Private lenders have played a relatively small role in financing higher education over the last 20 years, but that’s about to change.
In Delaware, state leaders have invested $800,000 in an unconventional student lending start-up, a local news outlet reported. Meanwhile, many universities have named established companies as the preferred lenders for their students. And some colleges are developing their own lending programs—all to help close funding gaps created by new limits to federal graduate student loans, which go into effect July 1.
It suggests something of a return to earlier times, when private lenders served as the predominant source of funding for graduate education. That changed in 2006, when Congress introduced Grad PLUS—a federal loan program that covered up to the full cost of attendance at any given institution.
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