The National Association of Federal Credit Unions said in a Friday letter to the CFPB that it would oppose measures that could unintentionally hurt credit union lending by restricting the private student loan market.
“For college students in need of securing student lending beyond what is available to them through public student loans, credit unions serve as important partners,” NAFCU said. “Credit unions are unique in that they are member driven not for profit institutions that develop and market products specifically to best suit the needs of their members. At credit unions, products such as private student loans are often coupled with unparalleled personal and responsible financial education that allows members to make educated decisions about what is right for them.”
NAFCU pointed to a March report by the National Credit Union Administration that found total delinquencies in the private student loan market stand at 5.4 percent, compared to 1.46 percent for credit unions.
“Unlike other institutions, credit unions are philosophically, structurally and financially incentivized like no other financial institution to be responsive to the individual needs of its members,” NAFCU said. “Credit unions work with their members to ensure they are in an appropriate product and have an interest in building a life-long financial relationship with that individual.”
Additionally, NAFCU said private student loan servicing is a strong point for credit unions “because of the cooperative and member driven nature of the way they do business,” adding that credit unions were recognized in a CFPB report for the small number of complaints stemming from private student loan borrowers.