The delinquency rate for all private student loans is at 5.33%,according to TransUnion data listed in a November white paper,“Demystifying Private Student Loans,” authored by financialservices writer Jim Jerving and produced by student lending CUSOsCU Campus Resources and Credit Union Student Choice.
|That's significantly lower than TransUnion's federal studentloan delinquency rate of 12.31%, but the statistic demonstrates thehigh asset quality of credit unions' private student loans —according to Callahan & Associates, private student loansat credit unions have a 1.45% delinquency rate.
|The white paper notes that the 5.33% delinquency rate is highcompared to that of other credit products such as auto loans, andstresses the importance of offering relief programs, such asgraduate repayment options, along with private student loans.
|“As with any loan product, planning for contingencies — like arecession — can protect the organization from the risk of losswhile helping the member through a period of financial stress,”Jerving said. “The goal is to foster a long-term, mutuallybeneficial relationship with the member.”
|In the white paper, Jerving argues that student loans, whichhave been compared to the burst mortgage bubble, are not a threatto the financial system because mortgages were held by financialinstitutions and comprised $8.1 trillion while student loanbalances are mostly backed by the federal government and total $893billion.
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