U.S. Senator Kirsten Gillibrand (D-NY) released the following statement today after a new GAO report shows the federal government received $66 billion in profits on student loans between 2007-2012, a 14 percent profit margin. With student loan debt at approximately $1.2 trillion, surpassing auto loan and credit card debt, and New Yorkers facing sky-high student debt at an average of more than $27,000 per graduate, Senator Gillibrand has repeatedly called for allowing millions of graduates and borrowers currently repaying their federal student loans the ability to refinance at a lower interest rate.
"More graduates and middle class families are burdened by student loans than ever before and are struggling to repay a higher amount of debt than ever before.
"What today's report clearly shows is that while these graduates struggle to get their heads above water, the federal government is putting a priority on $66 billion in profits over their futures, which is just wrong. Our role in government should be helping future generations enter the middle class and thrive through a quality education, not sustaining a huge profit center on their backs.
"It is time for graduates to have the same option to refinance their debt as homeowners, banks and even the government. It is the right thing to do for middle class families and the economy."
Graduates are facing a tougher time repaying their college loans as student debt nearly tripled since 2004, with New York graduates facing an average debt of $27,310 in 2012, according to the Federal Reserve Bank of NY. Over the past several years, more young borrowers have fallen further behind on their student loan payments.
Nationwide, almost 12 percent of all student debt was delinquent by the end of last year, up from 7.5 percent in 2007, according to the Federal Reserve Bank of New York. Statewide, nearly 11 percent of New York graduates, or 24,800 borrowers, defaulted on their student loans between 2009 and 2012, or were more than nine months behind on their payments, per the Department of Education.
In New York City, an average of 15.5 percent of graduates, or approximately 141,000 borrowers, were more than three months behind in paying their student loans at the end of 2012, up from 13.1 percent the previous year. Senator Gillibrand is pushing for legislation that will help provide relief to graduates currently in repayment.