Going to school is in right now. And not just for 18-year-olds, but for 28 and 29-year-olds, too. Layoffs, low-paying jobs, miserable days at the office and unsuccessful job searches are among the many reasons why Gen Y members are seeking second or even third degrees. And their end goals are typically the same: find a job that’s stable and in demand, launch a rewarding career and earn a higher salary.
In addition to the endless hours of homework, of course, tuition financing is one element of school that can cause anxiety for students. And in this day and age, it should. I recently interviewed a young author in California who published a book on how to graduate from college debt-free, and he described the combination of unemployment and rising tuition costs as the perfect storm for parents hoping to finance their children’s education. According to financial aid education website FinAid.org, the cost of college tuition doubles every nine years.
Nevertheless, classroom fever is in the air. The National Center for Education Statistics projected a 19% increase in college enrollment for people over age 25 from 2006 to 2017 and a 10% rise for people under age 25. This provides credit unions with an excellent opportunity to implement and market student lending products to Gen Y and hopefully build solid relationships with young borrowers.
Credit unions are connecting student borrowers with loans in a variety of ways. Some CUs are choosing referral programs that pose no risk. In these cases, CUs refer borrowers to loans funded by partner groups like Sallie Mae and bring in some fee revenue in return. Others carry student loans on their own books, which carries risk but gives the CU the opportunity to serve members more directly.
What does Gen Y look for when shopping for a student loan? Of course, they want it to be affordable. While most students look into private loans as a secondary option after federal loans, FinAid.org said private student loan volume is growing rapidly and expects it to surpass federal loan volume by 2025. So credit unions can certainly get a leg up in the private lending market by letting borrowers know their student loan debt will be manageable.
But just as importantly, they want the lending experience to be easy and painless. The mind of an unemployed 27-year-old planning to pursue an MBA is likely to be cluttered with many concerns, from course subject matter to class locations to how he or she will balance school with work and a social life. A complicated application process and loan term misunderstandings will only add to the student’s stress.
One quality that could help CUs stand out in the private student lending market is service. Market your products so potential borrowers will find them easily as they begin their search. Post clear information on your website that leaves no room for lingering questions. Ensure customer service is accessible and satisfying throughout the duration of a borrower’s loan. The underlying rewards of good service in the student lending arena include developing life-long relationships with loan recipients and pulling more Gen Y members into the credit union movement.
A busy Gen Y student is looking to simplify life, and that includes his or her finances. Now if only CUs could make the studying less of a pain.