Since taking over the student loan business, those loans have swelled to become a large chunk of the U.S. government’s assets.
“Student loans now make up 37 percent of the total assets of the U.S. government,” Mike Flynn writes for Breitbart.
The data comes from the annual financial report of the United States government, supplied by the Treasury Department. The federal government holds about $3.2 trillion in assets, and net loans receivable comprise $1.2 trillion of those. The federal direct student loan program accounts for $880.6 billion, about 72 percent, of those net loans.
“Education’s direct student loan program receivables balances have more than doubled since FY 2011 largely due to increased direct loan disbursements,” the report says. Those disbursements increased because the Health Care and Education Reconciliation Act of 2010, signed into law a week after the Affordable Care Act, marked the effective takeover of the student loan industry by the federal government.
“This puts the federal government in an extraordinary position to work with higher education institutions to bring down the cost of college tuition. Through student loans, the federal government is by far the [single] largest ‘purchaser’ of college tuition,” Flynn writes.
Therein lies the trouble.
That federal largesse, which students have to repay, also drives college tuition hikes. With low-interest loans accessible to any student who applies, colleges can increase tuition without losing any students. Students demand certain amenities that colleges supply through new buildings, more administrators, and other perks, and the cost of college climbs higher.
Meanwhile, the federal government collects roughly $1 billion from loan repayments annually. The Department of Education contracts out to private companies to service those loans, harassing borrowers and threatening tax withholding for unpaid loans.
In an effort to make college affordable and accessible, the government has beckoned unintended consequences. Students and taxpayers demand solutions, but no matter how the government addresses the problem, vested interests will oppose the move. Students, taxpayers, or debt servicers will come up short.
