The Government Backs up the Truck on Student Loans to the Tune of a 24.3% profit

Wow no wonder the government wanted to get in on the student loan business. They are making a killing on it.

To give you a better sense for how significant that disparity is and its implications for student borrowers, at the time of this writing, the difference between the 3-month and 10-year Treasuries was 2.44%, which increases to 4.49% for student loans after the 2.05% surcharge is added. The way the math works, that spread translates into a 24.3% present value profit — $24.30 for every $100 of undergraduate loans the government finances under this scenario if fully implemented today.

So for every $100 billion in student loans the government pockets a whopping $24.3 billion. That is strait up killing even mighty Apples 18% profit margin. In fact Google is barely beating that margin with 28% this past quarter. No wonder Obama is trying to get so many kids signed up for college. It is a huge money spinner for the government so keep that gravy train running. I mean there are $1 trillion in student loans outstanding so the money being raked in every year is astronomical.