The private student loan market shares some similarities with the real estate market before the mortgage bubble burst, according to a report released Friday by the Consumer Financial Protection Bureau and U.S. Department of Education.
Specifically, private student loan origination bubbled up rapidly during the last decade, from less than $5 billion in 2001 to more than $20 billion in 2008, and then precipitously declined to less than $6 billion in 2011.
During that growth period, underwriting standards loosened, with the percentage of loans to undergraduates made without school involvement or certification of need growing from 40% to more than 70%, the report said.
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