The Project on Student Debt issued a press release yesterday pointing to new federal data showing a large increase in private student loan borrowing. Private student loans, unlike federal loans like Stafford, PLUS, and Perkins, often have high and/or variable interest rates, and fewer protections for borrowers.

The new data shows that the portion of all undergraduates who are taking out these loans increased rapidly from 5% in 2003-04 to 14% in 2007-08. The numbers for students at for-profit colleges is especially concerning. 13% of these students took out private loans in 2003-04, but last year that number was a shocking 42%.

Students at some kinds of institutions were forced to turn to private student loan debt more than those at other kinds of institutions.

Unfortunately, the number of students taking out these risky loans without first exhausting their eligibility for federal aid also increased from 22% on 2003=04 to 26% in 2007-08.

These numbers do not reflect the more recent effects of the recession and credit crunch, but they do show that federal student aid, including the Pell grant, has not kept up with the demand caused by rising college costs.

In August, Congress passed legislation that would help protect private student loan borrowers. This legislation included a provision that would require lenders to let prospective borrowers know that they should exhaust their eligibility for federal aid and loans before turning to private loans.

The President’s 2010 budget proposal includes a policy that will expand and reform the Perkins Loan program, which should help students that would otherwise turn to risky private loans.