Senate Democrats Release Report About OBBBA Impact on Private Student Loan Lenders
By Maria Carrasco, NASFAA Staff Reporter
A group of Senate Democrats last week released a report analyzing how new provisions in the One Big Beautiful Bill Act (OBBBA) will increase demand for private student loans and calling for greater oversight of the private lending market.
The OBBBA, which was signed into law last July, makes a myriad of changes to the federal student loan programs, including eliminating the Graduate PLUS Loan program and placing new limits on graduate, professional, and parent borrowing. Graduate students’ Direct Unsubsidized Loan annual limit will remain at $20,500, but will have a new aggregate limit of $100,000. Professional students’ Direct Unsubsidized annual limit will be $50,000, with a new aggregate limit of $200,000.
While Republicans have argued that these loan limits are reasonable caps meant to protect students and lower costs, Democrats have voiced concerns that they could push some students into the private loan market, where benefits such as the Public Service Loan Forgiveness (PSLF) program and borrower defense protections are unavailable.
The new report, spearheaded by Sens. Elizabeth Warren (D-Mass.), Chuck Schumer (D-N.Y.), and Bernie Sanders (I-Vt.), analyzes how OBBBA will lead to a significant expansion of the private student loan market and includes information provided by Navient, Sallie Mae, SoFi, Citizens, College Ave, and Nelnet, all of which are private student loan lenders.
Over the last several years, private lenders have been expanding their lending activity, the report states, noting that as of early 2025, roughly $145 billion of student loan debt was held by private lenders.
Now, as more students likely turn to private loans due to OBBBA’s new loan limits, private lenders are anticipating an increase in demand. For example, the report notes that SoFi “currently plans to expand its graduate school offerings.”
Additionally, four of the six private lenders examined in the report didn’t describe any loan cancellation programs for students harmed by fraudulent schools or sudden school closures. However, Navient and Sallie Mae did describe their processes for facilitating debt cancellation based on borrowers’ Holder Rule claims, a federal regulation meant to protect consumers. According to the FTC, the regulation preserves consumers' right to assert the same legal claims and defenses against anyone who purchases the credit contract, as they would have against the seller who originally provided the credit, if a service or product is defective or fraudulent.
The report also highlights that half of the six private lenders either have sold student loans to private equity firms or plan to do so in the future, with the lawmakers warning that private equity firms have a “record of anti-consumer and predatory practices.”
Lastly, most of the private lenders expressed a “willingness” to expand customer service capacity if they face increased private loan demand due to OBBBA, but these lenders have not made any concrete plans, the report states. The lawmakers stressed that private lenders should be held accountable if they fail to adequately expand customer service capacity, if there is an increased demand.
NASFAA reached out to several of the private lenders mentioned in this report for a request for comment.
Warren said in response that these findings show that OBBBA “is a massive giveaway to private student loan lenders.”
“One year into the Trump Administration, President Trump and Secretary McMahon have made countless efforts to strip federal support from student loan borrowers as part of their crusade to dismantle the Department of Education,” the report reads. “The findings of this investigation raise alarm about the impact of OBBBA and the Administration’s broader effort to ‘get out of the student loan business’ and underscore an urgent need for oversight of the private lending market as these companies prepare to cash in on the Administration’s agenda.”
Publication Date: 2/12/2026
Jennifer A | 2/16/2026 5:54:53 PM
@James P - I really hope you are being sarcastic, but I have a feeling your statement was sincere. Do you not understand how much this will hurt the average student? Do you not see how this will impact specific fields of employment? McMahon has not reined in anything, she just pushed the problem to the private sector. There is no incentive for institutions to reduce tuition prices and the "free-market" will be happy to put millions more people into debt with little to no consumer protections in place. The private sector will not rein in the "bloated federal government" either because it's their biggest cash cow. Get your head out your rear-end. This is going to make getting a degree so much more costly and is going to decimate professions like teaching and nursing - both degrees with poor return of pay despite the need for such talented individuals.
James P | 2/12/2026 3:13:00 PM
Thank you, Secretary McMahon, for doing a good job of reining in federal student loans with over 1.9 trillion dollars of student debt. The private sector will do a good job reining in a bloated federal government.
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