Who profits from financial aid?

The Department of Education receives billions in profit from federal loans each year.

Middle- and lower-class families are often able to afford a college education by taking advantage of federal student loans and Pell Grants. These federal aid programs are managed by the U.S. Department of Education, which gives out billions in subsidies each year.

However, it’s likely once a borrower graduates from college, they’ll not only be paying back federal loans but also subsiding the education department itself.

According to a Nov. 18 Huffington Post article, the Department of Education took in more than $42.5 billion in profits from federal student loans during the most recent fiscal year, which ended Sept. 30. This total is one-third higher than the amount it received in 2012.

Profits from student loans prove not only to be helpful to the education department but to be a necessary part of its budget — nearly half, according to the Huffington Post.

In fact, the U.S. student loan program’s profits averaged through 2023 could potentially place it among the 20 most profitable public companies in the world, according to a July Huffington Post article.

These statistics should be particularly infuriating to college students, considering how talks of deficit reduction held up negotiations over interest rates on federal loans this summer.

Secretary of Education Arne Duncan, who has evaded questions about student loan profits in the past, must provide straightforward answers. While the Obama administration has provided leadership in the effort to reduce tuition costs, it should not allow college graduates, burdened with excessive amounts of student debt, to keep the education department well-funded.

The administration should work to make federal loans more affordable and reduce the profit it takes in from them each year.