January 30, 2013 / 4:46 PM / 5 years ago

UPDATE 1-Fitch - U.S. college costs rise, private loans to remain low

WASHINGTON, Jan 30 (Reuters) - Tuition and enrollment levels will likely continue to rise this year at colleges across the United States, and private student lending will struggle to keep up with the growing demand, Fitch Ratings said on Wednesday.

Private loan origination volumes will increase modestly but still remain low due to the exits of several large lenders, the ratings agency said. It added that other factors such as static federal loan limits and legislative proposals to change the dischargeability of private student loans will make credit less available.

Private student loan origination volume was $8.1 billion in the 2011-2012 academic year, up slightly from $7.9 billion a decade earlier, Fitch found. That was still 68 percent below peak origination levels seen in 2007-2008.

As President Barack Obama’s administration seeks to strengthen financial protections for college students, it has sought greater ways to provide aid through the government.

Fitch said that total student aid has grown at a compound annual pace of 7.7 percent over the last 10 years. Fitch found that in the 2011-2012 academic year the federal share of student was 73 percent, up from 67 percent a decade earlier.

That could make financial aid “more susceptible to government spending cuts,” as the U.S. Congress works on reducing the country’s budget deficit, the agency added.

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