The delinquency rate for all private student loans is at 5.33%, according to TransUnion data listed in a November white paper, “Demystifying Private Student Loans,” authored by financial services writer Jim Jerving and produced by student lending CUSOs CU Campus Resources and Credit Union Student Choice.
That's significantly lower than TransUnion's federal student loan delinquency rate of 12.31%, but the statistic demonstrates the high asset quality of credit unions' private student loans — according to Callahan & Associates, private student loans at credit unions have a 1.45% delinquency rate.
The white paper notes that the 5.33% delinquency rate is high compared to that of other credit products such as auto loans, and stresses the importance of offering relief programs, such as graduate repayment options, along with private student loans.
“As with any loan product, planning for contingencies — like a recession — can protect the organization from the risk of loss while helping the member through a period of financial stress,” Jerving said. “The goal is to foster a long-term, mutually beneficial relationship with the member.”
In the white paper, Jerving argues that student loans, which have been compared to the burst mortgage bubble, are not a threat to the financial system because mortgages were held by financial institutions and comprised $8.1 trillion while student loan balances are mostly backed by the federal government and total $893 billion.
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Natasha Chilingerian
Natasha Chilingerian has been immersed in the credit union industry for over a decade. She first joined CU Times in 2011 as a freelance writer, and following a two-year hiatus from 2013-2015, during which time she served as a communications specialist for Xceed Financial Credit Union (now Kinecta Federal Credit Union), she re-joined the CU Times team full-time as managing editor. She was promoted to executive editor in 2019. In the earlier days of her career, Chilingerian focused on news and lifestyle journalism, serving as a writer and editor for numerous regional publications in Oregon, Louisiana, South Carolina and the San Francisco Bay Area. In addition, she holds experience in marketing copywriting for companies in the finance and technology space. At CU Times, she covers People and Community news, cybersecurity, fintech partnerships, marketing, workplace culture, leadership, DEI, branch strategies, digital banking and more. She currently works remotely and splits her time between Southern California and Portland, Ore.
