Student-loan debt has grown to $1 trillion, topping all other forms of consumer debt in the U.S., according to a new report released by the Consumer Finance Protection Bureau.
While the amount of private student loan issued in the last year or so has actually slowed, during the boom period of 2004-2008 students took out more private student loans than they needed to or could handle, mostly because of relaxed borrowing standards set by private lenders, the Huffington Post reports.
Currently, the level of private student loans that are in default stands at $8.1 billion in the U.S., a figure that represents more than 850,000 separate student loans, the Huffpo report says.
The report, issued Friday, says less stringent private student loan rules, issued by the federal government, fueled the increase in lending.
"From 2005 – 2007, lenders increasingly marketed and disbursed loans directly to students, reducing the involvement of schools in the process; indeed during this period, the percentage of loans to undergraduates made without school involvement or certification of need grew from 40% to over 70%," the study says. "As a result, many students borrowed more than they needed to finance their education. Additionally, during this period, lenders were more likely to originate loans to borrowers with lower credit scores than they had previously been. These trends made private student loans riskier for consumers."