Strategies to test for private student loan discrimination

Little is known about private student loan discrimination, in contrast to the relatively developed research on discrimination in other credit markets such as mortgages and credit cards. The private student lending market can play a key role in responding to changes in the policy or economic environment, and many students and their families turn to the private loan market in order to cover financial need that is unmet by publicly funded programs. This paper includes a review of strategies used to measure discrimination in other credit contexts and a consideration of the applicability of such techniques for use in testing for differential outcomes in the private student loan market. The aim of the paper is to connect extant credit market discrimination literature and models to private student loans and to suggest possible avenues for future inquiry into the topic. Although fair lending analyses from other contexts provide lessons for measuring discrimination in educational credit markets, there is a need for better data and a more developed understanding of decision making in educational credit markets.