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ISmartMoneyI Private student loans see comeback
NEW YORK (8/26/10)--The number of private student lenders has almost doubled the past 18 months, and many of them are credit unions, according to an article in on The Wall Street Journal Digital Network (Aug. 25). "Unlike most banks that were hit hard by the recession, many credit unions have generally maintained healthy balance sheets and are looking for additional sources of revenue," said the article, titled "Private Student Loans Are Making a Comeback." The number of lenders offering these loans has doubled to 23, with some lenders hoping to make up for revenue lost by the July termination of a program that allowed them to underwrite federal student loans, said, which keeps track of financial aid and scholarship issues, in the article. That means getting a private student loan to fill gaps from federal loan programs will get easier, the article said. Private student loan volume is estimated at about $8 billion to $10 billion, said Kevin Moehn, CEO of Moehn & Associates, a financial consulting service that focuses on education lending. After private student loan volume hit $24 billion in 2007-08, the volume declined by half the following year, but credit unions "are also jumping into the private loan space," said the article. It featured two specific credit union programs. CUNA Strategic Services' provider of private student lending, the New Jersey-based Fynanz, originates, services and underwrites private student loans for credit unions, the article said. Fynanz has 55 credit unions in the marketplace, with 33 of them joining its program since June. Another provider, Credit Union Student Choice, which processes credit unions' loans and provides regulatory compliance, helped more than 65 credit unions enter the private student loan market, including nearly 30 credit unions joining since June. Also mentioned were community banks' IHELP program, launched in November, plus several services from individual banks such as SunTrust in Atlanta and Wells Fargo. The article also provided five tips students should consider when signing up for a private student loan. See the full article for more.
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