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Pa. credit unions report low student loan delinquency rates

By , - Last modified: March 20, 2013 at 12:10 PM

Delinquencies on student loans taken out through Pennsylvania credit unions are “remarkably lower” than the national average, according to the Pennsylvania Credit Union Association.

The student loan delinquency rate for Pennsylvania credit unions was 0.47 percent in 2012, compared with 1.36 percent for credit unions nationwide, the association said, citing call report data.

These rates are vastly lower than those for the student loan market as a whole. Nationwide, 15.1 percent of students who took out loans “in the three months after October 2010” were delinquent by the end of 2012, according to FICO Labs, part of credit rating firm Fair Isaac Corp., which does business as FICO. The delinquency rate has increased 22 percent in five years, the organization said.

Pennsylvania credit unions employ conservative lending practices, said Russell Evans, associate vice president of business development for the credit union association.

They lend only to four-year nonprofit educational institutions, he said. The majority of loans have a co-signer, and loans are school-certified, meaning colleges confirm loan recipients’ enrollment and receive money directly, he said.

Many Pennsylvania credit unions make loans through a partnership called Credit Union Student Choice, he said. Those loans had a 2012 delinquency rate of just 0.07 percent, the association said.

Nationwide, the average student loan was $27,253 in 2012, 58 percent higher than in 2005, FICO Labs said. Nearly 60 percent of bank risk managers surveyed by FICO said they expected student loan delinquencies to increase, but other types of delinquencies to decrease, the organization said.

“The situation is simply unsustainable,” FICO chief analytics officer and FICO Lab head Andrew Jennings said in a statement.


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