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Student loans now generate massive profits which in turn place a lot of pressure on students and their families. This fact was pointed out by two members of the Senate banking committee recently. Their aim was to bring about reforms in the student lending programs by putting pressure on the Congress.

According to Sen. Sherrod Brown, D-Ohio, government now is reaping profits off student loans just like the student loan servicers and Wall Street. He pointed out that we indeed have a lot of problems on hand when everyone else is benefiting from our president’s policies except students.

Sen. Elizabeth Warren, D-Mass points out to the fact that a profit of at least $51 billion will be generated by the government from student loans this year. This is about five times what Google makes and much more than what any Fortune 500 Company makes every year. She says that it is positively wrong to make this kind of money from our students.

According to budget documents, at least $120 billion is earned by the Education Department over the last five years through from loans disbursed to student borrowers. Obviously Republican and Democratic policymakers are contented with the situation as is evident with the inaction in Washington.

Profit figures were denounced by Warren and Brown who also imposed upon policymakers urging them to do something about the federal student loan system. Senate banking committee’s leading candidate Brown said that saddling students with a lifetime of debt with high student loan interest rates is not right and it is time we gave them a much-deserved break.

Recently, Congress was asked by our President to link US government borrowing costs to the federal student loan interest rates. Legislation was proposed by leading Democratic senators to continue with the existing interest rates on the Stafford subsidized loans for at least another couple of years. Existing student debtors however will not be benefited by either of the proposals.

A proposal was put forth recently by the CFPB to students for refinancing their existing federal loans with higher interest rates to the private student loans that charged lower rates.  Stafford loan is the most common type of student loan and there is no respite for students who have taken this loan even though there is an overall reduction in the interest rates, says CFPB official Rohit Chopra.

Reaching out for a new loan at lower rate and refinancing their existing federal loans is possible for some borrowers who qualify based on excellent credit and repayment history. There is also great concern among policy makers including those from the Treasury Department and Federal Reserve that our overall economic growth could be severely hampered by the record relative interest rates and soaring student debt levels.

Spokesmen from the Education Department point out that the administration recognizes the alarming situation and the need to keep loans affordable for students which is why they have introduced convenient repayment options such as Income Based Repayment and Pay As You Earn. Without adding to the deficit, lowered interest rates will especially benefit students from the middle class.