Student lending program provider Fynanz has announced the creation of a new CUSO, CU Student Lending LLC.
The CUSO is made up of credit unions that developed and will manage the cuStudentLoans.org EdAccess private student loan. The EdAccess loan is designed for credit unions to pool funds and share the risk of the loan. There are currently 46 credit unions that offer the EdAccess loan.
"The CUSO came together to best make sure the credit unions had full control over the pricing and structure of the loan. All the credit unions participating were interested in being representing by CEOs and credit union executives that have the background to make underwriting decisions," said Jim Merrill, senior vice president of sales at Fynanz.
Merrill recently joined Fynanz from the New Jersey Credit Union League where he was senior vice president. At the New Jersey league Merrill helped organize a group of 12 New Jersey credit unions that launched the EdAccess loan.
"The credit unions decided to build a CUSO around its operating committee, which really shows how the credit unions are overseeing and designing the pricing on the loans," said Vince Passion, CEO and founder of Fynanz.
The EdAccess loan also has a new low rate of 2.75%, which is currently the lowest starting loan rate listed and rated on StudentLendingAnalytics.com. The rate the student receives on the loan is calculated based on what Fynanz calls its Fynanz Academic Credit Score. The FAC is based on the FICO score of the signer and co-signer, the student's grade-point average, years of study, course of study and Libor. Each year, Fynanz rewrites the loan so the student has the opportunity to move into a better pricing level.
Once the student enters repayment and pays back 10% of the principal balance, he or she also qualifies for a one percentage point rate reduction.
The origination fee is also now set at 2.5% across all tiers. Previously it varied from 2.0% to 4.0%.
Merrill said that the credit unions were motivated to create a new low rate that would make them competitive but that would also not challenge the financial position of the credit union.
"The goal is to promote credit union funding as consumer friendly as possible and show that credit unions are the ones that are really helping to offer students affordable funding for education," Merrill said.
The EdAccess loan program launched last July, late in the peak student lending season. Merrill said that its credit unions are expecting a much greater loan volume amount than last year and that they are still anticipating the pool of lending capital to grow throughout the season as Fynanz added more partners. Last year, Fynanz CUs lent out $90 million with 90% of the loans going to new credit union members.