Student-loan borrowers are worried about Trump's repayment overhaul. Private lenders are 'excited.'
Student-loan companies, such as Sallie Mae and SoFi, reported growth in their loan portfolios as more federal borrowers turn to private lenders.
Private student-loan firms are reporting significant growth in their lending portfolios following President Trump's overhaul of federal student loan repayment policies. Critics argue that private lenders can subject borrowers to higher interest rates and riskier terms compared to federal loans. Sallie Mae and Navient, two major private lenders, both saw double-digit increases in graduate loan originations year-over-year in the third quarter of 2026.
Sallie Mae's graduate lending jumped 119%, while Navient's increased by 173%. This growth reflects private lenders' anticipation that the changes would create funding gaps that they could fill. The overhaul eliminated the Grad PLUS program, which allowed graduate students to borrow the full cost of attendance, and capped the Parent PLUS program.
Private lenders see these shifts as opportunities for expansion. SoFi, a private lender, reported a 96% increase in student loan originations year-over-year, attributing the surge to more favorable interest rates. However, private loans often come with higher rates that fluctuate and lack the federal protections and relief programs available for federal loans.
Critics warn of the risks posed by the influx of federal borrowers into the private market, urging a focus on lowering costs for students and borrowers rather than enabling predatory lenders.
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