Students Help Washington Get Wealthy

Congressional Democrats have pounced on a nonpartisan government report showing the Department of Education this year is forecast to earn a record $51 billion profit off student borrowers, denouncing the Obama administration and urging for structural reforms.

Members of the House of Representatives including George Miller (D-Calif.), John Tierney (D-Mass.) and John Yarmuth (D-Ky.) cited news reports in The Huffington Post that highlighted the Tuesday 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 by assets combined.

"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," Tierney said.

Miller criticized a policy that is leading to "immense profit being extracted from students and families that are struggling."

The critical comments have alarmed policymakers in the Obama administration, who along with lawmakers are racing to avert a scheduled doubling of interest rates on some new federal student loans that is set to occur on July 1.

The House Education Committee on Thursday approved Republican-led legislation that would tie student loan interest rates to the U.S. government’s borrowing costs. Two Democrats voted for the bill. The full House is expected to vote on the measure soon, as rates on subsidized Stafford loans for future borrowers are scheduled to double to 6.8 percent.

Typical College Student...

“While we welcome action by the House on student loans, we have concerns," the White House said in a statement.

Some Republican senators have introduced similar legislation, as has the White House. President Barack Obama’s plan, however, 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.  Read more: