More students who graduated in 2020 relied on private loans made by banks and other lenders to pay for their college education, with students in some states graduating with an average of over $40,000 in private loans.

College students are taking on more private loan debt than ever before, with private loans now comprising nearly 8 percent of all student debt, according to the Institute for College Access and Success’s new report on the Class of 2020’s student debt burden. The trend is primarily fueled by an increase in private loans taken out by undergraduate students.

Private student debt-which comes from loans made by banks and other private lenders and lacks the protections of the federal loan programs-was at an all-time high at the beginning of the COVID-19 pandemic. Current students and graduates in repayment held an estimated $136.3 billion in private student loans as of March, a 47 percent increase from $92.6 billion in . And the private debt 11 academic year to the 201819 academic year.

It’s not just the overall amount of debt that students have that matters, but also what types of debt students take on, because some kinds of debt can be costlier, have higher interest rates and also have fewer protections than debt from the federal government, said Oliver Schak, research director at TICAS and a co-author of the report. We find that, in some states, private debt can be fairly common and private debt loads can be fairly high.

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Of the top 10 states with the highest average private debt levels for the Class of 2020, eight of them, plus Washington, D.C., were in the Northeast-Connecticut, Delaware, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island and Vermont.Continue reading→