A new lending landscape leaves 40% of Americans likely to be rejected for private student loans

Forty percent of Americans are likely to be rejected for a private student loan, according to a new study by Protect Borrowers and the Century Foundation that analyzed 34 private lenders. The shift follows last year’s budget reconciliation bill—known as the “One Big Beautiful Bill Act” (OBBBA)—which removed $300 billion from federally backed higher education and financial aid programs. With federal support diminished, private lenders now bear more risk, tightening underwriting standards around credit and income. That burden translates directly to borrowers: between 61 and 100 percent of private student loans now require a cosigner. Students and families who once relied on federal aid are now navigating a stricter lending environment where approval is no longer guaranteed. The study underscores a new reality—qualifying for private financing demands earlier planning, stronger credit profiles, and often, a financially qualified cosigner.