Feb 03 2015

Student Lending: Challenges and Opportunities for Credit Unions

College graduation brings joy. It also comes with a price—a very expensive one. This is especially true for those students who rely on loans to finance their college tuition, books, and housing. In fact, the average borrower will graduate with $26,600 of student debt.  While federal and private student lending programs expand access to college for many students, they are contributing to a national debt crisis.

This report aims to give an overview of what credit unions are doing to help finance college education, the opportunities available to credit unions to provide structured private lending options, and how this current financial burden on graduates is affecting big life choices. The report includes examples of credit unions that are currently offering attractive loans to undergraduate students and consolidation services for graduate students.

To that end, credit unions have a prime opportunity to offer students resources that will help them better plan, financially, for college so that they aren’t burdened with debt upon graduation. Some of the most effective solutions include:  

  • Engaging and educating high school students on all of the available funding options on the market.
  • Customizing student lending services so that each individual student has a loan option that is tailored to meet his or her needs and repayment capability.
  • Incentivizing private loans with performance-based models that encourage students to get good grades in order to receive reductions in loan interest rates.
  • Offering cash flow management products that give students access to quick cash that can be used toward education expenses beyond tuition.
Report Number 349