NEW YORK (3/30/12)--Credit unions have moved into the student loan market, offering borrowers a way to consolidate their private loan debt at lower rates, according to a Thursday CBSNews.com article.
While consumers have been able to consolidate federal college debt in the past, that has not be been the case with private college debt. That's because private lenders did not have a reason to offer loan consolidation at lower rates, when they could keep customers paying off loans at higher ones, CBS News said.
Because the average age of credit union members is 50, credit unions have ample incentive to attract younger members, Ken O'Connor, director of student advocacy at cu.StudentLoans.org, told the publication. The cuStudentLoans.org site is powered by Fynanz, a strategic alliance provider of CUNA Strategic Services.
Private consolidation loans for college at variable rates of 4.75%, 5.75% and 7.25% are being offered by credit unions, said the article.
Student loan debt was one of the top topics at the Senate appropriations subcommittee on financial services and general government hearing Wednesday (News Now March 28).
The hearing was the second in about a week to highlight student lending. Sen. Richard Durbin (D-Ill.), who heads the subcommittee, last spring introduced legislation that would treat privately issued student loans the same as other privately issued debt in bankruptcy proceedings in a bill, known as the Fairness for Struggling Students Act (S. 1102).
Also, combined national student loan debt hit the trillion dollar mark several months ago, and students borrowed $117 billion in federal student loans in 2011, Rohit Chopra, Consumer Financial Protection Bureau (CFPB) student loan ombudsman, noted earlier this month.
CFPB has asked credit unions and others in the student lending industry to provide information on the role of schools in the private student loan marketplace, and other issues for a study to be released this summer.
To read the CBS News article, use the link.