CARLISLE, Penn. - CUs that want the benefits of offering student loans without the potential downside of creating their own program have a variety of alternatives available to them.
Lehman Brothers-owned Campus Door, here, teamed up with the corporate CU-owned CharlieMac to offer CU Student HELP (Higher Education Loan Program). “For many credit unions, this is something they like because there is no risk to them as they do not underwrite, fund or service the loans. It is just a referral program,” explained Tracy Sniscak of Campus Door. “Many credit unions tell us they used to offer student loans but stopped because it required too much infrastructure.”
When a CU finds a member in need of a student loan, it refers the member to CU Student HELP. The member gets a loan (the lender of record is Lehman Brothers) without having to go looking somewhere else and the CU gets a referral fee. “There is language in the agreement that there will be no solicitation of the members by the bank,” Sniscak said. “Campus Door is dedicated to student lending; it’s the only thing we do.”
Call center representatives are trained to find out which credit union referred the student to the CU Student HELP program to make sure the right CU gets the referral fee.
One of the risks in a referral program in the is the black eye a CU can get if it refers a student to a program that has decided to pull out of student lending, but Sniscak said this is not an issue with CU Student HELP. “Lehman Brothers tells us they are dedicated to consumer lending, which includes student lending,” she said. “We have the luxury to balance sheet all our loans until the market is more favorable and we can securitize them.”
Kim Shook and Penny Adair of CharlieMac said more than 200 credit unions are currently participating in the program. “This is a co-branded program that can help credit unions appeal to the youth market while bringing in referral fee income,” Shook offered, noting that the referral fees are decided upon by the individual corporates, and the contract for the program is between the corporate and the CU.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
