Market Overview

Private Student Loan Balances Rising Sharply Year-Over-Year, Analysis Shows


Frozen Federal Loan Limits Fail to Keep Pace with College Cost of

With the 2018-2019 school year weeks away, many college students and
their parents are securing last-minute funding for the academic year
ahead. Based on July data, student loan marketplace
reports that many undergraduates are relying more heavily on private
student loans, with average
loan balances
up 14 percent in 2018 compared to 2017 and 27 percent
from 2016.

Looking at private student loans taken out by undergraduates in July, found that the average private student loan balance was
$18,332 in 2018, compared with $16,078 in 2017 and $14,446 in 2016.

"As college costs continue to rise and federal loan limits remain fixed,
private student loans are an increasingly important source of funding
for students and their families," said Stephen Dash, founder and CEO of "If you are using private student loans to fund college
costs, one of the most important things families can do to keep costs
down is to compare rates with multiple lenders."

Stalled Federal Student Loan Limits Fail to Cover College Costs

While federal loan limits have been unchanged since 2008, the cost of
attendance at both public
and private
has increased significantly. According to the College
Board, tuition and fee increases have leveled off, but room and board
expenses are up sharply.

Even after adjusting for inflation, the annual net cost of attendance
for in-state students at public universities has increased
by 33 percent
over the last 10 years, to $14,940. Over the same
period, the annual net cost of attendance at private, nonprofit
universities is up 10 percent, to $26,740.

Despite these increases, Congress has not raised borrowing limits on
federal student loans in a decade. As a result, freshmen dependent
students can take out no more than $5,500
in federal direct loans
. While the amount gradually scales up to
$7,500 a year for juniors and seniors, the lifetime limit on direct
loans for dependent undergraduates is $31,000. Once undergraduates have
hit their limits on federal direct loans, many families must choose
between parent PLUS loans or private student loans to cover unmet
funding needs.

Private Student Loans Competitive with PLUS Loans

With interest rates on federal student loans increasing
for the second year in a row on July 1
, rates on federal PLUS loans
for parents and graduate students headed to school this fall are 7.6
percent. PLUS loans also carry a hefty 4.26
percent upfront fee
, which can raise the annual percentage rate
(APR) by about one full percentage point. That means that effective
annual percentage rates for PLUS loans can exceed 8 percent.

Depending on the borrower (and cosigner's) creditworthiness, rates on
private student loans can
be competitive with PLUS loans
, particularly after factoring in the
upfront fee on PLUS loans. As a result, more families are turning to
private loans as an alternative to expensive parent PLUS loans.

"Rates on private student loans vary considerably by lender and credit
profile," explained Dash. "One of the best ways to reduce your rate and
keep your overall debt as low as possible is to add a cosigner.
makes it easy for anyone to compare actual rates (not ballpark
estimates) across multiple lenders in two minutes without affecting
their credit."


As a marketplace that empowers consumers to discover financial products
and services that are the best fit for their own, unique circumstance, is fiercely independent and committed to delivering fair
and unbiased solutions for millennials. Credible's integrations with
lenders and credit bureaus allow consumers to access actual rates
through a neutral platform, without sharing their information until
they're ready to proceed with a specific lender. The
platform provides an unrivaled customer experience, as reflected by
hundreds of positive Trustpilot reviews and a TrustScore
of 9.5/10
. For more information, news media may email

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