Student Debt Research

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Student Debt Research[edit]

Outstanding Questions[edit]

  1. What is the gap between a late payment as DOE considers it for the debtor/student themselves vs. their scorekeeping for a servicer?
  2. A journalist said that if we timed late payments just right, we could have zero risk for the student/debtor but the servicer would be forced to list a large number of late payments under it’s perveiw. Never been able to find the exact language in the servicer contract that spells this out, however.
  3. Are there any signs that the DOE plans to securitize Direct loans? (Is there a mechanism for them to do this this?)
  4. What would be the effect of ending the federal guarantee of student loans? For instance, if the government stopped guaranteeing such loans, would wall street stop buying bonds from UC?
  5. What are all the ways that bond markets have negative effects on education? (The need to promise to repay bonds makes schools raise tuition; makes state schools bring in more out of state and foreign students to jack up prices; makes colleges hire adjuncts instead of full-time faculty to save money. What are some other ways we can politicize the bond market in education?

Department of Education Budget[edit]

2017 Budget[edit]

  • "Overall, the 2017 Budget for postsecondary student aid includes both discretionary and mandatory funding that would make available $139.7 billion in new grants, loans, and work-study assistance-an increase of $42.0 billion, or 43 percent, over the amount available in 2008-to help an estimated 12.1million students and their families pay for college." [1]
  • The federal government allocated approximately $154 billion on education in fiscal year 2015
  • "measuring spending on the federal student loan program is not straightforward, and the government provides significant subsidies for higher education in the form of tax benefits."
  • The federal government spent a total of $3.7 trillion in fiscal year 2015. That means the approximate $154 billion in education spending accounts for approximately 4.2 percent of the entire federal budget.

DoE Appropriations 67.1 billion

  • Student Loan Subsidies (newly distributed loans) $8 billion
  • student loans, are funded on an ongoing basis through mandatory spending (unlike most federal education programs which are funded through the annual appropriations process) [2]

Ed Profits:[edit]

Fiscal year 2013 - $42.5 billion in profit

  • "Had Congress and President Barack Obama not agreed over the summer to temporarily lower student loan interest rates, the Education Department's 2013 profits would have been about $8 billion higher, according to the Congressional Budget Office, and they would have set a new record."
  • 7-17-2013 "The federal government is due to book $51 billion in profit this year off new and existing federal student loans, according to estimates by the nonpartisan Congressional Budget Office. The record amount brings the government's profit haul to nearly $120 billion over the past five years, according to CBO forecasts and Department of Education budget documents. The CBO estimates that the government will generate $184 billion in profit for new loans made this fiscal year through 2023." [3]

2011: 47.9 billion in profit