Executive Summary

Now more than ever, our nation’s future depends on the educational and economic success of our young people. Yet with tuition skyrocketing and entry-level jobs flat-lining, students are borrowing more and more against their futures to pay for school. A startling 67 percent of the U.S. bachelor’s degree graduates last year had student debt, averaging about $23,200 per indebted student. While most of that debt is in safe, lower-interest federal loans, a significant amount is in private loans that can carry interest rates of over 18 percent. In fact, due to aggressive marketing, nearly 3 million American students took out private loans last year, up from less than 1 million just four years before. Since federal loans are lower interest and have more borrower protections, taking out unnecessary private loans for college is like putting tuition on a high-interest credit card that students can’t pay off for years. And like credit cards, private loans carry costly penalties and fees and are marketed heavily to students regardless of need, resulting in unnecessary and damaging levels of expensive debt.  Unfortunately, unlike with credit cards, there has been no “Credit Card Holder’s Bill of Rights” for student loans to reign in the worst abuses in the private loan market. This absence of basic consumer protections is why American students need a new consumer watchdog.

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