Federal Student Loan Program to Yield a $51 Billion Profit for the U.S. Department of Education!

Dear Commons Community,

The U.S Department of Education through its policies has managed to turn the student financial loan program into a magnificent profit center for the federal government, more lucrative than the most successful American businesses.  As reported in the Huffington Post:

“The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers, a sum greater than the earnings of the nation’s most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.

Figures made public Tuesday by the Congressional Budget Office show that the nonpartisan agency increased its 2013 fiscal year profit forecast for the Department of Education by 43 percent to $50.6 billion from its February estimate of $35.5 billion.

Exxon Mobil Corp., the nation’s most profitable company, reported $44.9 billion in net income last year. Apple Inc. recorded a $41.7 billion profit in its 2012 fiscal year, which ended in September, while Chevron Corp. reported $26.2 billion in earnings last year. JPMorgan Chase, Bank of America, Citigroup and Wells Fargo reported a combined $51.9 billion in profit last year.

The estimated increase in the Education Department’s earnings from student borrowers and their families may cause a political firestorm in Washington, where members of Congress and Obama administration officials thus far have appeared content to allow students to line government coffers.

The Education Department has generated nearly $120 billion in profit off student borrowers over the last five fiscal years, budget documents show, thanks to record relative interest rates on loans as well as the agency’s aggressive efforts to collect defaulted debt.”

This is an incredible turn of events for an administration that has supposedly sought to help students go to college and to ease their financial burdens.  There is a contradiction here if not hypocrisy.

Tony

 

Bill Thompson on the New York City Public Schools: “Parents feel shut out, teachers feel demonized,” and, “too many classrooms have been turned into test-prep centers”!

Dear Commons Community,

Bill Thompson, Democratic mayoral candidate, in a talk last night at NYU, came out swinging against the current state of public education in New York City.   While giving Mayor Michael Bloomberg credited for some accomplishments such as the development and expansion of 21st century vocational high schools, he characterized the state of public education under Mayor Bloomberg as a system where:  “Parents feel shut out, teachers feel demonized,” and, “too many classrooms have been turned into test-prep centers”.

Much of what Thompson said is true and echo comments from other candidates.  In the coming weeks and months as the mayoral nomination season moves into high gear and the candidates become more adamant about closing any gap in their polls, Mayor Bloomberg’s policies and especially education will come under severe scrutiny and attack.  This will especially be the case until the United Federation of Teachers endorses one of the candidates.   As reported in the New York Times:

Michael Mulgrew, the leader of the city’s teachers’ union, said Thompson’s speech was full of “very smart ideas” that he was sure would elicit a “positive reaction” from his members.

“He clearly has an understanding of the diversity of our city schools,” Mr. Mulgrew said.

However, Mr. Mulgrew declined to say if Mr. Thompson’s performance had succeeded in inching the candidate closer to the union’s coveted endorsement.

Tony