WASHINGTON - Even as other financial institutions are running away from student lending, credit unions are finding ways to dive right in, with several alternatives to creating a student loan program from scratch all cropping up.
Case in point: Callahan & Associate’s CU Student Choice program, which started out as a feasibility study into how credit unions could better meet their members’ needs.
“The idea: focus on members needs. Members already needed student loans, but right now they need credit union help with this even more than ever before,” said Jon Jeffreys of CU Student Choice. “We are the benefactor of good timing.” Indeed, CU Student Choice launched May 5, not long after a number of major financial institutions–not the least of which was Bank of America–announced they were exiting the student loan market, sending students scrambling to fund the upcoming fall semester.
But CU Student Choice was in the works long before that, as Callahan CU Financial Services Limited Partnership was looking to determine what member needs credit unions weren’t meeting.
“We had one of our credit unions tell us ‘we’re community based, we don’t do student lending, but we know our members are getting student loans, so they’re obviously getting them somewhere else,’” Jeffreys related. “Why would a credit union want to turn away from a member’s need?”
Increasingly, the answer appears to be that they don’t.
“We are not alone in this marketplace,” Jeffreys said, noting that CUNA Mutual Group has a program in beta testing (see related story), and Charlie Mac is offering a referral program (see related story). “There’s a real appetite for this among credit unions. The market response [to CU Student Choice’s launch] was even greater than we expected. We are sold out through the end of August. We have about 17 credit unions live across the country, with another eight to 10 coming online by the end of August.”
While CU Student Choice is a great option for credit unions that are just now getting into student lending, it’s not just for beginners, Jeffreys said, pointing out that “a couple of credit unions are very active student lenders.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
