The average consumer with a student loan carries about $35K in debt. Many of these consumers have also acquired new credit products over the course of the past three years, growing their debt level and cross wallet monthly payments since student loan forbearance started. A new TransUnion (NYSE: TRU) study, “Implications of the End of Pandemic-Era Student Loan Forbearance,” found that, as student loan payments resume in September 2023, many borrowers may find themselves facing the challenge of having to manage these payments for the first time amidst a more expensive monthly debt portfolio. The U.S. Department of Education has directed that student loan delinquencies not be reported to the credit bureaus for 12 months until September 30th, 2024, helping to protect consumers’ credit as they manage these new payments. The TransUnion study looked at the anticipated impacts of these restarted payments on consumers’ wallets. TransUnion’s study found that as of May 31, 2023, 40.6 million consumers possessed student loans, totaling $1.6 trillion in balances. From this group, approximately 26.8 million consumers with federal student loan debt totaling $1.1 trillion are expected to be faced with a resumption of payments for the first time since the beginning of pandemic-related payment moratorium, or for the first time ever if they were not in repayment prior to the moratorium. Many students with private student loans did not have a payment holiday. While current Department of Education plans for student loan forgiveness could alleviate payment requirements for some borrowers once finalized, most of this group will be facing monthly student loan payments for the first time in years. These borrowers will experience a payment shock as they attempt to recalibrate their monthly budgets to accommodate this new payment. “The majority of consumers with a student loan have not been required to make payments for the better part of three years,” said Liz Pagel, senior vice president and head of TransUnion’s consumer lending business. “Payment amounts will vary, but many of these consumers have taken on additional debt since the last time they had to pay their student loans. It’s important for both lenders and consumers to be prepared for this new payment shock.” Student Loan Borrowers Increased Debt Loads on Other Credit Products During the Pandemic One of the key reasons why student loan borrowers may be particularly vulnerable to payment shock can be found in the number of borrowers who have opened new credit products since the beginning of the pandemic. “These additional credit products mean additional monthly payments, the accumulation of which may pose added challenges for households attempting to reintegrate student loan payments into their monthly budget,” added Pagel. While the Department of Education has offered a 12-month runway before student loan delinquencies will have an impact on consumer credit files, interest will begin to accrue immediately so it is in the best interest of consumers to resume payments right away. Payment Shock Impact on Student Loan Borrowers TransUnion’s study analyzed consumers who will experience a payment shock across a range of dimensions. These areas included generational breakdowns and credit risk ranges to determine how large their expected student loan payments will be once they are restarted. The study showed that about 50% of consumers who will experience a payment shock are expected to have a payment of more than $200 a month and about one in five will see payments of more than $500. The study also showed that these figures did not vary significantly when viewed across credit risk tiers. For instance, between 18% and 20% of borrowers had payments of more than $500 over each risk tier. There was, however, some divergence when looking at the data across generations, as the Silent Generation, Baby Boomers and Gen Xers were more likely to have payments of $500 or more, while Gen Z borrowers were significantly less likely, with only 5% expected to have payments of more than $500. “Regardless of credit risk range, the sudden addition of a new regular monthly payment on top of existing obligations can prove challenging for any household,” said Margaret Poe, head of consumer credit education at TransUnion. “It’s important that student loan borrowers who know or anticipate that their payments are likely to resume soon should begin assessing their monthly budgets, making any needed adjustments as soon as possible to help mitigate the impact of these payments.” To better understand how a student loan payment shock may impact a consumer wallet, lenders can leverage TruVision Premium Student Loan Attributes, TruVision Trended Usage Payment Ratio Algorithms and TruVision Trended Liquidity Algorithms.
0 Comments
Members First Credit Union has announced the launch of its "Double the Donation"; campaign in support of New Dawn Shelter. This initiative aims to maximize the impact of community donations by matching them dollar-for-dollar, up to a total of $20,000. As a Community Development Financial Institution (CDFI), Members First wants to continue to deepen the mission of serving the underserved, especially in the capacity of basic needs and housing. This mission starts at the most basic level of ensuring community members have a safe space to reside when experiencing homelessness. New Dawn Shelter is dedicated to providing comprehensive support to individuals experiencing homelessness on their journey toward employment and secure housing. Through a 90-day program, guests work closely with case management staff to develop personalized plans focused on achieving long-term stability, including securing housing, income, and overall security. They also participate in training sessions covering essential life skills such as budgeting and financial management. The cost to house one guest for a day is $19. With four bedrooms able to accommodate 10 to 12 guests including men, women, and families, New Dawn Shelter relies on donations from individuals, businesses, and churches in Gladwin and surrounding communities. These donations are crucial in sustaining the shelter's operations and providing critical support to homeless individuals seeking a fresh start. Members First Credit Union's "Double the Donation"; campaign encourages community members, local businesses, and credit union members to contribute generously to New Dawn Shelter. For every dollar donated, Members First will match the donation, effectively doubling the impact of each contribution, up to $20,000. “We are thrilled to launch the 'Double the Donation'; campaign in partnership with New Dawn Shelter,” Kristen Williamson, Community Relations Leader at Members. “By matching donations, we hope to inspire others to contribute and make a meaningful impact in the lives of individuals experiencing homelessness." To participate in the campaign, community members can donate directly through New Dawn Shelter's official website or drop off a donation at New Dawn Shelter, 137 Commerce Ct., Gladwin, Michigan. The campaign will run until September 30th or until the goal of $20,000 has been reached. "We are grateful for the generous support of Members First Credit Union," said Kevin Brott, CEO of New Dawn Shelter. “Their commitment to our cause will provide a tremendous boost to our efforts in providing shelter, resources, and hope to those experiencing homelessness. Together, we can make a lasting difference in the lives of vulnerable individuals within our community." Members First Credit Union encourages the community to spread the word about the “Double the Donation” campaign through various channels, including social media, community newsletters, and word of mouth, to maximize community engagement and impact. For more information about the "Double the Donation" campaign and how to contribute please visit mfcu.net/newdawn. Agent IQ, a provider of digital customer engagement solutions specializing in making financial services more personal again, announced today that Stanford Federal Credit Union (Stanford FCU) has selected Agent IQ as its strategic partner to revolutionize digital member experience initiatives through personalized, relationship-based banking. Nestled in the heart of Silicon Valley, Stanford FCU continues to draw on its university talent and high-tech community’s innovation by tapping Agent IQ’s Lynq™ platform to deliver a more digitally consistent banking experience to its members. Combining the credit union’s trusted team of associates with the efficiency of AI/ML, automation and self-service options allows Stanford FCU to develop a member-centric engagement model and communicate with members via a secure, user-friendly and AI-augmented chat platform. Integrating the importance of human empathy and computer intelligence, Lynq equips Stanford FCU with real-time digital connection between members and associates; empowers members to select and engage with a preferred personal associate across any digital channel; stores previous conversations for internal collaboration and provide context to members’ unique situations; facilitates video and co-browsing options to further enhance and support member interactions; and eliminates active waiting as members can request a personal advisor and receive notification once an associate responds. “We are excited to help Stanford FCU further deliver innovation and convenience with the most updated and personalized communications to create a more fulfilling banking experience for its members,” said Slaven Bilac, CEO & Co-Founder, Agent IQ. “The key to modern relationship banking is augmenting the human banker; not replacing them. With the Lynq platform, the credit union is equipped with real-time insights for greater transparency between members and employees, ultimately allowing associates to better connect, engage, and support members.” “Being able to provide more digital options for our members was of particular importance to us; particularly with how tech savvy our members are,” said Deena Otto, SVP/Chief Operating Officer, Stanford FCU. “Agent IQ’s platform was able to provide the high-tech digital engagement for our members while allowing our high standard of member experience to shine through.” Registration is open for TruStage’sTM Discovery2023 conference on Thursday, August 10, 2023. The no-cost, all-day event will feature nine breakout sessions, six networking sessions, two keynote addresses and one Steve “Woz” Wozniak. Silicon Valley icon, entrepreneur, philanthropist and co-founder of Apple Inc., Steve “Woz” Wozniak, will address the potential impact of artificial intelligence, blockchain and other cutting-edge technologies on the financial services landscape. “2023 has seen a lot of change,” said David Sweitzer, executive vice president and Chief Experience Officer of TruStage. “Technology continues to encroach on every facet of our modern lives. Financial institutions are no different. Discovery2023 will focus on helping credit unions make the most of recent technological advances and confidently make plans for 2024.” Other topics include, the future of credit unions and the credit union workplace, using market intelligence to shape credit union strategy and developing digital pipelines for financial well-being. The yearly event is held the first Thursday of August to help inform and prepare credit union staff as they begin annual planning for the upcoming year. All credit union and league employees are welcome and encouraged to attend. For more information or to register for this year’s event, please visit trustage.com and search “Discovery2023 Conference. SMA Technologies, the leading provider of automation solutions for financial services and the maker of OpCon Workload Automation & Orchestration (WLA&O), today announced Robotic Process Automation (RPA) capabilities for its automation platform for financial services. OpCon RPA enables clients to easily record and automate UI-specific workflows in Windows or on the web, ensuring smooth execution of financial services workflows that traditionally required manual intervention. "OpCon RPA is our next step in providing our clients the most comprehensive automation platform to save time, reduce errors, and free their staff to work on more strategic initiatives,” said Todd Dauchy, CEO of SMA Technologies. The release of OpCon RPA takes place amidst a diverse and dynamic RPA marketplace backdrop, where most solutions are general purpose across industries. Unlike generalized automation solutions, OpCon RPA takes advantage of SMA’s leading library of integrations for banks, credit unions, and other financial services companies to address specific workflows unique to those businesses. OpCon RPA is a significant leap forward, addressing manual gaps, increasing individual and organization efficiency, and facilitating end-to-end automation. The new offering fills the automation 'last mile,’ offering unprecedented levels of operational efficiency by extending the capabilities of OpCon into jobs traditionally requiring manual intervention. Examples include:
“With OpCon RPA, we're pushing the envelope of automation possibilities for financial services," said Ryan Dimick, Chief Technology Officer of SMA Technologies. "We're excited to provide our clients with the ability to increase efficiency and drive more innovation within their organizations by freeing employees to engage in more meaningful work." For more information about OpCon RPA, visit https://smatechnologies.com/opcon-robotic-process-automation. PSCU – the nation’s premier payments CUSO and an integrated financial technology solutions provider – published the July edition of the PSCU Payments Index, the goal of which is to provide information and insights to help financial institutions navigate the evolving financial landscape to make informed, strategic decisions for their organizations and members. While recession fears are abating in the near-term, they will continue to be a concern over the next 12 months. This month’s PSCU Payments Index finds improved consumer sentiment and renewed purchasing growth for both credit and debit. In June, credit card purchases rebounded with positive year-over-year growth, while debit card purchases posted similar upward gains. This month’s Deep Dive highlights the Services sector, including which of the varied merchant groupings contributed to making this sector the most impactful on the overall growth in purchases for June. In the Labor Department’s July 12 update, the Consumer Price Index (CPI) increased by 0.2% in June. The annual rate of inflation dropped from 4.0% through May to 3.0% through June, the lowest in the past 26 months. While this is the 12th consecutive monthly drop in the annual rate from the peak of 9.1% in June 2022, it remains higher than the Fed’s target annual inflation rate of 2.0% and is likely to tick up slightly in August. The largest contributor to inflation continues to be shelter, accounting for over 70% of the annual increase, with contributions from motor vehicle insurance, apparel, recreation and personal care. After falling in May, the energy index (which includes gasoline) increased 0.6% in June. The Consumer Confidence Index improved substantially in June to 109.7 (1985=100), up from 102.5 in May. While this is the highest level since January 2022, consumers continue to signal expectations that a recession is on the horizon in the next six to 12 months. Treasury Secretary Janet Yellin recently commented that a recession is not completely off the table and “we should expect job gains to be coming down to more normal levels.” The Bureau of Labor Statistics (BLS) reported in its June 2023 jobs report that 209,000 jobs were added for the month (nearly 100,000 fewer than the revised May figures), with increased jobs in government, health care, social assistance and construction. The overall unemployment rate, remaining low, decreased to 3.6%, or six million people for June. With inflation still above the Fed target rate of 2%, low unemployment and job creation cooled, yet still solid, a subsequent additional rate increase may occur sooner than expected. The next Federal Open Market Committee (FOMC) meeting is set for July 25-26. “While consumers continue to feel financial pain from two years of high inflation and sharply increased borrowing costs, signs of improved sentiment were evident in the positive year-over-year credit and debit purchase growth in June,” said Norm Patrick, vice president, Advisors Plus Consulting at PSCU. “In this month’s Deep Dive, we explore the Services sector, which contributed to the largest share of positive overall growth for credit purchases. For now, resilient consumer spending and the strong job market are staving off the odds of a full-blown recession. The coming months will be key in determining the full effects of the Fed’s aggressive rate hikes.” A sampling of key takeaways from the July report includes:
The full report is available for download here or can be shared as a PDF upon request. Let us know of any questions or additional needs, or if you’d like to coordinate an interview. Origence, the leading lending technology solutions provider for credit unions, is hosting a free webcast entitled “The US Economy: Rising Rates, Real Risks, and Recession?” with special guest speaker Economist Elliot Eisenberg on July 27, 2023 at time 11 am PDT. With 2023 Q2 GDP looking surprisingly strong at about two percent, and consumer spending holding up due to a combination of pent-up demand for services and excess COVID savings suggests that the remaining of 2023 should be good. However, inflation, particularly core inflation, continues to remain high. In this session, Eisenberg dives into what is expected for the rest of 2023 and beyond. Eisenberg’s session will include:
“We are excited to make the knowledge and expertise of Elliot Eisenberg available to credit unions across the country once again,” said Neetu Bhagat, chief financial officer, Origence. “Elliot shares a great deal of information that is helpful in guiding institutions during these complex times. Our hope is to stimulate conversations, empower credit unions with deeper understanding and inspire innovative approaches to the economic challenges we face today.” Credit unions can join us for this free webcast by registering here. Winona Nava, President and CEO of Guadalupe Credit Union in New Mexico, has been honored with the 2023 James D. Likens Western CUNA Management (WCMS) Alumni Recognition Award! Each year, this prestigious honor is awarded to a WCMS alumnus who has made significant professional growth and strides in his or her credit union career — as well as leading through significant service to the credit union community — after graduation from Western CUNA Management School. Winona attributes much of her successful 45-year career in credit unions to winning a full scholarship to WCMS in 1983. Throughout her career, she continually took on duties beyond those in her job description and learned as much as possible. In 1983, upon returning from WCMS, she received a promotion to Branch Manager of State Employees Credit Union in Santa Fe, NM and established the first branch, which was 60 miles away in Albuquerque. Following graduation from WCMS in 1985, this single mom returned to school to pursue her bachelor’s degree. Promoted in 1985 to Operations Manager of the then $12.5 million-asset credit union, she managed the accounting, plastic card, and operations of State Employees. In 1986, she was promoted to Executive Vice-President and served in that capacity until 1991. She served as the main touchpoint for examiners. She also served on her state credit union league’s Chapter Board, quickly becoming the President. Additionally, she achieved the designation of Certified Credit Union Executive from the Credit Union National Association (CUNA) in 1989. Following the exit of a new CEO who had replaced the retired CEO of Guadalupe Credit Union in 1989 (resulting in conservatorship), state and federal regulators encouraged her to apply for the open CEO position. She did so — and started her new position in May of 1991 when the credit union was $10 million in assets. By February 1992, the regulatory conservatorship ended, and member control was regained. Over the next nine years, the credit union prospered and grew from $10 to $30 million in assets under her leadership. She also led a field-of-membership expansion to underserved individuals in the credit union’s footprint, which fueled growth. Under her leadership, the credit union gained a national reputation for finding effective ways to serve immigrant families, helping it to become a Community Development Credit Union. She helped the credit union grow its assets from $30 million to $133 million by 2014, expanding its field of membership from one to seven counties and adding several new branches. Winona decided to create the position of a full-time FiCEP (Certified Credit Union Financial Counselor) and develop financial literacy classes. Today, Guadalupe Credit Union is more than $265 million in assets, serving more than 25,000 members, and is well-capitalized, growing and strong. Thanks to Winona’s leadership and her heart for serving the underserved, Guadalupe Credit Union helps many individuals build wealth and improve their financial lives. The credit union has won first place nationally in the Dora Maxwell, Louis Herring, and Desjardin Youth categories of the CUNA Awards. It was also a first-place recipient in the National CRMNEXT “Right on the Money” Award in 2021. Under Winona’s tenure, Guadalupe Credit Union has won many awards — from “Top Workplace” to “Best Places to Work,” including first place and a values award. The credit union is a platinum-level family friendly workplace in New Mexico and actively participated in the National Credit Union Foundation’s Real Solutions program. Most recently, she was honored as the 2022 recipient of the National Credit Union Foundation’s Herb Wegner Award. Winona has served the credit union industry in many ways during the last 45 years, including being involved in the following:
Eltropy, the leading enterprise-wide digital conversations platform for community financial institutions, today announced it has partnered with Texas Bay Credit Union, a community financial institution (CFI) serving the greater Houston market. Texas Bay chose Eltropy as an important step in its ongoing digital transformation to help improve its member engagement across account openings, providing loans, and member services. The credit union went live on the Eltropy Digital Conversations Platform on August 1, 2022. "We’re a digital-focused organization committed to delivering value and seamless communication channels to our members. Our partnership with Eltropy shows our dedication to member-centric design and continuous innovation,” said Osman Ulhaq, VP of Strategic Growth and Development at Texas Bay Credit Union. “With a phased approach, we’ll introduce game-changing features like Video Banking, Chatbot, Conversation AI and more. These advancements empower members with efficient account opening, streamlined lending, and personalized servicing interactions.” "We love the mission at Texas Bay Credit Union and look forward to helping them enhance the entire member journey, from account opening to ongoing support," said Dave Norton, Chief Revenue Officer at Eltropy. Working with the Eltropy Customer Support Care team, Texas Bay Credit Union will begin a phased approach to utilizing Eltropy's advanced capabilities, delivering exceptional member experiences, improving operational efficiency, and fostering long-term growth for the credit union. Credit Union of Atlanta, a leading community-focused financial institution, is thrilled to announce the appointment of Debra Collins as its new CEO and President. Her appointment is set to invigorate the credit union’s commitment to serving the Atlanta community and underline the Credit Union of Atlanta’s dedication to fostering strong leadership within the financial sector. Credit Union of Atlanta has a long-standing reputation for excellence in the financial industry, serving a diverse membership across the Atlanta community. The institution is renowned for its commitment to member satisfaction and its ability to deliver innovative financial solutions. On behalf of the Board of Directors, we are delighted to welcome Debra Collins as our new CEO,” said Reggie Grant, the Board Chair of Credit Union of Atlanta. “Her wealth of experience, coupled with her passion for community service, makes her the perfect leader to guide our credit union into the future. We are confident that under her leadership, the Credit of Union of Atlanta is poised to enter a new era of community-focused growth and service.” Debra is a passionate leader with a strong vision for the success of the credit union and a commitment to the Atlanta community. She joined Credit Union of Atlanta in 2019 as the Vice President of Retail Operations and BSA Compliance Officer. Previously, she held leadership positions at Pinellas Federal Credit Union and MacDill Federal Credit Union. Her background has enabled her to leverage analytical, management, and leadership skills to drive results as a collaborative leader. In response to her appointment, Debra Collins said, “I am incredibly excited to step into this new role with the Credit Union of Atlanta. This institution has always been a pillar of the community, and I am committed to furthering this legacy. Together, we will continue to serve our members with the utmost dedication, fostering financial literacy and growth, and serving as a Beacon of Light for our community now and for generations to come.” Credit Union of Atlanta is excited to welcome Debra Collins and looks forward to a future of growth and service under her leadership. |
Author: Mike LawsonMarried to a most gorgeous and wonderful wife, raising 5 kiddos (including twins!), enjoy helping others tell their stories, and love surfing SoCal waves. Keep it simple. Archives
May 2024
Categories |