US senators take aim at predatory student loan lenders

US Sen. Mazie Hirono and eight other senators released a report Friday revealing an investigation into how private student loan lenders may profit from federal student loan cuts included provisions in the Republican-backed “Big, Beautiful Bill.”

The report represents the first congressional analysis regarding how the bill’s restrictions on federal loans might impact the private lending market. The legislation established new caps on federal borrowing for graduate students, which lawmakers say creates a pathway for private lenders to expand.

The full report is available by clicking here.

“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,” Hirono said. “Why? To support huge tax breaks for themselves and their billionaire buddies.”

The private student loan market currently accounts for about 8% of student debt, but it’s responsible for more than 40% of student loan-related complaints filed with the Consumer Financial Protection Bureau.

In the report, the senators expressed concern over the anticipated growth of private lending.

“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,” the senators wrote.

The investigation involved inquiries to six major private lenders: Citizens, College Ave, Navient, Nelnet, Sallie Mae and SoFi. These companies combined to lend more than $14.7 billion in private student loans in 2024.

The findings of the investigation allege that major lenders have a history of predatory behavior and are already planning to expand loan offerings in response to the new federal limits. The report also noted that half of the lenders surveyed have sold student loans to private equity firms or intend to do so.

According to the report, most private lenders surveyed provide minimal protections for students who are defrauded by schools or affected by sudden school closures.

“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.

The lawmakers called for increased oversight of new private loan products and requested that experts examine the implications of lenders selling student debt to private equity firms.

The senators concluded that the findings “underscore an urgent need for oversight of the private lending market as these companies prepare to cash in on the administration’s agenda.”

Hirono said she would continue to advocate instituting further consumer protections to prevent companies from exploiting borrowers.

“Students should be able to pursue higher education without taking on a lifetime of debt,” Hirono said.