LOS ANGELES — To better serve its growing millennial member base, USC Credit Union here has partnered with CU Campus Resources (CUCR) and its new private student loan program.
"When the decision was made to re-enter the student loan industry, CU Campus Resources was a natural fit for us," said USC CU Assistant Vice President of Student Lending Audie Marzo.
Marzo explained that a significant segment of the university-based CU's 57,914 members are from the "Trojan" family. As such, the CU wanted to be viewed as the low price leader on campus.
"CUCR makes things very easy for credit unions. They do most of the technological heavy lifting," said Marzo. "All we had to do was provide our program specifics, a secure data transfer method and a space on our website to place a link to the online application."
Mike Long, president and COO of CUCR, explained that since 2010 the company has processed over 37,000 applications and funded over 17,000 loans for nearly $240 million.
"We design a fully branded application portal for our clients to link to their various distribution channels," explained Long. "Once an application has been submitted, we underwrite, certify and disburse the loans on behalf of our clients."
Loans To Go
Once USC CU made the decision to offer the solution, the operation was fast tracked. The total time from contract signing to roll out was 70 days. But Marzo pointed out that the CU was only able to achieve this accelerated goal due to prior experience in the industry.
"For an inexperienced credit union, there are many factors to weigh before making critical decisions," said Marzo. "Training involves educating our frontline staff about the loan product, the application process and the funding process."
To determine return on investment, Marzo explained that the CU has developed a robust discounted cash flow model. This system integrates key inputs, such as borrower credit risk distribution and risk-based pricing, conservative loss assumptions and industry loss distribution curves, origination and servicing costs and weighted average cost of capital funding assumptions to ensure that the CU is achieving appropriate risk-adjusted returns.
Since USC CU signed with CUCR on Sept. 1, related loan data is minimal. "It's really too soon to report any significant numbers," said Marzo. "I can report that we have already received five applications for a total requested amount of just under $50,000."
When asked how loan rates are determined, Long said clients set respective rates and terms based on the loans that they want to portfolio. "Our highly customizable platform allows credit unions to design a program precisely to their specifications. We provide advice and counsel along the way to ensure that they get the loans they are looking for."
As a completed loan application moves through CUCR's pipeline, CU clients have full, real-time access to the application and can monitor its progress. "Once the loan process has been complete, we provide all the data and documentation back to our clients for warehousing and reporting," said Long.
From experience, Marzo said that timing the launch of a loan product is critical. To this end, the loan offer has to be advertised when students are looking for funding, which is shortly after they receive their financial aid award letters.
"Work with the school's financial aid office in developing your product," said Marzo. "Their input will ensure you are providing the product the students need and can depend on to finance the student's educational expenses."
