Report Comes as Costs Climb and Trump Cuts Aid; Students Face Historic Shortfall in College Financing Which Could Push Millions Out of Higher Education

March 31, 2026 | WASHINGTON, DC — A new study published by Protect Borrowers and The Century Foundation warns that more than 40 percent of U.S. college students—including nearly two thirds of Pell Grant recipients—would not qualify for a traditional private student loan. This new report comes as colleges prepare for the first financial aid cycle since President Trump and his allies in Congress cut more than $300 billion from federal financial aid programs, to finance new tax cuts for billionaires and corporations, in the One Big Beautiful Bill (OBBBA).

Today’s report, authored by Protect Borrowers analyst Jennifer Zhang and The Century Foundation fellow Peter Granville, examined the published underwriting criteria for more than 30 private student lenders—companies that collectively originate an overwhelming majority of all new private student loans each year.

“A market that denies access to 40 percent of Americans should never be the gatekeeper to higher education. Yet, the Trump Administration’s pivot toward private financing has made it exactly that,” said Jennifer Zhang, Policy, Research, and Data Analyst at Protect Borrowers and an author of the study. “This signals the end of an era in which students across the nation could—regardless of their family’s wealth—at least access higher education. Students of color and those from low-income backgrounds will bear the heaviest burdens and be the first forced to abandon their dreams. To compound the injustice, all of this is the direct consequence of the Administration’s rush to give the largest tax cuts in American history to billionaires and corporations.”

This report, Access Denied: How 40% of Americans Are Locked Out of the Private Student Loan Market, is available at: https://protectborrowers.org/resource/report-access-denied-how-40-of-americans-are-locked-out-of-the-private-student-loan-market/

“Students’ access to higher education shouldn’t depend on their parents’ credit score,” said Peter Granville, Fellow at the Century Foundation and an author of the study. “When it comes to student loans, leaders in Congress have effectively thrown families into a private market in which 40 percent will have no options at all, and the rest must cross their fingers and hope they don’t get burned. Countless would-be doctors, lawyers, and public servants will be denied their educational potential, leaving the rest of us worse off, too.”

Specifically, the report finds that:

  • More than 40 percent of Americans cannot qualify for a private student loan made by a traditional student lender.
  • Nearly two-thirds (61.1 percent) of students who receive a Pell Grant, the largest source of financial support for students from low-income families, cannot qualify for a private student loan made by a traditional student lender.
  • Students of color and those from low-income backgrounds will be overrepresented among those offered the highest interest rates or outright denied by private student lenders. Many will be forced to give up on higher education as a result or be forced to rely on more expensive, predatory subprime products.
  • Between 61 percent to 100 percent of the loans originated by lenders in our sample have cosigners. This underscores the private market’s continued reliance upon household wealth for underwriting student loans, which systematically makes low-income and underprivileged students less likely to access a loan.
  • About 82 percent of non-profit lenders are residency restricted or require borrowers to attend a school in a limited number of states. Non-profit, state-affiliated lenders also generally have the highest loan underwriting requirements. These restrictions make them unlikely to fill the gap for borrowers who are shut out of the private market.

Recent reporting also suggests that schools recognize the obstacles that traditional underwriting may pose for many students’ access to credit and may pursue deals with lenders to create new, more expansive institutional lending schemes to loosen underwriting criteria. This presents its own risks to students and families, as schools choose to backstop lenders without providing an expanded safety net for students.

The report recommends that policymakers, schools, and student loan market participants:

  • Expand accountability and transparency. States should increase transparency and accountability for the private student loan market by requiring lenders to register with state regulators and mandating public reporting on underwriting, loan origination, and other information. Protect Borrowers maintains sample legislation for states to create such registries and reporting requirements.
  • Protect students from predatory lending. Policymakers, schools, and lenders should not expand subprime lending nor rush to create school-based or state-affiliated lending programs that have historically employed aggressive debt collection practices against struggling borrowers and generally do not lend to students from low-income, low-credit families.
  • Fund higher education directly. Federal and state policymakers should increase direct funding for higher education as a public good, and reduce the amount of debt students are forced to take out in the first place.

Further Reading

The Century Foundation’s report on how the OBBBA will limit who gets to access college: The FICO Factor: GOP Megabill Will Limit who Gets to Access College

Protect Borrowers Deep Dive on how changes made by OBBBA makes paying for college riskier and more expensive: Deep Dive: The OBBBA Law Makes Paying for College More Risky and Expensive

Protect Borrowers’ Mike Pierce’s Testimony before the U.S. Senate on the state of higher education: Testimony on the State of Higher Education

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About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.

Learn more at protectborrowers.org or follow us on social @BorrowerJustice.

About The Century Foundation

The Century Foundation (TCF) is a progressive, independent think tank that conducts research, develops solutions, and drives policy change to make people’s lives better. We pursue economic, racial, gender, and disability equity in education, health care, and work, and promote U.S. foreign policy that fosters international cooperation, peace, and security. TCF is based in New York, with an office in Washington, D.C. Follow the organization on Twitter at @TCFdotorgand learn more at www.tcf.org.