This report investigates the unique risks posed by state-backed private student loans amid increasing industry lobbyist efforts to promote these loans as “safer alternatives” for millions of families being forced to find new ways to pay for college after President Trump’s One Big Beautiful Bill Act. It is based on a review of court filings, consumer complaints, and other public records and documents how many state-backed private student loans feature high interest rates, few flexible repayment options, and abusive debt collection tactics when borrowers fall behind.
The investigation is authored by Sophie Laing, fellow at Protect Borrowers, and is the most comprehensive investigation into the current state-based student loan market to date. It finds that many state programs fail to provide loans that are more borrower-friendly than their for-profit counterparts, documents the myriad of challenges borrowers face when dealing with these lenders, and details the aggressive collection practices state-based private lenders deploy when borrowers fall behind.
Read the Report: The Worst of Both Worlds: An Investigation of State Student Loan Lending
Read the Press Release: As Trump’s One Big Beautiful Bill Law Forces Families Into More Expensive, Risky Private Loan Market, New Protect Borrowers Report Exposes Risks of State-Backed Private Student Lenders
Read the Blog: Worst of Both Worlds: State Student Loans Are Not the Friendly and Safe Alternative States Claim They Are