Many college students take out loans from the federal government to help pay for college, but there’s a cap on the amount they can borrow. When they still can’t afford the cost, they face a choice: Don’t go to college, or take out riskier private loans to cover the rest. 

At some Pittsburgh universities, more students are taking on larger amounts of private debt than others nationwide. That raises questions about the affordability of these institutions and the financial guidance students receive, and it means more students are borrowing with fewer protections. Federal loans often have fixed or lower interest rates and provide borrowers with more options for repayment, forgiveness and discharge. 

Private loan debt can be “the most debilitating for people who already have the least access to higher education and to generational wealth,” said Ben Kaufman, fellow and former director of research and investigations at the national nonprofit Student Borrower Protection Center. While Black borrowers are less than half as likely to take out private loans than their white peers, they’re four times more likely to struggle repaying it.

The local universities should each “think about what it’s doing to people,” he said. “It’s just a shame that the universities have chosen to approach their own students so extractively.” 

Nationally, about 10% of public university students who graduated with bachelor’s degrees in the 2020-21 academic year took out private loans, with an average debt of roughly $32,000. At private universities, about 13% of graduates that year did the same, taking on an average debt of $42,800. 

Here’s how several Pittsburgh universities compare, according to publicly available data. The numbers exclude transfer students. 

  • At Duquesne University, about 24% of 2022 bachelor’s degree recipients (254 students) took out private loans, averaging $66,509.
  • At Carnegie Mellon University, about 7% of 2022 bachelor’s degree recipients (108 students) took out private loans, averaging $59,354.
  • On the University of Pittsburgh’s main campus, about 20% of bachelor’s degree recipients (723 students) took out private loans, averaging $50,204. 
  • At Chatham University, about 35% of 2022 bachelor’s degree recipients (63 students) took out private loans, averaging $44,851.
  • At Point Park University, about 25% of 2021 bachelor’s degree recipients (100 students) took out private loans, averaging $10,314. Point Park did not make data on 2022 graduates publicly available.

Carlow, Robert Morris and La Roche universities do not make data on private loans publicly available and did not provide data to PublicSource.

What’s behind the numbers in Pittsburgh?

Selective private universities can often provide students with more financial aid than public or less-selective private institutions, which likely explains CMU’s lower share of graduates borrowing private loans, advocates for students said. A spokesperson for CMU said that the university’s undergraduate need-based financial aid has grown by 61% since 2016. 

“We are increasingly approaching, as a country, a situation where if you’re able to get into one of a small handful of the wealthiest schools, and you happen to be low-income – which makes it even tougher to get in – they can probably meet your needs,” Kaufman said.

Still, the data show CMU students whose needs were not met had the second-highest average private debt load of all the local universities.

Pennsylvania’s declining investment in public higher education could also contribute to the numbers at Pitt, said Mark Kantrowitz, an expert on student loans and college savings plans.

“It’s not surprising,” Kantrowitz said of Pitt’s share of students borrowing private loans. “If the state doesn’t give as much money to the public colleges, they have to get it from the students in the form of tuition, which means that they have to borrow more to pay for the costs.” 

But the debt burdens can’t be blamed entirely on outside circumstances. Universities are often aware of the number of students who intend to take out private loans, as lenders often notify them.

Officials at Duquesne start talking to families about financial planning for college as early as ninth and tenth grades, and the university’s advising team works to keep students on track for on-time or early graduation. Joel Bauman, senior vice president for enrollment management at Duquesne, said the university encourages students to maximize all of their scholarships and grants before borrowing and maintains a list of interest-free loan options. 

Even with those efforts, though, almost 1 in 4 of the university’s 2022 bachelor’s degree recipients took out private loans, with the highest average debt load among the local universities. Bauman attributed the average private debt burden partly to the number of students enrolled in the university’s professional programs, which can entail extra costs.

“I think you can find cases where we didn’t have the conversation, people slip through the net. People have free will, will make some bad choices,” Bauman said. “We feel pretty comfortable that we have really good relations with the families and as good advising and support as we can to help them make the right decision.”

What reforms may be needed?

Some students who take out private loans could be unaware of the amount of federal loans available to them: In the 2015-16 academic year, about half of students in the U.S. who took out private loans did not borrow the maximum amount of more affordable government loans. Typical undergraduates can borrow up to $31,000 over the course of their education in subsidized and unsubsidized federal loans.

Michele Shepard, senior director of college affordability at The Institute for College Access and Success, said the organization has advocated for the federal government to require that universities certify that their students have taken advantage of their entire federal loan eligibility before approving them for private loans. 

Kantrowitz said universities should provide financial counseling to these students and ensure they’re borrowing with “eyes wide open.”

Pitt, CMU, Chatham and Point Park did not make financial aid officials available for interviews about their efforts to provide financial advising to families, and they did not directly answer emailed questions including about whether they educate students and families about private loans. A Chatham spokesperson said the university’s financial aid staff present at open houses and academic visit days, and the university’s website provides information on private loan borrowing.

Pennsylvania could look to Colorado for reform. In 2021, the state’s governor signed a law requiring private education lenders to register with an assistant attorney general; allow for loans to be discharged if a borrower or co-signer becomes permanently disabled; and report borrower outcomes each year, among other protections. The Student Borrower Protection Center has created sample legislation for states that would allow for similar changes.

Kantrowitz said some universities have implemented temporary holds on approving private loans, which allow students to determine if they need to borrow after all. Others use peer counseling programs, where fellow students share the risks of borrowing too much to help the message resonate.

He added that universities should provide financial aid offers that clearly distinguish between grants and loans so families know how much they may need to borrow. The U.S. Government Accountability Office, a federal watchdog agency, estimated in a November report that 24% of colleges do not make such distinctions in their offers. 

Duquesne provided PublicSource with a copy of a financial planning worksheet that it sends to families. The sheet includes tables that ask families to separate their gift aid from their loans when making calculations. 

Shepard recommended that students visit their university’s financial aid office armed with some research on private loans. That way, they can have a more informed conversation about their options for covering gaps in cost, she said. 

And parents should know that, unlike most federal loans, many private loans require students to have a cosigner or established credit record. Those who cosign for their children’s loans will see their credit score harmed if their children default, and they’ll be responsible for repaying the debt.

“I would encourage families to spend more than just a few minutes considering the cost,” Kantrowitz said. “Just like you look at whether a college is a good academic fit, social fit, environmental fit, you should also evaluate whether it’s a good financial fit.”

Emma Folts covers higher education at PublicSource, in partnership with Open Campus. She can be reached at emma@publicsource.org.

This story was fact-checked by Punya Bhasin.

Higher education reporter for PublicSource in partnership with Open Campus.