Government profits to soar more than $700 million with new student loan rates

Tim Goral's picture
Monday, August 26, 2013

A law touted by politicians as their way of keeping money in the pockets of the nation’s college students will instead funnel more than $700 million in additional profit into the federal government’s wallet over the next 10 years, a new analysis shows.

The law, regulating interest rates for federal student loans, was passed by Congress and signed by President Barack Obama this summer. It was hailed by politicians on both sides of the aisle as a win in the campaign to combat a rising tide of student loan indebtedness.

Though the law will accomplish that in the short term, it also guarantees profits for the government every year for the next decade and, starting in 2016, increases those already high profit levels, a mid-August report from the nonpartisan Congressional Budget Office shows.

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