- In 2005, Congress modified the bankruptcy code to make it as hard to get rid of private student loans as it is to eliminate federal loans. Private loans have been one of the fastest-growing ways for students and families to pay for college, rising to $17.1 billion in 2006-7 from $2 billion 10 years earlier, according to the nonprofit College Board. Students often use private loans to fill the gap between the cost of attendance and the funds available through federal loans and other aid.
- In our experiences representing borrowers in financial distress, lenders, including non-profit lenders, have not been willing to cancel loans or offer reasonable settlements…
A number of loans in our study stated explicitly that there will be no cancellation if the borrower of co-signer dies or becomes disabled. “Paying the Price: The High Cost of Private Student Loans and the Dangers for Student Borrowers” National Consumer Law Center, March 2008, p.4 . - To start, nearly $69 billion of the current $86 billion in student loans is backed by the U.S. Treasury, meaning that even if the loans go into default, the lenders are protected.
- Borrowers who do not complete their degrees are 10 times as likely to default on their loans and twice as likely to be unemployed as borrowers who complete their degrees. SOURCE – Borrowers Who Drop Out: A Neglected Aspect of the College Student Loan Trend, Lawrence Gladieux and Laura Perna, National Center for Public Policy and Higher Education, May 2005.
The Facts
- In the past five years, tuition and fees at public universities have risen by 57% (40% after adjusting for inflation). SOURCE – Trends in College Pricing, The College Board, 2005. (Compares average public tuition and fees for academic years 2000-2001 and 2006-2006.)
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Today, private loans comprise 20% of total education loan dollars, including undergraduate, graduate, and parent loans. Ten years ago, private loans comprised only 5% of total education loan dollars. SOURCE – Trends in Students Aid 2006, The College Board, 2006.
- Total student loans (2006) was $80 billion.
- By the time they graduate, nearly two-thirds of students at four-year colleges and universities have student loan debt (66.4% in 2004). In 1993, less than one-half of four-year graduates had student loans. SOURCE – Calculations by the Project on Student Debt from the National Center for Education Statistics (NCES), National Postsecondary Student Aid Study (NPSAS), 1993 and 2004 undergraduates, Data Analysis System (DAS)..
- In 2004, nearly two-thirds (62.4%) of graduates from public universities had student loans. SOURCE – Trends in Student Aid, The College Board, 2006.
- Over the past decade, debt levels for graduating seniors with student loans more than doubled from $9,250 to $19,200 – a 108% increase (58% after accounting for inflation). SOURCE – Calculations by the Project on Student Debt from the National Center for Education Statistics (NCES), National Postsecondary Student Aid Study (NPSAS), 1993 and 2004 undergraduates, Data Analysis System (DAS).
- At public universities, debt levels for graduating seniors with student loans more than doubled from $8,014 to $17,250 over the past decade – a 116% increase (65% after accounting for inflation). SOURCE – Calculations by the Project on Student Debt from the National Center for Education Statistics (NCES), National Postsecondary Student Aid Study (NPSAS), 1993 and 2004 undergraduates, Data Analysis System (DAS).
- At private universities, debt levels for graduating seniors with student loans nearly doubled from $11,356 to $22,125 over the past decade – a 95% increase (49% after accounting for inflation). SOURCE – Calculations by the Project on Student Debt from the National Center for Education Statistics (NCES), National Postsecondary Student Aid Study (NPSAS), 1993 and 2004 undergraduates, Data Analysis System (DAS).
- Last school year, nearly 40 percent of all undergraduates-about 6.8 million individuals-took out a total of $39 billion in federal loans. That’s an increase of more than 50 percent in loan volume and nearly 60 percent in number of borrowers over the last decade. SOURCE – (?)
- Since 1995 its [Sallie Mae’s] stock has returned over 1,900%, trouncing the S&P 500’s 228% gain. SOURCE – Bethany McLean, When Sallie Met Wall Street, December 26, 2005, Fortune Magazine http://robots.cnnfn.com/magazines/fortune/fortune_archive/2005/12/26/8364649/index.htm
- Under CEO Lord, Sallie’s growth was nothing short of phenomenal. Net income more than quadrupled between 2000 and 2004, from $465 million to 41.9 billion. SOURCE – Bethany McLean, When Sallie Met Wall Street, December 26, 2005, Fortune Magazine http://robots.cnnfn.com/magazines/fortune/fortune_archive/2005/12/26/8364649/index.htm
