finance
Private Student Loans Poised for Growth as Trump Repayment Changes Take Effect
President Donald Trump's federal student-loan changes set to begin July 1 will limit federal borrowing and direct more students toward private lenders. Business Insider reviewed a decade of Consumer Financial Protection Bureau complaints and interviewed borrowers and former regulators who described confusion over debt ownership, missing notices, and challenges after defaults.
May 11, 5:01 AM·3m read1 source
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Student-loan borrowers are facing a maze of confusing rules as President Donald Trump's repayment overhaul goes into effect on July 1. The changes will limit federal borrowing and are expected to push more students toward private lenders. Private student loans currently make up a relatively small share of the higher-education borrowing market but the industry is positioned for rapid growth.
Business Insider reviewed the past decade of Consumer Financial Protection Bureau complaints and interviewed borrowers, attorneys, lawmakers, and former regulators about oversight of the private student-loan industry. Borrowers described confusion over who owned their debt, missing or conflicting notices, and lawsuits that followed defaults.
While private lenders are subject to federal and state consumer-protection laws, enforcement is fragmented and inconsistent according to the reporting.
Private lenders serve about 10 percent of borrowers yet account for roughly 25 percent of CFPB complaints. The CFPB released a report in January showing it received about 4,500 private student-loan complaints from July 2024 through July 2025, an increase of 33 percent compared to the previous year.
Anna Park, an attorney at the New York Legal Assistance Group, said she has had difficulty obtaining information from lenders even with client authorization. "It's very difficult, even when we reach out with authorization from the law firm, and we know the language to use, and we know which documents to ask for.
Even then, sometimes we come up with nothing," Park said. Julie Margetta Morgan, a former CFPB and Department of Education official, said the industry's growth could leave more borrowers exposed to payment errors, costly litigation, and the consequences of default including ruined credit and wage garnishment.
