More Americans might find themselves turning to personal and private loans this year.
Proposed changes to the lending market could impact banks and consumers starting this year, particularly in two of the largest areas of consumer debt: credit cards and student loans. Private and personal lending firms could end up big winners if those changes stick.
On the student debt side, President Donald Trump’s “big beautiful” spending legislation called for new borrowing caps on graduate and professional loans in an attempt to curb excessive borrowing. It also eliminated the Grad and Parent PLUS programs, which allowed parents and graduate students to borrow up to the full cost of attendance for their programs.
More recently, Trump proposed a one-year, 10% cap on credit card interest rates, which he said would prevent credit card companies from “ripping off” consumers.
The changes to student loan borrowing are set to take effect in July, while it’s unclear if Trump’s credit card proposal will come to fruition, as its most likely path would be through congressional legislation.
Some policy experts and lenders have said that the caps on rates could mean banks reduce credit card offerings, and caps on student loan borrowing could drive consumers to private loans to help fill the gap.
As the cost of living continues to rise in the US, personal loans, credit card debt, and student debt are already at record highs. While the benefit of a personal loan is that its flexible terms allow it to be used for a wide range of purposes, interest rates vary depending on credit scores, similar to credit cards.
Similarly, taking on private student loans could also be riskier than federal financing because their interest rates are often variable, meaning the rate could increase or decrease over the loan’s lifetime.
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Personal loans as an alternative to credit cards and a boost for private student-loan lenders
A joint statement from several banking associations said that the cap on credit card interest “would only drive consumers toward less regulated, more costly alternatives” such as personal and payday loans.
On Tuesday, JPMorgan Chase’s CFO said that if the interest cap were to take effect, it may not be worth it for the bank to be in the credit card business. Similarly, student borrowers without sufficient financing for their programs may turn to private lending.
Personal lending company SoFi is an example of a company that could benefit from both policies. CEO Anthony Noto wrote in a post on X that, should Trump’s credit card cap proposal be implemented, consumers would need access to more credit.
“That creates a large void—one that @SoFi personal loans are well positioned to fill,” Noto said.
Noto also said during an August earnings call that the elimination of Grad and Parent PLUS loans could lead to “further opportunities for in school lending and student loan refinance.” Private lender Navient’s CEO, David Yowan, expressed a similar idea during an earnings call: “Grad PLUS elimination is a substantial and significant expansion of opportunities that we have with graduate students.”
A SoFi spokesperson told Business Insider that the company prioritizes affordability, “and providing members with a more accessible and safer path to financial independence.”
An analysis by credit reporting firm TransUnion found that unsecured personal loan balances reached record highs in the third quarter of 2025, totaling $269 billion.
The accumulation of debt is a concern shared by some policy experts and lawmakers, particularly regarding student loans. In August, Sen. Elizabeth Warren led some of her colleagues in sending letters to the major private student-loan lenders asking for information on how they plan to protect borrowers in anticipation of an influx into the private lending market.
“Student debt places a tremendous burden on borrowers, their families, their communities, and the U.S. economy, driving employment, spending, and housing decisions that have long-lasting negative impacts on borrowers’ financial health,” the lawmakers wrote. “Placing a greater share of student loans into the hands of private lenders threatens to make these problems much worse.”
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