Who's Profiting From $1.2 Trillion of Federal Student Loans?

[marmar]

(Bloomberg) Jody Sofia borrowed $92,500 to get a degree from Florida Coastal School of Law. Now she’s in default, her outstanding balance having ballooned to almost $144,000, and she spends her days fielding calls from government-contracted debt collectors.

The companies making those calls are just one part of an ecosystem feeding on federal student loans. There are also debt servicers, refinance lenders, firms that help former students stay out of default and for-profit schools that make money as borrowers try to repay more than $1.2 trillion in government-backed education debt.

Sofia is one of 7 million former students in default on a record $115 billion of federal loans, an amount that has grown almost 25 percent in two years, according to U.S. government data. The mountain of debt, for which taxpayers are on the hook, has provided a stream of revenue to companies at every stage of the process.

“This is not some small cottage industry,” said Rohit Chopra, the former student-loan ombudsman for the U.S. Consumer Financial Protection Bureau, which oversees loan servicers, debt collectors and private student lenders. “There is a large student-loan industrial complex. Rising costs of college and flat family incomes have created enormous business opportunity for every step of the loan process.” .....................(more)

http://www.bloomberg.com/news/articles/2015-12-11/a-144-000-student-default-shows-who-profits-at-taxpayer-expense

[Warren Stupidity]

1. The kleptocracy and its minions.

[mnhtnbb]

2. The Rovian/Bush bot Margaret Spellings who was recently hired by the Republican dominated

Board of Governors to be President of the UNC system has served on the Board of one
of these low life student loan collecting outfits, as well as on the parent company board--Apollo Education Group--
for the University of Phoenix.

I'm sure she and her Pope/Koch buddies who hired her can't wait to get their hands on
privatizing everything they can think of in the what used to be prestigious UNC system.
Money is what corrupted the athletic experience at UNC (football troubles with NCAA)
and while they would be happy to dumb down the education experience they'll be
salivating at the thought of how to make a buck for their buddies off the system.

[eppur_se_muova]

3. Thou shalt not permit banks to lose money on bad loans.

The student loan program may have begun from good intentions, but banking lobbyists made sure it morphed into a guaranteed-income, zero-risk prospect for lenders. I took out several private loans to get into grad school. Guess who they got sold to ? The US Dept of Education! So now the original lender has gotten its money back, plus all those interest and penalty charges, and if I should never be able to pay back my loans (which seems increasing likely) who loses ? Jane & Joe taxpayer! Should I actually manage to find a good enough job to pay back those loans, I, as a taxpayer would be paying for someone else's bad loans! It's strictly win-win for lenders, lose-lose for taxpayers and borrowers.