CLOQUET, Minn. – Members Cooperative CU is the first Minnesota credit union to join a cooperative student lending network, cuStudentLoans.org, which provides lessons in financial literacy as it hands out student loans.
While in school, students have to make a monthly $25 payment that is applied to interest and principal on their loans. In addition, the underwriting on the loan is rewritten each year, giving students the opportunity to lower their interest rates through their own academic performance.
The credit union loan program, created by Fynanz Inc., prices the loans based on several factors, including the FICO credit scores of the signer and co-signer. It also looks at the member’s probability of graduation by examining the student’s major, years of study and grade-point average, as well as the repayment history of fellow students at the borrower’s school.
The cuStudentLoans network works as a cooperative student lending program with participating credit unions pooling funds and spreading risk. Each credit union typically owns 10% of the loans they distribute. Currently 21 credit unions in New Jersey, Pennsylvania, New York and now Minnesota participate in the network, providing loans for students in 479 schools in 47 states.
This past peak lending season, the program saw about $90 million worth of loan requests, and 90% of those approved for loans were new credit union members.
