Despite Generation Y’s optimistic nature in regards to their financial capabilities and happiness, they struggle with managing their assets and...
Apr 28 2015
Helping Members Navigate College Costs
College signals success, at least for those who graduate. Holding a bachelor’s degree is one of the best determinants of higher lifetime earnings, and college graduates are almost uniformly positive about the value of their degree: 98% of those making six figures and up say their degree has paid off, and even 63% of those making less than $50,000 agree (Pew Research Center 2014). Yet, financing college presents unavoidable challenges for millions of Americans. Obtaining a degree is more essential than ever to advancing in a post-industrial economy. Yet continuing cost growth increases the risk of a debt trap—when obligations exceed earnings growth and disrupt the savings linked to a middle-class lifestyle. Recent regulations, media attention, and economic concerns ensure continuing public attention to our college financing system.
This report highlights a high-impact opportunity for credit unions to empower members with tools and services for sound financial management. Research has shown that the framing of choices affects financial behavior; a raft of web resources is available to members. By propagating best-in-class resources, credit unions can help members make the best possible decisions about financing college.
The findings offer three main points:
- Credit unions have been a marginal segment in US student lending, which is dominated overwhelmingly by government loans (92%), followed by private loans (8%) made mostly by six for-profit institutions
- For those credit unions offering student loans, the most common method is to offer a website application link to a networked service organization, which offers technical support and possesses the capabilities to define the next generation of online finance navigators
- Given the economic, financial, and technological trends documented in this report, it makes sense for these credit unions to keep a toe in the water of private student lending—to offer personalized college financing services to member-borrowers that leverage third-party resources and navigators, enable financially sound decisions, and deliver high-value loan products
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Report Number 356