Of all student loans awarded, $16 billion (19%) was in the form of private loans compared to less than 5% just 10 years ago. The vast growth in private loans is being facilitated by several factors including rising college costs, stagnant federal loan limits, increased private loan profitability, and increased sales of private loans on capital markets. Private and federal loans are distinct from one another in a number of important ways, including funding and guarantee structure; associated risk of default; terms of interest rates, repayment and fees; and variability in products offered and the borrowing process. The future of private loans depends on the behavior of both lenders and students within a broader policy and economic environment.

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