Does the government make money from student loans?

We hear all the time that student loan debt is on the rise, and isn't likely to slow down anytime soon. For all those federal loans, though, does the government really make any money?

A recent report out on student loans says that we owe more money than ever before. Five years ago, 47 percent of students received federal financial aid -- now that number is up to 57 percent. If you include private loans and grants, that number jumps to 71 percent.

We owe Uncle Sam $1.2 trillion right now. But $214 billion of that is in deferment or forbearance and $89 billion is in full-on default, which means that about one-third of loans out there right now are not being paid.

Will all that cash involved, many might think that the feds are earning money. That's hard to figure out. In 2013, the U.S. government is probably spending about $7 billion more on student loans than it is taking in.

But since the loans can sometimes take 30 years to pay off, it isn't that helpful to just look at one year when trying to determine how much money the government actually makes. Another issue with figuring out the exact figure? People estimate revenue in different ways. Read more here.

 

About the author

Sabri Ben-Achour is a reporter for Marketplace, based in the New York City bureau. He covers Wall Street, finance, and anything New York and money related.

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