Student lending presents a significant opportunity for credit unions, but long-term responsibility is key.
With the holiday season upon us and only a handful of days left in 2010, I recently found myself reflecting upon the amazing year that Credit Union Student Choice has experienced.
Although my reflections initially centered on the Student Choice program, I had the chance last evening to watch "America’s College Debt Crisis," a special report that aired on CNBC. The report highlighted several of the critical factors affecting the student loan industry including:
- The ever-increasing cost of education that has fueled the growth of student loans;
- The Federal student loan program that encourages borrowing but does not factor in a student’s ability to repay or the corresponding risk to taxpayers;
- The rise of for-profit schools and their reliance on Federal student loans to drive revenue while producing abysmal graduation rates and high loan default rates;
- The questionable tactics employed by some lenders to facilitate higher loan balances to the detriment of a student’s long-term financial success
The report underscores serious issues within the higher education industry, and it also reinforces the very reasons for the creation and continued evolution of credit union-focused student lending operations.
In the past 30 months, Credit Union Student Choice has done considerable work to better the lives of students. Our credit union partners have now funded more than $400 million in no-fee, school-certified loans to nearly 22,000 students who are attending traditional four-year schools. Ultimately, we are helping these students reduce their overall debt burden and better prepare for long-term success while also returning strong economic value to credit unions.
Although we cannot snap our fingers and magically resolve all of the issues highlighted in CNBC’s report, we can feel positive about the much-needed solutions we are providing to American families. As educational funding costs continue to surge, and as traditional funding sources fall short, alternative financing solutions will be critical to the higher education goals of millions of students. By continuing to work in a prudent manner with a keen focus on economic value and borrower relationships, credit unions will play an increasingly important role in 2011 and beyond.