The Chronicle of Higher Education

By Beckie Supiano

Even as tuition and fees increased last year, the amount students borrowed in private loans declined by almost 50 percent, according to the first widely accepted estimate of that drop, which was expected to be significant.

In 2008-9, lenders issued about $11.9-billion in education loans not backed by the federal government. Those loans consist primarily of traditional private loans but also include loans made by states. That represents a drop of about $11.9-billion, after adjusting for inflation, according to two reports issued Tuesday by the College Board, “Trends in College Pricing 2009″ and “Trends in Student Aid 2009.”

Private loans represent a small—but until recently, rapidly growing—portion of the education-loan market. Sandy Baum, senior policy analyst with the College Board and an author of the reports, said the shift was “really not surprising at all.”

Because of turbulence in the credit markets, fewer lenders made private education loans last academic year. At the same time, the government raised the loan limits for undergraduates who borrow federally backed but unsubsidized Stafford Loans.

To view full text: http://chronicle.com/article/Private-Borrowing-for-College/48878/

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