PROVIDENCE, R.I. (AP) - U.S. Sen. Jack Reed on Saturday called on Congress to do a better job of making student loans affordable after a report showed the federal government earned an estimated $66 billion in profits from student loans originated between 2007 and 2012.
The Rhode Island Democrat was reacting to a Government Accountability Office report released Friday. A previous Congressional Budget Office report estimated that the government will pocket an additional $185 billion in profits on new student loans made over the next 10 years.
“The GAO report makes clear that Congress must do a better job of pricing student loans closer to the actual cost to the government,” Reed said in a statement. “Students and parents who borrowed at needlessly high rates should be given an opportunity to refinance at a lower rate.
“The bigger question that the report does not address is that the student loan programs were originally seen as an investment, not a profit center or even a cost-neutral proposition,” Reed said. “We invested in offering low-cost loans to create opportunity, spur innovation, and grow our economy.”
Reed and eight other U.S. senators committed to wring government profits out of student loans and address a $1.2 trillion in outstanding student loan debt they say is crushing families and putting a strain on the economy.
An estimated 7 million student loan borrowers are currently in default.
“Today, student loan debt is becoming a drag on economic opportunity and growth. We must turn the tide,” Reed said.
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