An official of the Federal Deposit Insurance Corp. provided some testimony today before the Senate Committee on Banking, Housing, and Urban Affairs that detailed how, during the Obama years, the federal government has taken over the business of student loans. Federal student loan originations have grown to more than $100 billion a year in each of the past three years from about $70 billion in the 2006-2007 school year, while "in contrast," the private student loan market has shrunk considerably over the same time period, with originations peaking at about $23 billion in the 2007-2008 academic year before falling to about $8 billion per year in the past three academic years.
This issue crops up from time to time in the news when President Obama demands that Congress act now to prevent student loan interest rates from doubling. But it's not a small thing, the government taking on an additional $30 billion a year in student loans while private lenders, such as banks, cede $15 billion a year of the business, especially when one considers that the end beneficiaries of the loans are not only students but (largely left-leaning) college professors and administrators.
