A new report by the Project on Student Debt shows that an alarming number of students are taking out private student loans, which often come with high and variable interest rates and few borrower protections, before exhausting federal sources of funding.

Among their findings:

• The portion of private loan borrowers who did not exhaust federal sources of student loans increased from 48% in 2003-04 to 64% in 2007-08.

• The portion of all undergrads who borrow private loans has increased dramatically from 5% in 2003-04 to 14% in 2007-08. Students at certain kinds of institutions are much more likely to take out private student loans, however. 14% of students at public four year universities have private loans, compared to 42% of students at for-profit schools.

• African Americans are the most likely to borrow private loans. Between 2003-04 and 2007-08, the number of percentage of African American undergrads who took out private loans rose from 4% to an alarming 17%.

Though these loans often come with interest rates comparable to a credit card and few borrower protections, borrowers are unable to discharge them in bankruptcy.

The Project on Student Debt is also calling on folks to support a Consumer Financial Protection Agency that, among other things, could regulate private student loans. Despite some new disclosure regulations passed last year, not enough has been done to reign in the growth of these dangerous loans. Take action by clicking here.

Cross-posted at Students Over Banks.