Imagine you need $100 to go to school and your only option (unless you’re a trust fund baby) is going to the government-owned Sallie Mae and asking for a loan. They will charge you ~6.5% interest, which has recently increased, but with Obamacare and guncontrol there’s obviously no room for this topic in DC… oh and let’s not forget that tuitions are at an all time high. Anyway, that’s not the worst part..
Back to basic economics, in order to lend to others, banks need money. As most know, the 2008 financial crisis was greatly influenced by the faux rise in the real estate market. As a result, many people defaulted on their mortgages and homes across the nation were left unoccupied. Not to worry though, these properties were bought out by the government at a ridiculously low price. Eventually, our friends at Sallie Mae used these properties as leverage to borrow money from
the government the taxpayers at “.23%-0.34%” interest.
So let’s break down the math:
Lender borrows $100 from the taxpayers at .3% -> they have to payback $100.30
Students borrow $100 from Sallie Mae at 6.5% -> they have to payback $106.50
= meaning our government-owned Sallie Mae is making $6.2
(REMEMBER: profits mean the amount left over after they have paid off the staff and operations costs.)
The only problem is that no student is borrowing $100, but upwards of $100,000. Sallie Mae reported $85 billion in profits for 2013.
So what? A majority of people cannot afford to pay these ridiculous interest rates, thus cannot attend the schools of their choice or any at all. If you ask me, its rather unpatriotic of the government to make profits off those trying to better themselves.