Hirono, Colleagues’ Investigation Reveals How Private Student Loan Lenders Expect to Profit from Trump’s ‘Big, Beautiful Bill’

Senators: "[These findings] underscore an urgent need for oversight of the private lending market as these companies prepare to cash in on the Administration's agenda."

WASHINGTON, D.C. - U.S. Senator Mazie K. Hirono (D-HI) joined Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking Committee, Senate Democratic Leader Chuck Schumer (D-NY), and Senators Bernie Sanders (I-VT), Richard Blumenthal (D-CT), Ron Wyden (D-OR), Chris Van Hollen (D-MD), Ed Markey (D-MA), and Jeff Merkley (D-OR) in releasing a new report revealing the findings of their investigation into how private student loan lenders will reap the benefits from cuts to federal student loan access enacted in Republicans' 'Big, Beautiful Bill' (OBBBA). The report is the first Congressional analysis of the impacts of the bill's student loan restrictions on the private lending market.

"This report makes it even more clear that by placing an arbitrary cap on federal student loans, President Trump and his Republican allies are making it more expensive for everyday students to pursue higher education. Why? To support huge tax breaks for themselves and their billionaire buddies," said Senator Hirono. "Students should be able to pursue higher education without taking on a lifetime of debt. I will continue to do everything in my power to ensure that we put an end to abusive practices that exploit borrowers, to institute further consumer protections, and to prevent companies from cashing in on this regime's political agenda."

The OBBBA set new caps on federal student loan borrowing for graduate students and others, paving the way for a significant expansion of the private student loan market. The private student loan market currently accounts for approximately 8% of student loan debt, but represents more than 40% of student loan-related complaints submitted to the Consumer Financial Protection Bureau.

"The anticipated expansion of the role of private lending is deeply concerning, since private student loan lenders have a long record of predatory practices that raise costs for borrowers and deprive them of basic consumer protections," wrote the senators in the report.

The senators pressed six significant private student loan lenders, Citizens, College Ave, Navient, Nelnet, Sallie Mae, and SoFi-which, combined, lent over $14.7 billion via private student loans in 2024-to provide details on their policies, lending activity, and future plans related to OBBBA.

The investigation found that:

• There is a history of persistent predatory behavior in the private student loan market and major lenders have been expanding their student loan activity each year;
• Private student loan lenders expect more students to turn to private loans due to OBBBA's loan limits, and at least one lender is already making plans to expand its loan offerings in response to this policy change;
• Most of the private lenders surveyed offer minimal protections for borrowers who are defrauded by their schools or who face a sudden school closure;
• Half of the private lenders surveyed either have sold student loans to private equity firms or plan to do so in the future; and
• Private lenders do not yet have concrete plans in place to expand customer service capacity if they increased their student loan activity.

"Private student loan lenders have a record of utilizing abusive practices, including lying to borrowers about the availability of debt cancellation, autopay discounts, and unemployment protections for borrowers," the senators warned.

In response to the findings, the senators called for careful oversight of any new private loan offerings targeting students and families affected by the federal loan caps and for experts to examine potential impacts of private lenders selling student loans to private equity firms.

"One year into the Trump Administration, President Trump and Secretary McMahon have made countless efforts to strip federal support from student loan borrowers as part of their crusade to dismantle the Department of Education…[These findings] underscore an urgent need for oversight of the private lending market as these companies prepare to cash in on the Administration's agenda," the lawmakers concluded.

The full text of the report is available here.

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