Ohio CUs Pledge $150M For Affordable Student Loan Program
COLUMBUS, Ohio-Eleven credit unions here have pledged $150 million in affordable student lending through a new initiative called Ohio Student Choice.
The CUs will offer the loans through Credit Union Student Choice, a Washington-based CUSO that provides turnkey private student lending services. Ohio Student Choice is not involved with a state guarantee agency.
Patrick Harris, director of media relations for the Ohio Credit Union League, said the initiative developed from conversations between OCUL President Paul Mercer and a group of Ohio CUs regarding the need to "fill a financing gap for higher education. We hear stories from parents who say they are getting federal student loans, but that there is quite a gap between the loans and actual cost for tuition, books, and fees. We have numbers that show the average amount people are falling short to attend a public university is $7,400."
The group of 11 credit unions, whose membership covers the entire state, have each pledged about 1% of their assets to come up with the $150 million that will cover three years. The loans will be made by the CUs and remain on the CUs' books. However, CU Student Choice will do the processing, servicing, and school certification, shared Mike Weber, VP-marketing for Credit Union Student Choice. Weber said CU Student Choice will make recommendations on the loan rates but the final decision is up to each lender. "We have $175 million in loans on the books from all of our credit unions in CU Student Choice. If you combine all of their rates the average being charged right now is 6.2%."
Harris said Ohio Student Choice CUs will charge no origination fees and provide flexible repayment options, including full deferment while students are in school. Weber believes that by banding together, the Ohio CUs are "making a good PR move and showcasing how credit unions can be a good source for fair-value private students loan in Ohio."
A website to help Ohioans learn more about Ohio Student Choice and locate a participating CU, www.ohiostudentchoice.org, was introduced last week. Credit unions participating in the program are BMI FCY, Cinco Financial CU, Directions CU, Day Air CU, Kemba CU, Kemba Financial CU, Seven Seventeen CU, Ohio Educational CU, Mid State Educators CU, Midwest Community FCU and Wright-Patt CU.