The CFPB and the Department of Education released a report on private student loan market. According to the report, consumers owe more than $150 billion in outstanding private student loan debt. The private student loan market grew rapidly from less than $5 billion in 2001 to over $20 billion in 2008, before contracting to less than $6 billion in 2011. Part of the growth in private student loans was driven by lax underwriting standards during 2005 through 2007; but underwriting standards have firmed in recent years.
The report notes that default rates have spiked significantly since the financial crisis of 2008, as cumulative defaults on private student loans exceed $8 billion on over 850,000 distinct loans. The report makes several legislative recommendations on how to improve consumer protections, including enhancing the role of schools in the private student loan origination process, examining the appropriateness of the bankruptcy discharge standard, and modernizing the regulatory framework.