Struggling Borrowers Share Experiences of Private Student Loans

May 10, 2013

For some borrowers, private student loans can mean carrying large balances at high interest rates, dealing with unhelpful lenders, and waiting to buy a house or start a family. That's what the advocacy group Young Invincibles found when it invited people on its mailing list and ones kept by other groups concerned with student debt to take a survey on the topic.

Young Invincibles released the survey findings on Wednesday in a new report, "Borrower in Distress: A Survey on the Impact of Private Student Loan Debt."

Young Invincibles and its partner groups based the survey questions on those asked in the Consumer Financial Protection Bureau's request for information on private student loans. The bureau, the federal government's consumer-watchdog agency, on Wednesday released a report analyzing the 28,000 comments it had received. Young Invincibles gave survey respondents the option of forwarding their feedback to the bureau as well.

Comments the bureau and Young Invincibles have gathered show that "while college can be a great investment, for the people who take on a lot of student-loan debt they can't easily repay, it can have an impact on their economic life," said Rohit Chopra, the bureau's student-loan ombudsman. Those high-debt borrowers' constrained choices can have a broader effect on the economy, too, he said.

Invitations to take the Young Invincibles' survey were sent to more than a million people this spring, and 9,523 responded, a response rate of less than 1 percent. The report indicates that survey respondents are likely to be having a particularly difficult time with their debt. But "this is a self-selected cohort of borrowers," it acknowledges, "and so our results do not necessarily represent the experiences" of the broader population.

That kind of survey design makes interpreting the results more difficult, said Mark Kantrowitz, publisher of, a student information Web site. Some people are having such trouble managing their private loan balances that it constrains their other choices, he said, "but we don't know how big that population is."

The respondents reported high debt levels, and presumably many respondents have federal loans, too. More than 20 percent of respondents said their private loans had interest rates of 9 percent or more.

Survey respondents also reported difficulty in working with lenders. About two-thirds said they had tried to negotiate better repayment terms because they could not afford their payments, About 40 percent reported that their lender was either unwilling to negotiate or unreachable.

Borrowers also said their student-loan debt limited their life choices. About 47 percent said they had delayed buying a car, and the same share said they had put off buying a house. Fifteen percent said they had been denied a mortgage.

More than a third of respondents said they had delayed starting a family, and three-quarters said they were not saving as much money as they otherwise would. Close to a quarter said they had put off starting a small business.

There is clearly work to be done to prevent new borrowers "from getting into the same trap," Mr. Kantrowitz said. But he said he hopes policy makers will investigate the scope of the problem before they decide how to fix it.