Private student lenders report growth after federal policy shifts

Private student-loan companies are seeing a significant increase in loan volume following the closure of the federal Grad PLUS program on July 1, 2026. The policy change, which included new caps on graduate borrowing, has prompted students in advanced academic programs to seek private financing to cover educational expenses.

Financial results for the third quarter of 2026 show substantial growth across several major lenders. SoFi reported that its student loan originations reached $2.9 billion during the quarter, representing a 96% increase compared to the previous year. Similarly, Sallie Mae saw its graduate student loan originations rise by 119%.

Navient also recorded significant gains in its portfolio. The company reported that its graduate lending increased by 173% from the prior year, accounting for 95% of its growth in new in-school loans. Its subsidiary, Earnest, experienced an 84% increase in in-school student loan volume.

Steve Hauber, CFO of Navient, stated that the company originated graduate loans at a broader range of schools, reflecting growth across both new and existing relationships. Hauber noted that the firm was prepared to accommodate a higher number of graduate borrowers during the peak season.

Despite the rise in loan volume, the private lending sector faces ongoing operational challenges. Some lenders have encountered a softening market for selling loans to investors and have reported higher-than-anticipated default rates on loans issued between 2021 and 2024.