COLORADO SPRINGS, Colo.–A credit union must have a good relationship with the Student Aid Office of local universities if it is to make an impact in student lending.
That's the opinion of Bill Vogeney, SVP at the $3.1-billion Ent FCU, who compares the credit union's relationship with the student aid staff to working with the finance department of an auto dealer. "If you are doing indirect auto lending you have to have a good relationship with the finance department so the dealer directs loans your way. The same thing with the college
student aid office."
But discussions Ent has had with Student Aid Offices of two local universities has given the credit union another reason to avoid the private student loan market. "They have shared with us a very negative view of private student loans," said Vogeney. "They feel there are other, better options for students, such as grants. They see private student loans as expensive, and a burden
on the backs of students."
Both of the universities with which Ent has had discussions are state schools, Vogeney pointed out, and do not have high costs for tuition and other expenses, relatively speaking.
Vogeney cautioned that entering the student lending market is a strategic decision and that credit unions must do their due-diligence before adding the line of business. "Some credit unions look at private student lending as a growing need for consumers, and it is. But when the cost of tuition is going up faster than personal income, these kids are taking on too much
debt."
Vogeney noted that if a credit union were to enter private student lending, it could "make a go of it" by starting small, limiting portfolio exposure, having sound underwriting, and working with members it already has a good relationship with. "But if you blindly charge into this it could be a mess."
