The annual increase in
private student loan volume was about 25 % to 35 % per year, compared with 8 % per year for federal loan volume.
As of fiscal year 2013 about $ 94 billion — over 11 percent of federal
student loan volume in repayment — was in default, which generally occurs when a borrower fails to make a payment for more than 270 days.
Although this issue has been addressed back in 2008 and temporarily decreased
private student loan volume, it is expected to rise again.
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On average in the past decade, private
student loan volume has increased by about 30 % a year while federal volume has only grown by 8 % annually.
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For example, the proposal for expanding Perkins loan funding from $ 1 billion a year to $ 8.5 billion a year will cause a significant decline in private
student loan volume.
(The introduction of the Grad PLUS loan on July 1, 2006 and the increases in the annual but not aggregate limits had only a modest impact on the growth of private
student loan volume.
Private
student loan volume is expected to return to the 25 % annual growth rate unless there is another increase in federal loan limits or an expansion of the availability of federal student loans.
But so long as federal loan limits do not increase every year, private
student loan volume will continue to grow at double - digit rates.
Private
student loan volume grew much more rapidly than federal student loan volume through mid-2008, in part because aggregate loan limits on the Stafford loan remained unchanged from 1992 to 2008.