It's springtime and students are graduating, looking forward to their next step in life. Some are high school seniors about to embark on a brand new experience and obtain a college education. Others are graduating from college and about to enter the proverbial real world—with real jobs, real responsibilities and unfortunately, a lot of real debt.
Preparing for these life steps are important, and proper planning can help ease some of the burden. College savings plans, such as 529s, student loans and overall responsible spending and investment plans can relieve some of the stress and provide assistance in repaying the debt. As a credit union, helping your members successfully manage their higher education debt represents a big opportunity to help them not only plan for but survive one of the biggest expenses in their lifetime.
In 2023, one report estimated that 43% of Millennials have student debt and the average balance is $42,637, and will most likely take many years in order to pay it back. And while some are lucky enough to perhaps select an occupation where loan forgiveness is offered, such as in the area of a public service profession, most struggle to find ways to manage the payments after graduation, even with the help of a parent. As we know, the cost of a college education is increasing every year - a recent report estimated the cost of just one year at a public university rises by about 6% annually and by 2030, the estimated cost will be $44,000 a year to attend school.
Though much of today's personal finance management is accomplished through mobile innovations and technology, there is still much to be gained by making an appointment and meeting with a member services representative or financial adviser in person to discuss the individual financial needs of your members, and should be encouraged. When it comes to saving for college and any pre-planning, members should be made aware of the various solutions and tools available to help make the cost of education more bearable. Options such as the Coverdell Education Savings Account, or a 529 plan can be set up, as well as repayment strategies discussed and personal loan terms and other lending solutions explored.
Once a student has graduated, in the case where a student loan was not originated at your credit union, many are offering incentives to bring the loan over, including fee waivers, low or discounted APRs, and a reduced payment.
Though graduates are predicted to be saddled with college debt for many of their first years in the working world, many are still interested in planning for the future. They have the foresight to want to own a home and a car, and even plan for retirement. In fact, when polled, 83% of Millennials and Gen Xer's viewed saving for retirement as an important financial priority. As a credit union, you have the unique opportunity to know your members well, and can partner with them to offer a variety of financial solutions and options no matter what they may be interested in.
Proper financial planning and education is important at all stages of life. Members should recognize that their credit union is in their financial corner and not hesitate to make an appointment to visit a branch and build a plan for any life event, including higher education expenses. Many credit unions offer classes, provide budgeting applications, first-time homebuyer programs, and a variety of investment and loan options as a part of their credit union member services, designed to help their members at every stage of life.
