On Deadline

Published June 27, 2008, 1:41 p.m. EDT

Updated August 27, 2020, 1:10 a.m. EDT

3 Min Read

SECU To Invest $1.1B In Student Loan Program

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RALEIGH, N.C.–State Employees CU is investing $1.1 billion to refinance and provide funding for student loans made by College Foundation, Inc. (CFI).

The $15.8-billion credit union is joining forces with Local Government FCU and the North Carolina State Education Assistance Authority (NCSEAA) to help fill the student lending gap in the state.

The SECU investment will provide a portion of the funding for the state’s 2008-2009 program. CFI has processed 1.8-million college loans for a total of $7.5 billion lent to more than 530,000 student and parent borrowers over the course of 40 years. NCSEAA is the state agency that guarantees these loans.

“Helping students get an education is one of the most important investments we can make to boost their future income and continue to grow our State’s economy,” said SECU Chairman Shirley Bell. “CFI, NCSEAA and our credit union are natural partners, since we all focus on providing low-cost financial services to benefit North Carolinians.”

“As our organizations work together to make loan money available, we also share a commitment to educate families about the best ways to pay for college,” said Steve Brooks, NCSEAA executive director. “We want to make sure that families understand the financial aid process and the availability of federal and state scholarships, grants and low-cost federal loans before they consider other options.”

And there’s something in it for SECU members, as well. Members who have applied for federal and state aid will be entitled to a reduction in the interest rate on North Carolina’s EXTRA Education Loan, a supplemental loan available to help pay educational expenses. Members will also receive information and programs on other financial aid for college, such as grants and scholarships and the overall process for career and college planning.

Although Local Government FCU will also be playing a role, it was unknown at press time what its investment would be.

NAFCU Asks For Card Review

WASHINGTON–NAFCU moved last week to get Congress involved in a brewing controversy over a new JP Morgan Chase Mastercard brought on to the military bases to be used at Army and Air Force Exchange Service (PX) facilities. NAFCU President Fred Becker asked leaders of the House Financial Services Committee to review the new Chase card as part of its broader ongoing study of credit card practices. In a letter to Rep. Carolyn Maloney, chairman of the Financial Services Subcommittee on Financial Institution, Becker said the card violates Department of Defense policies on "one bank, one credit union" per base, as well as DoD bars on its varied operations conducting their own financial services.

The NAFCU chief also said he believes the new card violates provisions of last year’s law restricting predatory financial practices on military bases. “We urge your committee to pay close attention and include this topic in your discussion as reserve Officer Training Corps students may be impacted,” said Becker. “We are puzzled as to why AAFES would clearly violate regulations that have been in place for years by introducing a credit card that can only service to further entice young Soldiers, Sailors, Marines and airmen into a cycle of debt.”

MasterCard Pays AmEx $1.8B

PURCHASE, N.Y.–MasterCard has agreed to pay American Express $1.8 billion to settle an antitrust suit claiming MasterCard and Visa conspired to keep credit unions and banks from issuing AmEx cards. Last year, Visa agreed to pay AmEx more than $2.7 billion to settle its case.

The settlements bode well for Discover Financial, which has similar legal claims against MasterCard and Visa. MasterCard said it agreed to make 12 quarterly payments of $150 million to AmEx. The company plans to book a $1 billion charge related to the settlement in the current fiscal quarter.

The settlement funds will come from a legal defense reserve set up when MasterCard went public two years ago.