PLYMOUTH, Mich.-Recognizing the economy is changing the education loan landscape, NuUnion CU is now offering a loan for parents of kindergartners.
The $840-millon credit union has introduced a new K-12 education loan that can be used for kids from high-school age all the way down to kindergarten. "If you send your children to a private school, or little kids to a Montessori school, it may not be feasible to continue that," said Danielle Brehmer, director of marketing. "This is a nice supplemental loan that can help prevent parents from having to sacrifice their child's education."
Risk-priced at 6.9% APR for the best credit, the one-year loan can be extended to 18 months. That compares with NuUnion's CU Student Choice college loan, also risk-priced at one month Libor plus 3.25% to 4.5%, with a floor of 6%.
The new loan is partially driven by the economy, but it should also further position the credit union as an integral part of the community, Brehmer said. "We are located all over the state, and we recognize that getting out into the communities builds our base. We realize that schools are the center of the community."
Brehmer said NuUnion believes the market is there for the K-12 loan, with tuition costs rising to about $3,500 annually for an elementary school child and $6,000 for high school. With the loan out for only a week at press time, Brehmer told Credit Union Journal no K-12 loans had been booked. She expects the loan will appeal to middle-America. "We don't know of anyone else in Michigan offering this. At NuUnion we try things and if they don't work, we stop doing them. This loan is one of those things we want to try. We do not know exactly what the return will be. But we think it is promising for the credit union, and most important, it will help families."
NuUnion's $5-million student loan portfolio grew by $3.3 million last year, an 86% increase over the previous year. Brehmer thinks the K-12 loan could drive college loans, establishing a student lending relationship with parents when their kids are young.
Initially, the CU is marketing to members only through handouts, branch signage, the CU's newsletter, and its website. "People are looking for ways to make ends meet," Brehmer said. "But those things that are important, members are holding onto. We are thinking that their child's education might be one of those."
