CU Student Loans May Dodge Asset Bubble, Delinquency Rates



CU Student Loans May Dodge Asset Bubble, Delinquency Rates


Private Loan Default Rates Continue Lower Than Federal Student Loans


By Heather Anderson - May 20, 2013 - Credit Union Times

From the Wall Street Journal to the activist blog Zero Hedge, economists and pundits have been actively debating this year whether or not a student loan asset bubble exists and if so, when it might pop.

The chatter intensified April 25 when Sallie Mae, the country’s largest originator of federally insured student loans, scrapped a $225 million debt offering. The Wall Street Journal reported the lender pulled the plug on the deal because investors felt the 3.5% interest rate offered wasn’t enough to offset risk. Included with the article was a graph that showed as of year-end 2012, more than 31% of all borrowers were 90 days or more past due on their student loans.

Those numbers could make credit unions, still smarting from corporate credit union mortgage -backed security losses and loan losses on their own books, shy away from the private student loan market in a time when the loans are one of the few products with consumer demand.

However, CUNA Chief Economist Bill Hampel said despite the asset bubble talk, student loans are a good product for credit unions...

[read the full article here]


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