Private student loans are not just an asterisk in the loan data anymore. And they’re not just for law and med students, either. According to our Project on Student Debt, the numbers in 2003-4 stood at:
–5% of students in public four-year colleges took out private loans (compared to 43% federal);
–11% of students in private four-year colleges (compared to 54% federal); and,
–15% of students at for-profit colleges had private loans (compared to 80% federal).
Are those numbers going to continue to rise? At an industry conference a few days ago, more than one expert predicted that private student loans could overtake federally-backed loans in six or seven years’ time.
Getting accurate, up-to-date data on private loans is tricky. Those 2003-4 figures are from a survey conducted by the National Center for Education Statistics — but the surveys are conducted only every few years. What has happened with private loans in 2005 and 2006? For 2005, the College Board estimated, based on a survey of loan companies, a one-year increase of 30 percent in private loans.
Colleges continue to report (and sometimes facilitate) the growth in private loans. According to a student task force report posted on Student Debt Alert, UMass Boston had a 56% increase in the number of private loans between 2003-4 and 2004-5 (from 368 to 576). At the lender conference I attended, the financial aid director from Michigan State University reported an increase in private loans from $12.7 million in 2004, to $20.6 million in 2006, a 63% increase.
Schools do not necessarily know whether their students have taken out alternative student loans. Some loans are made through the financial aid office. But a number of lenders are direct-to-consumer (“DTC” in the lender world). They require some proof of enrollment, but in some cases that can be a copy of paid tuition bill, or just an electronic data match with the National Student Clearinghouse. In those cases, the loans won’t show up in schools’ tallies of loans to their students.