This blog recently discussed the difficulty that younger Americans are facing in terms of home ownership. Coupled with high unemployment rates and a likelihood of facing student loans after graduation, younger borrowers could be riddled with debt for some time.
While this does not mean that all Millennials will have poor credit, financial institutions need to remain aware of these issues. Using current lender software will help them make sound decisions when choosing creditworthy borrowers. Additionally, it will ensure that loan payments are designed to benefit the borrower and the lending organization as well.
With recent research showing that college admission directors expect incoming students to take out a certain amount in loans, it should also be expected that graduates will in turn have payments to make when they complete their program.
According to an Inside Higher Ed survey, 48 percent of private college admission directors feel that taking out between $20,000 and $30,000 in loans is “reasonable.” For public schools, 33 percent of those surveyed agreed with that amount of loans as acceptable.
“In general, the report also shows that admissions officers are becoming more comfortable with student debt,” explained a Bloomberg Businessweek article. “Last year, 22 percent said debt of more than $30,000 was fine. That figure rose to 25 percent this year.”
Not all recent graduates will have poor credit, but it is likely that a majority will have some form of student loans to pay off. When financial institutions have tools like loan management software, they can work with potential borrowers to find payment options that are well within their financial abilities.