The cost of a college degree has doubled over the past decade. The private loan business has shaped up well owing to the fact that scholarships and other fund benefits have caps.

More than $17 billion in private student loans were issued last year, up from $4 billion a year in 2001. Outstanding student borrowing jumped from $38 billion in 1995 to $85 billion last year, according to experts and lawmakers.

According to CollegeBoard.com - Consumer prices on average rose less than 29 percent over the past 10 years while tuition, fees, and room and board at four-year public colleges and universities soared 79 percent to $12,796 a year and 65 percent to $30,367 a year at private institutions.
Critics say what happened in the mortgage market(Subprime) could happen in the student loan market.

The student loan-backed securities market may suffer a considerable blow. “Once the economy starts to slow, you’re going to see a large increase of these people in bankruptcy court,” said Robert Manning, a professor at Rochester Institute of Technology who has written about college students and credit cards.
“Should private student loans suffer the same sort of failure as (subprime) mortgages, as students graduate or drop out and find themselves unable to pay, we will do serious damage not only to the lives of many students but also to the economic and social fabric of our country that depends on college graduates for its strength,” said Luke Swarthout at the U.S. Public Interest Research Group.

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