Private student lenders are seeing a surge in graduate borrowing.
Sallie Mae and Navient both more than doubled their graduate loan originations year-over-year in the third quarter of 2026, the first earnings period after President Donald Trump’s federal student-loan repayment overhaul took effect.
The overhaul eliminated the Grad PLUS program, which had allowed graduate students to borrow the full cost of attendance. It also capped the Parent PLUS program, which parents use to borrow for their child’s education. Private lenders had expected these changes would create funding gaps that they could fill.
Sallie Mae’s graduate lending grew 119% from a year earlier, accounting for 70% of the company’s year-over-year increase in private education lending, according to a Business Insider analysis of financial filings.
“We continue to be excited about the PLUS opportunity and believe the investments we have made and performance this quarter position us well for future originations growth,” said CEO Jonathan Witter during their latest earnings call.
Navient’s graduate lending increased 173% from a year earlier, accounting for 95% of its growth in new in-school loans.
“We originated graduate loans at more schools, reflecting growth across both existing and new school relationships,” said CFO Steve Hauber, adding that the company was equipped to “serve significantly more graduate borrowers during the peak season.”
Private lenders are also attracting borrowers looking to refinance existing debt.
SoFi, which offers student loans along with other financial products, reported that its student-loan originations were up 96% from a year earlier. CEO Anthony Noto said borrowers are turning to the company for more favorable interest rates.
“Your federal student loans are at 8%, we’re giving them to you at 6%. We still make a great return on that product,” Noto said during the earnings call.
Private loans can offer lower rates for borrowers who qualify, but rates can fluctuate, and they lack federal protections and relief programs such as income-driven repayment and Public Service Loan Forgiveness. Borrowers have reported spiking monthly bills under Trump’s changes and have faced errors and glitches as they navigated the new repayment landscape.
Democratic lawmakers have warned of the risks posed by the influx of federal borrowers into the private market.
“The Trump administration should focus on lowering costs for students and borrowers, not giving predatory private lenders free rein to profit off of American families,” Sen. Elizabeth Warren previously told Business Insider.
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