumed loans taken out in 2008 made the government $9.09 per hundred dollars borrowed. The next year it estimated the very same loans cost the government 24¢ per hundred dollars.

One figure is pretty clear: how much the Department of Education spends administering the loans. That’s jumped from $314 million in 2007 to $864 million in 2012, reflecting changes in the federal program that removed banks as intermediaries and caused the number of loans directly issued by the government to increase threefold. Overall, the administration costs per borrower has stayed the same or even fallen slightly.

The overall difficulty in nailing down these estimates is an increasingly relevant problem as student debt tops $1 trillion—most of it financed by the government.

http://www.businessweek.com/articles/20 ... loans-cost

[Doka]

This debate "cracks me up"!

Massachusetts Senator Elizabeth Warren decrying how the government “profits” off student loans.

What she "stirred" up is wonderful, almost redeemed her in my eyes for all the other "wacky" stuff.

When I hear the Pres decry about the terrible cost of "Student Loans", I roll up in a "ball" and whimper. Who do people think sets the cost of the loans? The Pres and the Federal Government, thats who. People are under the impression that it is the Republicans or the "Tooth fairy". We are not experiencing the "Age of Reason" here.

[Cherry Kelly]

Colleges set tuition rates and some are stupendously higher than just 5 yrs ago. Why not - the banks and gov't give out loans left and right - even to students who are not educated enough to even attend college. Oh their HS grades are decent, problem is those grades are not honest education, but PC courses in place of actual courses in the subject field. Or students are given passes for just "trying" in some course - even when they are truly failing.

Now the gov't touts get a higher education (college) for good paying jobs. Remember all those student out of college demanding six figure incomes and sit ins (occupy) groups. Students with worthless degrees where there might have been four or five actual jobs in those degree areas. In the meantime the costs to attend college have been hiked beyond the ability to repay loans in an even number of years after college.

Totally crazy!

[fos]

I hate to admit that I'm into the government for one of my degrees. At least I can say I'm currently employed....

[Doka]

No shame in that Fos, as the government is the only on hiring at this time.

[Cherry Kelly]

The other thing besides just the classes - student has to live (on campus or housing close enough to get TO classes) then of course student needs food to eat; clothes - books or laptops, etc.

[voguy]

Best thing they can do is write off the loans, and take the loss from the salaries of Congress and Senate.

[Doka]

Best thing they can do is write off the loans, and take the loss from the salaries of Congress and Senate.

That would be great! I don't believe that you can kill "Student Loans" with even a bankruptcy. I am not sure about that, maybe someone knows for sure.

[voguy]

That would be great! I don't believe that you can kill "Student Loans" with even a bankruptcy. I am not sure about that, maybe someone knows for sure.

True. As long as they can keep the leash on students, they have them indebted to them.

[Doka]

We just voted in money for 3 new schools. It is obscene, for a town of 17,000. I am supposing that only teachers voted? Now they are bragging about they have so much money they don't know what to do with it all. Any time you say, "But it's for the children" the guilt just sticks like glue. We have stores here that are closing, beginning to look like a "ghost town", but it is for the children.

[Cherry Kelly]

Doka - just about every bill or new tax someone wants to raise - its always labeled "for the children" -- but whether its city, county or state -- all that happens is $$ raised goes into general coffers and things for children?? not really. Seems for every couple of teachers they hire -- they hire 4-5 administrators. OVERSEERS -- and kids are so far behind in basic education its ludicrous.

THEY cry and yell - ok what can we do to improve learning. No matter how many times they are told - get rid of PC and return to basics. PLUS add more recess and PE to every day - especially in grade school ages. THEY don't listen. Even when new studies have come out from places that HAVE returned to more basics and returned to more PE and recess - the kids are improved scholastically... they still don't listen.