WASHINGTON (4/23/13)--Credit unions could do more to help debt-saddled grads if the maximum credit union student loan maturity of 15 years was increased, the Credit Union National Association emphasized in a recent meeting with the Consumer Financial Protection Bureau.
The CFPB in the CUNA meeting said it is concerned that college graduates are leaving school with multiple loans to their name and starting their careers with significant debt. A recent CUNA student loan survey found that 25% of students expect to take out two or more student loans during their college careers. Twenty-two percent of those surveyed said they will owe between $11,000 and $50,000 when they graduate, and 15% expected debt of $10,000 or less. Thirteen percent said they would owe more than $50,000 in debt at graduation. (Use the resource link to read April 17 News Now story: Survey: 50% Of High School Seniors Don't Know Student Loan Costs.)
Bureau officials asked CUNA Deputy General Counsel Mary Dunn and Executive Vice President of Strategic Communications and Engagement Paul Gentile if credit unions could help ease students' loan-debt burdens by consolidating several student loans into fewer payments, and at better terms.
To be most effective in providing help, Dunn and Gentile said, credit unions need more flexibility to offer longer-term student loans to their members.
Current law restricts federal credit unions to loans with maturities of 15 years or less, except for first mortgages and other certain loans. CUNA earlier this month asked the U.S. Congress to permit private student loans with maturities of up to 30 years for credit unions that are well positioned to manage such loans. The recommendation was made as part of a 35-point CUNA regulatory relief plan for credit unions.
Student loan debt, which surpassed $1 trillion in 2012, has exceeded credit card debt as the largest source of consumer debt in the U.S., according to the CFPB. More than $150 billion of this $1 trillion total is comprised of private student loans, and at least $8 billion of these private student loans are in default, the CFPB said.