COLLEGE STATION, Texas - With states lining up to get out of the student loan market, one credit union here is bucking the trend by partnering with the state to make sure the student loan tap doesn’t run dry.
Aggieland CU and North Texas Higher Education Authority have started a new partnership that will increase borrower benefits for Federal student loan borrowers by incorporating key features like auto debit interest rate reductions and early loan forgiveness on (ELF) on all Stafford and PLUS loans disbursed on or after July 1.
A broad overhaul of federal student loan programs that cut subsidies to lenders has prompted some federal student loan lenders to announce that they will no longer fund any new federal student loans. “I believe there is a direct correlation between the recent legislative changes and student loan lenders, whose primary function is student loans and are vacating the industry,” said Sherry Schroeder, AVP Aggieland CU student loans.
“Legislation has made it less profitable for for-profit entities to fund student loans as well as more costly for all student loan providers,” she added.
Aggieland CU has always had a strong student loan program due to its close association with Texas A&M University. “Our portfolio currently runs at approximately $36 million,” Schroeder said. “We saw quite a bit of money go out the door during the “early repayment” consolidation craze so it’s actually a little low but in the past we’ve held roughly $50 million on the books pretty consistently.”
The CU was originally known as Texas Aggie FCU before a 1992 merger with the $302-million Greater Texas FCU. In 1994, at the behest of Texas A&M, the CU was renamed Aggieland CU, a branch of Greater Texas FCU.
“Aggieland Credit Union has always been and remains committed to providing cost-effective opportunities for students to attend college” stated CEO Tommy D. Seargeant.
Unlike many lenders, Aggieland CU completes all student loan processing in College Station. This hands-on approach allows the credit union to insure members receive the best possible service, according to Schroeder.
All loans funded after Oct. 1, 2007 will be transferred to North Texas Higher Education Authority upon graduation or when the loan enters repayment. Schroeder said the decision to partner with NTHEA was based on each entity’s parallel philosophy of service to a dedicated constituency.
“NTHEA is non profit, as is the credit union,” Schroeder said. “Their focus is on providing service and support to its lending partners as opposed to diversifying. As a non-profit organization, NTHEA is in a position to provide borrower benefits where other secondary markets may continue to scale back or eliminate the benefits they offer borrowers once they begin repayment.”
Schroeder said that as a non-profit financial cooperative, the CU has a responsibility to look out for the members’ best interests. “This is especially true for student borrowers,” she said.
Jose Guerrero, regional marketing manager for North Texas Higher Education Authority, stated “North Texas Higher Education Authority is excited about its partnership with Aggieland Credit Union and looks forward to serving its members for many years to come.”
North Texas Higher Education Authority has an outstanding repayment savings plan, one of the best in the industry, according to Aggieland VP Greg Baird.
Benefits currently include an automatic .75% interest rate reduction when a borrower uses auto debit to make payments, additional principal reductions up to 6% and the Early Loan Forgiveness Program (ELF) which will eliminate combined account balances below $600. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com
