Student Loan Debt Expected To Top $1 Trillion
November 18, 2011
According to recent news articles, outstanding student loan debt is expected to hit $1 trillion this year for the first time. Researchers say that Americans now owe more on student loans than on credit cards.
As students are borrowing more than ever, the amount of delinquencies is growing too. Student loan delinquencies (loans more than 90 days past due) are now at 11.2%, up from 10.6% in Q1 2011.
Student loans are difficult to shake because borrowers can’t get rid of them with methods like personal bankruptcy. At the same time, increasing amounts of student borrowing could have a major impact on the future economy. Experts say that students who borrow too much will delay things like buying a car/home, getting married and having children.
If your credit union offers, or is thinking of offering student loans, there are 3 important questions to consider:
- Is it the credit union’s responsibility to ensure students do not over-borrow?
- What is the best way to manage borrower expectations to not lose trust if the credit union is forced to take collective action?
- If the laws change regarding student loan collections, what must the credit union do to prepare?
Sources:
- Scariest Student Loan Debt Numbers Ever: $100 Billion, $1 Trillion, TIME Magazine, 10/19/11
- Student Loans Outstanding Will Exceed $1 Trillion This Year, USA Today, 10/18/11
