The Best Lesson? Wise Student Loan Decisions

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Lately, student lending has been making headlines, from record outstanding student debt levels, to college affordability, to the recent article on proposed legislation to help inform borrowers about student loans (CU Journal, April 10, 2012).

It's easy to get lost in the hype and extremes of rising student debt when, in reality, 72% of borrowers owe less than $25,000 and fewer than 5% owe more than $75,000. Compared to data outlining the value of a higher education, it's clear that a college degree is a worthwhile investment for young adults, especially if they are planning carefully and borrowing wisely.

While it's hard to comment on the proposed legislation without knowing the specifics, we fully support the idea of educating borrowers. School-certified loans, as outlined in Credit Union Journal's article on the Senate bill, are certainly a good idea-and one that CU Student Choice already practices with every loan our partner credit unions make.

Credit unions can have an important role to play. They can start by educating students and parents on using student loans wisely, and only after other lower-cost funding source have been maximized. By following sensible underwriting criteria and lending to students who attend traditional, four-year, not-for-profit institutions, credit unions can craft a program that works for borrowers and the cooperative. Perhaps most importantly, credit unions should use this opportunity to cultivate long-lasting, authentic member relationships.

Jon Jeffreys, President

CU Student Choice, Washington, D.C.

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