A Student Loan Debt Solution

Gen Y is eager for student loan consolidation opportunities and credit unions can offer them.

 
Melissa Forsyth

 

How many of your credit union’s members are in college or recent college graduates entering the workforce? How many of those members are burdened with student debt?

Many young credit union members have been confused by exactly how much they’ll end up paying back on their student loans if they make the minimum payments. When I started college, I signed up for both federal and private student loans. I was also the first-born child in my family, so student loans were also a little foreign to my parents.

Fast forward to my last term in college, when I was sitting in a mandatory financial aid counseling session before graduation. I’m handed a piece of paper with my two loan balances written on it.  I’m about to graduate college but all I can do is panic and wonder how I’m ever supposed to pay this huge debt.

After a year out of college, I’m making the regular loan payments and the dust has settled. With mortgage rates extremely low right now, I hear so much talk of refinancing them. Mortgages are huge loans, but what about those of us with student debt – which now totals more than credit card debt in the U.S.? What do we do if we want to refinance our student loans for a better rate?

I’ve heard about consolidating my student loans, but the calculations look complicated. Credit unions can help members like me by going over the calculations with members or offering interest and principal loan calculators on their websites for student loan borrowers. Even reminding those borrowers that automatic payments can decrease interest rates.

Looking back to 2008, I wish I had used a credit union for my student loans and I’d be open to consolidation opportunities from credit unions that offered them. Credit unions have the mission to help their members’ financial well-being. My federal and private student lending institutions seem to see me as a distant balance figure.  It would be nice to connect better the people behind my monthly loan statements as credit unions do.

 
 

Oct. 16, 2012


Comments

 
 
 
  • I wish more credit unions did this with the new graduates. With rates as low as they are now, it doesn't hurt to try and refinance and save some money for the student. So many students are coming out with no jobs and tons of debt, which is no way to start a new career.
    Danielle
     
     
     
  • As a CU with a very young potential market and plenty of new college grads, I appreciate the emphasis on helping these new adults in their loan payoff process. Often we think of helping them plan for college financing but forget they still need us after they graduate. What a terrific opportunity to come alongside them at a critical time in their financial lives.
    Joline Epple
     
     
     
  • Thank you for working to push the issue of providing credit union members with a way to pursue higher education and to alleviate debt. The Student Loan process is a bit scary for members, and by taking the time to walk through options (both on a student loan side, and overall credit and debt ratio side) is so valuable to grow a members relationship with you.
    K Flory
     
     
     
  • There are several credit unions offering student loan consolidation programs including at least one that will consolidate both federal loans and private student loans. The interest rate is based on your credit risk so having good credit is important but it's no different than when you apply for a car loan or get a credit card so it's pretty easy to apply. Terms of up to 15 years for federal credit unions are available but if your credit union is a state-chartered one, other terms may be available based on their state laws. The good news with a student loan consolidation is you make a single payment and like a mortgage refinance, you get a brand new loan. With a good job and good credit, cosigners are often no longer necessary. You don't know until you apply!
    R Burden