Charter Oak Partnering with Excelsior

[sanantone]

Unfortunately, this isn't true. How Much Money Does the Government Really Make From Student Loans? - Andrew P. Kelly - The Atlantic

The government makes money off of student's who default. Ergo, it is in the Fed's best interest for tuition prices to rise so more need to take loans (and to make the loans big enough that default is a likely option).

I finally got time to read the article you posted. According to that article, the government makes money off of student loans. However, they do not make money off of defaults.

But by the CBO's own admission, the FCRA procedures don't account for the cost of "market risk," or the potential for economic forces out of the government's control to affect the ability of borrowers to pay back their loans. When the economy goes south, for instance, borrowers are more likely to be delinquent or to default, leading to lower recovery rates and higher collection costs for the government.

Another article gives more statistics.

The Obama administration’s latest budget proposal shows the federal government only recovers 82 percent of a student loan after it enters default.

Though the feds can often recoup 96 percent of the lost loan’s value, it can take years for the feds to recover the full amount of the loan — and, as Delisle writes, “time is money”:

How Student Loan Defaults End Up Hurting Taxpayers | StateImpact Indiana

Time is money. If the interest rates aren't keeping up with inflation, then the money that the student pays back is worth less over time. Also, if the government is borrowing money to lend money (which it is), it is also paying interest until the student pays his or her loan back.

Other ways student loan defaults hurt the economy.
http://www.usatoday.com/story/money/busi...g/1969293/
http://www.cnn.com/2012/12/06/opinion/be...udent-debt