Student Loans Earn More Than Interest: Print Preview
Private student loans account for just 0.2% of the U.S. credit union loan portfolios, according to Callahan & Associates, but student loan CUSOs and credit unions that offer student loans believe they’re a worthwhile addition to any CU’s product suite, citing potential relationships with young members as a major benefit.
Tapping in to the college student market is an obvious motive for credit unions with a student loan offering, but how does the product affect their bottom lines? Experts from student loan CUSOs CU Student Choice and CU Campus Resources and one CU Campus Resources credit union partner said student loans are a good investment, but ultimately, the loans pay off in the form of young member cultivation.
Citizens Equity First, a $4.6 billion, Peoria, Ill.-based CU, began working with CU Campus Resources in February 2011 after offering a student loan program of its own for several years. Credit Manager Doug Higgins said CEFCU enlisted the services of the CUSO in light of regulatory changes and to streamline its student lending process; the CU had a goal of originating $5 million in student loans this year, which Higgins said it will meet comfortably.
CEFCU’s student loan portfolio manager, Greg Jaeger, pointed out that with a variable interest rate, student loans add strength to a CU’s lending portfolio, but said they’re “not intended to be big money makers.”