The Private Student Loan Market
Private student loans continue to carve out a significant piece of the $200+ billion higher education funding market. Private student loans are used to cover qualified education costs including tuition, room and board,books and other school related expenses.
Over the past ten years, millions of American students and families are increasingly turning to private loans as the cost of higher education continues to outpace increases in federal student loan program limits. Private student loans offer students and families a resource to help bridge the growing funding gap that exists between the actual cost of higher education and federal aid, grants and scholarships available [Fig. 1].
Escalating tuition costs and nominal increases in federal student loan limits have helped the private student loan market grow by more than 500% over the past 10 years – from $3 billion in 1997-1998 to over $19 billion in 2007
[Fig. 2].
Given the wide range of economic pressures facing many American families and students, the private student loan market shows no signs of slowing.
While demand for private student loans continues to grow commensurate with increased costs, the availability of private student loans has dramatically decreased due to recent upheaval in the credit markets. Many traditional providers of private student loans have exited the market or curtailed originations. Huge opportunities exist for credit unions to fill the void.
