Apparently, the Washington credit union regulator believes so.
On May 24, 2011, the Division of Credit Unions sent out a bulletin on Safe and Sound Student Loan Programs. Click here to read the bulletin.
Examiners from the Division of Credit Unions noted that "a few Washington credit unions have adopted student loan programs with very limited research and few controls."
The bulletin advises credit unions to due their due diligence before implementing the program, especially with regard to the underwriting standards of indirect student loan programs offered by third party vendors.
Additionally, the bulletin recommends that credit unions minimize their concentration risk by limiting growth of no more than 10% of the credit union’s net worth per year. The Division of Credit Unions recommends that the concentration limit remain in place until the credit union has at least three years of satisfactory experience with the private student loan program and at least two years of collecting material amounts of the loans.
As of the end of the first quarter of 2011, 385 credit unions held slightly more than $1 billion in private (or non guaranteed) student loans on their books.
Four credit unions report holding non-guaranteed student loans in excess of their net worth -- Huron Area Education FCU, Mass Institute of Technology FCU, CTCE FCU, and Harvard University Employees Credit Union. Ninety-two credit unions have private student loans in excess of 10% of their net worth.
Digital FCU has the most private student loans at almost $65.3 million. Other credit unions with sizable private student loan portfolios are University of Wisconsin Credit Union at $49.7 million and Eastman Credit Union at $44.9 million.
The following table lists the 25 credit unions with the most private student loans (click on image to enlarge).
I happen to know that at least one of the credit unions in the top ten of this list has a University guarantee on the face value of all student loans.
ReplyDeleteBe careful how you analyze data from publicly available sources. Important information may be missing.
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