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ERIC Number: ED507151
Record Type: Non-Journal
Publication Date: 2009-Nov-17
Pages: 9
Abstractor: ERIC
"Higher Education: Factors Lenders Consider in Making Lending Decisions for Private Education Loans." Report to Congressional Committees. GAO-10-86R
Scott, George A.
US Government Accountability Office
Over the past few decades, the cost of tuition, room, and board for undergraduate students has increased, making it more difficult for some students and families to afford the cost of college. While students have historically relied on federal loans and grants and family contributions to pay for college, a growing number have turned to private education loans to help them cover the cost. Unlike federal loans, private education loans are not guaranteed by the federal government and are typically more costly for students than loans offered through federal programs. Despite their generally higher cost, about 26 percent of students who obtained private education loans in 2007-08 did not obtain Federal Stafford loans, and more than one-half of these students did not apply for Federal financial aid, according to the Institute for College Access and Success. In 2007-08, 14 percent of undergraduate students obtained private education loans, according to the Institute for College Access and Success, and the average private loan amount was $6,533. This letter discusses the author's briefings with the staff of Government Accountability Office (GAO) during which they discussed their work under the mandated study in section 1122 of the Higher Education Opportunity Act of 2008 (HEOA). The mandate directed GAO to assess the impact of private lenders' use of nonindividual factors--factors other than the borrower's own credit worthiness, such as the cohort default rate or graduation rate of the school the student attends--in making loan decisions. To address the issues raised in the mandate, their study was framed around three key questions: (1) What are the key characteristics of private education loan borrowers and the types of schools they attend?; (2) How do lenders use nonindividual factors--including cohort default rate, graduation rate, and accreditation--in making lending decisions for private education loans?; and (3) What is the impact of using these factors on loan products and rates students pay and their access to loans, by gender, race, income, and institution type? The author and GAO's staff believe that the information and data obtained, and the analysis conducted, provide a reasonable basis for any findings and conclusions in this product. (Contains 2 figures and 10 footnotes.)
US Government Accountability Office. 441 G Street NW, Washington, DC 20548. Tel: 202-512-6000; Web site:
Publication Type: Reports - Evaluative
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: US Government Accountability Office
Identifiers - Laws, Policies, & Programs: Stafford Student Loan Program