Private Student Loan Facts

Brought to you by the Consumer Bankers Association

Private student loans make up just 7% of the existing $1.2 trillion in student loan debt, and only originate about 9% of all new student loans each year, with more than 97% performing successfully.

Some CBA members offer refinancing and consolidation products, and others are considering new products as consumer demand increases. Also, private student loans have no pre-payment penalty -- any student loan can be refinanced as a personal or other loan by any willing lender of the borrower's choice.

Only .03% of private student loans have received a complaint according to data from a recent CFPB study.

Less than 3% of private student loans are seriously delinquent, and performance continues to improve.

Unlike federal student loans, private student loans offer the strongest consumer protection available: a robust assessment -- before a loan is made -- of a borrower’s ability to repay.

It is in the lender’s best interest to do everything in their power to help borrowers repay their loans, including extending grace periods and modifying loans.

Most major lenders offer fixed and variable rate products and are constantly innovating new products to meet consumers’ needs. In fact, half of loans originated since 2012 are fixed rate loans.

Private lenders are required under The Truth In Lending Act (TILA) to provide 18 disclosures no fewer than 3 times before a loan is issued.

Private student lenders can frequently offer a lower interest rate than the federal government, especially when the borrower has a strong credit profile or has a cosigner.

CBA members do not automatically place loans in default if a cosigner passes away.

CBA members offering private student loans have policies in place to forgive the loan in the event of a student-borrower passing away.

Banks work with their customers to help them cope with circumstances that make it difficult or impossible to keep up with loan payments, including in some cases modifying loan terms.

MYTHS VS. FACTS

Private lenders are driving the student loan debt “crisis.”

Borrowers do not have options to refinance their student loans.

A majority of borrowers are reporting issues

with their private student loans.

Most borrowers have difficulty repaying their private student loans.

Private student loans do not have adequate consumer protections.

Private lenders do not help borrowers

when repayment challenges arise.

Banks only offer variable rate student loan products.

Private lenders do not provide adequate

disclosures before issuing a loan.

Private student loans never offer more

favorable terms than federal loans.

Private lenders automatically place a loan in

default if a cosigner passes away.

Private lenders do not forgive the loan under the tragic circumstances of a student-borrower passing away.

Private loan lenders won’t work with borrowers who are

having trouble making their payments.