Uncle Sam's Growing Ownership of Student Loans - Economic ...

Donald Marron writes:

The federal government has been borrowing rapidly to finance recent budget deficits. But that?s not the only reason it?s gone deeper into debt. Uncle Sam also borrows to issue loans, build up cash, and make other financial investments.

Those financial activities have accounted for an important part of government borrowing in recent years. Since October 2007, the public debt has increased by $6.9 trillion. Most went to finance deficits, but about $650 billion went to expand the government?s investment portfolio, including a big jump in student loans. Before the financial crisis, Uncle Sam held less than $500 billion in cash, bonds, mortgages, and other financial instruments. Today, that portfolio has more than doubled, exceeding $1.1 trillion:

Note: Murray Rothbard would, correctly, object to this government spending as investment. My point in ?quoting Marron is simply to show how large a factor student loans ?have become, rather than to hail it as magical new investment. Indeed, given new evidence that a college education is becoming near useless, thanks to government's involvement in the sector, government "investment" in this sector is clearly money down the drain.?

Source: http://www.economicpolicyjournal.com/2013/06/uncle-sams-growing-ownership-of-student.html

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