WASHINGTON--The government has resumed collections on defaulted student loan repayments, and America's Credit Unions details what that might mean for credit unions.
Senior Economist Dawit Kebede said data show credit unions’ indirect exposure to risk due to the resumption of collections is slightly lower than other lenders can expect.
In addition, data suggest credit union members were more conservative when it came to credit expansion during the relief period when student loan payments were paused, he said.
“Also, credit union members typically obtain more favorable rates on auto loans, mortgages, and credit cards compared to borrowers at for-profit institutions,” said Kebede. “These lower rates result in reduced monthly payment obligations which may serve as a mitigating factor against the financial impact of resumed student loan collections for credit union members.”
Learn more in ACU's latest Economic Update.