Economic Update: How student loan payment resumption impacts credit unions

The government has resumed collections on defaulted student loan repayments, and this month’s Economic Update addresses what that might mean for credit unions. Senior Economist Dawit Kebede walks viewers through data on all student loan borrowers and compares it to data on borrowers who are credit union members.

Kebede shared data that shows credit unions’ indirect exposure to risk due to the resumption of collections is slightly lower than other lenders can expect. In addition, data suggests credit union members were more conservative when it came to credit expansion during the relief period when student loan payments were paused.

“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.”