Is The Private Student Loan Market As Bad As It Seems?
Career College Central summary:
According to a new study from student loan analyst MeasureOne, the private student loan market may be doing better than previously reported. By analyzing data from seven of the largest private student lenders, the nonprofit data company found the outstanding balance of private loans has essentially leveled off since 2011, while that of federal loans has consistently increased since 2008. Outstanding balances from those seven lenders make up about 6 percent of all outstanding student loan debt. Overall, private student loans account for about $90 billion, or 8 percent of the $1.1 trillion in outstanding student debt.
Seven private lenders — Discover Bank, The First Marblehead Corporation, PNC Bank, RBS Citizens, Sallie Mae, SunTrust Banks, Inc., and Wells Fargo Bank — provided data to MeasureOne for the report.
The number of undergraduate students taking out private loans has decreased from its peak of 14 percent in the 2007-08 school year, to 6 percent in the 2011-12 school year, the report found. Meanwhile, the share of undergraduates taking out federal loans increased from 35 percent in 2007-08 to 40 percent in 2011-12.
The private student loan market, which boomed in the years leading up to the financial crisis, typically doesn't offer the same consumer protections as the federal student loan market, and has drawn harsh criticism from student advocacy groups and government agencies.
The Consumer Financial Protection Bureau has zeroed in on consumer complaints that detail borrowers' expressed inability to repay their private loans. Unlike federal loans, private loans typically don't have income-based repayment plans, and are more difficult, if not impossible to refinance.
Click through for full article content.
U.S. NEWS & WORLD REPORT