PROVIDENCE – The private market for student loans has “exploded” in recent years, as there is now about $102 million in private student loan debt nationwide to help pay for college, according to a new report.
With more than 100 banks and other private lenders now providing student loans, private student loans now compose about 7.5% of the nation’s outstanding student debt balance, according to the “State of Private Student Loans Report 2019,” from LendEdu, an online marketplace for student loans, personal loans, and credit cards.
The report, which analyzed data from nearly 200,000 private student loan applicants from 2016 to 2019, found that roughly 1.4 million students each year will use a private loan to help pay for college.
Federal student loans remain the main source for students financing their college education in addition to other sources, such as scholarships, grants and savings. Currently, there is $1.52 trillion in outstanding student loan debt in the United States, with borrowers from the Class of 2017 having an average of $27,975 in student loan debt, according to the report.
Some key findings:
- From 2016 to 2019, the approval rate for private student loans was 21%. For cosigner loans, the approval rate was 40.5%, while the rate for no-cosigner private student loans was 8.7%.
- During the same period, 62.5% of applicants for private student loans applied with a cosigner, while 37.5% did not.
- During that period, the average approved private student loan amount was $13,780.
There are “a few interesting narratives, [such as] the fact that variable interest rates have remained lower than fixed interest rates,” said LendEdu research analyst Mike Brown, who authored the report. “Also, the wide financial disparity between those who apply and those who get approved is eye-opening.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
