X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Google the phrase “student lending crisis” and you’ll be inundated with nearly two million links to a myriad of articles, blogs and editorials detailing the demise of the student lending industry. Before you chalk it up to governmental blunders and greedy bankers and move on to more pressing credit union issues like how you’re going to sell used car loans to a membership base whose average age is pushing 50, take heed of a statement made by John F. Kennedy in 1959.

“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity.”

So, where is the opportunity amid the turmoil? Take a closer look at the problem, which first began with the College Cost Reduction and Access Act of 2007 that slashed the yield lenders earn on federal loans. That tropical depression for student lenders grew into a Category Five hurricane in 2008 with unprecedented market turmoil and restricted access to capital, as the market for securitized loans–which student lenders sell to raise capital so they can fund more loans–simply evaporated. As a Wall Street Journal editorial succinctly stated, ” The combination of legislative fiat and fewer investors willing to buy asset-backed securities amid the credit crunch has put the squeeze on lenders.” This squeeze forced many traditional lenders to exit the marketplace for both federal and private student lending, leaving students and families scrambling for financing like never before.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.