Data Shows Nonprofit and State-Based Lenders Offer More Affordable Education Loans

WASHINGTON, May 12, 2026 /PRNewswire/ -- Education Finance Council (EFC), the national trade association representing nonprofit and state-based higher education finance organizations, announces that an American Action Forum (AAF) report, Student Loan Lenders: How Do Different Options Stack Up?, found that "nonprofit/state-based lenders issued a substantially larger share of loans at lower interest rate tiers than for-profit lenders."

"Students and families who are seeking an affordable private education loan to fill their higher education funding gap should include a nonprofit and state-based education lender in their search," said EFC President Gail daMota. "Nonprofit and state-based higher education finance organizations help set students up for success by offering free resources and education about college planning and financing and administer life-changing grant and scholarship programs. In addition, they offer low-cost, consumer-friendly education loans for students and families. The AAF report compares the student loan lending patterns of federal, for-profit, and nonprofit/state-based lenders and confirms the value of nonprofit/state-based education loans."

Using aggregated data from 18 nonprofit/state-based lenders provided by EFC, AAF found that in academic year 2024-25, nonprofit and state-based lenders issued 88% of loans between 5–8.99% and only 8% of loans at 9% or higher. AAF compares this to publicly available data from Sallie Mae, which researchers used as a proxy for all for-profit lenders, finding that 69% of its loans in the same year were made at interest rates of 9% and above.

The AAF report concludes, "…nonprofit/state-based lenders tend to offer lower interest rates than their for-profit counterparts to borrowers with lower credit scores. The policy implications of this are notable, as lower rates can reduce lifetime borrowing costs, improve repayment outcomes, and expand affordability for creditworthy students who exhaust federal aid."

"EFC members are dedicated to helping students make informed decisions regarding their higher education financing options," added daMota. "They exist to maximize student success, not profits. Exhaust scholarships, grants, and federal student loans first. Then if you need additional resources, look at private education lenders and seek preapproval to learn the interest rate you will pay. Do not be swayed by the advertised rates. I encourage you to include an EFC member on your list, you will be amazed at the support and assistance you will receive."

Background: EFC is the national trade association representing nonprofit and state-based higher education finance organizations that are dedicated to improving college access, success, and affordability in their states and nationwide. Learn more about EFC by visiting efc.org. 

CONTACT: Gail daMota
(202) 552-8505 │[email protected]

SOURCE Education Finance Council