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The market for private student loans: an analysis of credit union exposure, risk, and returns

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  • Cullen F. Goenner

    (University of North Dakota)

Abstract

Beginning in 2011, credit unions in the United States have been required to report in their quarterly call reports their holdings of private student loans. Since this time, private student loans have been the fastest growing loan product among credit unions. The empirical results here indicate credit unions respond to external market forces and internal exposure to interest rate risk in their decision to hold private student loans. The effect of which, to date, has led to lower returns on their assets and no effect on overall risk. Credit unions looking to diversify their loan portfolio should do so with caution. Private student loans being in deferral reduce both delinquency and charge-off rates, which will rise over time with their seasoning and as interest rates rise.

Suggested Citation

  • Cullen F. Goenner, 2018. "The market for private student loans: an analysis of credit union exposure, risk, and returns," Review of Quantitative Finance and Accounting, Springer, vol. 50(4), pages 1227-1251, May.
    • Handle: RePEc:kap:rqfnac:v:50:y:2018:i:4:d:10.1007_s11156-017-0660-y
    DOI: 10.1007/s11156-017-0660-y
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    More about this item

    Keywords

    Credit unions; Private student loans; Risk; Performance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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