The Rundown
|- Credit unions poised to prove that student loans are viable investments.
- Slight growth last year has increased the industry's comfort level.
- Emphasizing the differences between federal and private student loans is key for credit unions.
Last year was not the most glowing year for student loans, reputation-wise. The Consumer Financial Protection Bureau's release of numerous negative comments from the public on their experiences as private student loan borrowers, comparisons of student loans to the burst mortgage bubble and the fact that national student loan debt grew to nearly $900 billion has led to questions about how wise it really is to make or take out a student loan.
But credit unions in the private student lending business are set on turning bad news to good and hope to prove that private student loans are viable investments for credit unions and their members. In 2012, while private student loans remained a small sliver of credit unions' total loan portfolios, their popularity grew. According to Callahan & Associates, private student loans compose 0.32% of credit unions' total loan portfolios as of third-quarter 2012, a small hike from third-quarter 2011's 0.23%.
The Washington-based research and analysis firm also reported outstanding private student loans at credit unions total just over $1.9 billion as of third-quarter 2012–an increase of around $600 million in the past year–and the number of credit unions that hold private student loan balances grew from 488 in 2011 to 581 in 2012.
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