CU Journal Article - What's Missing in Much of the Student Loan "Analysis"

What's Missing In Much of the Student Loan 'Analysis'

Credit Union Journal | Monday, December 10, 2012

By Jon Jeffreys

Readers beware. On the heels of the Consumer Financial Protection Bureau/Department of Education report, "Private Student Loans," sensational headlines continue.

While private student loans (PSLs) make up just a small fraction of the overall student lending market (less than 7% of total originations during 2010-11), abusive lending practices during the boom years of 2005-08 make for dramatic stories. In the early 2000s, skyrocketing tuition and soaring enrollment fueled the fire as free-flowing capital from the asset-backed securities market made it easy for aggressive lenders to step in. And they did, focusing on quantity over quality, with little concern for risk management or borrower education. Loans were abundant, and underwriting standards were shallow. In hindsight, the boom - and ultimate bust - of private student lending is no surprise... (download the full article here)


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