HOBOKEN, N.J.–A new analysis offers updated insights on debt held by private student loan borrowers, including the discovery of “wide financial disparity between those who apply and those who get approved.”
LendEDU noted there is currently $1.52 trillion in outstanding student loan debt in the U.S. collectively owed by 45-million student loan borrowers. Borrowers from the Class of 2017 had an average of $27,975 in student loan debt.
While federal student loans are typically the first option after other sources of funds have been exhausted, LendEDU said private student loans are increasingly being used to fill gaps.
“With over 100 different private student loan lenders, the market has exploded in recent years. Now, there is around $102 million in private student loan debt, or 7.5% of the country’s outstanding student debt balance,” the company said. “Each year, roughly 1.4 million college students will use a private student loan to help pay for college.”
Using its user data that includes close to 200,000 private student loan applicants, LendEDU said it has put together an extensive private student loan report that highlights industry trends.
The Findings
Among the key findings:
- From 2016 to 2019, the approval rate for private student loans was 21.04%. For cosigned private loans, the approval rate was 40.51%, while the approval rate for no-cosigned private student loans was 8.66%
- From 2016 to 2019, 62.65% of private student loan applicants have applied with a cosigner, while 37.35% did not
- From 2016 to 2019, the average approved private student loan amount was $13,780.40
- From 2016 to 2019, the average interest rate on a private student loan was 8.86%, while the average variable rate was 8.81% and the average fixed rate was 9.97%
- From 2016 to 2019, the average interest rate on cosigned private student loans was 8.74%, while the average variable rate was 8.49% and the average fixed rate was 10%
- From 2016 to 2019, the average applied FICO credit score for private student loans was 644, while the average approved FICO credit score was 737
- From 2016 to 2019, the average applied income for private student loans was $44,583, while the average approved income was $72,947
Other Revelations
Among the interesting points revealed in the analysis is that variable interest rates have remained lower than fixed interest rates, “which would be valuable knowledge for consumers,” the company noted. It further added that the “wide financial disparity between those who apply and those who get approved is eye-opening.”
For the full report, go here.