Student Loan Market Still Holds PromiseFor CUs

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LAS VEGAS - (05/12/05) --- In a move that may seemcounter-intuitive, one credit union is growing and prospering byputting its chips on one bet that others are shunning--the studentloan market. USC CU has carved out a profitable niche inoriginating student loans just as dozens of other credit unions andother small players are pulling out of the market now dominated bya handful of giants, like Sallie Mae, JP Morgan Chase and Citibank."We see this as a major opportunity for credit unions," Gary Perez,president of the $210 million credit union, said during the annualNACUSO convention, of the strategy that has quadrupled his creditunion's assets over the past five years, while helping it maintaina strong return-on-average assets (ROA) of 1.6% during that time.The credit union has originated more than $300 million in studentloans over the past five years and expects to originate as much as$100 million this year, and has not reported a single loss ordelinquency. "We're in the dream fullfillment business. But this isa dream that we have left totally unfilled," said Perez, whosecredit union conducts its student lending through a wholly ownedCUSO known as Education Learning Resources. "We (the credit unionmovement) have failed to develop credit union solutions to financeyoung adults' dreams." Student loans can provide numerous benefits,beside the guaranteed stream of income--98% is guaranteed by thefederal government--that also includes new memberrelationships.

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