Millennials are a diverse crowd, but they have a few things in common. Many are leaving college with thousands of dollars in debt. They also tend to be impatient and want decisions made quickly.

Harnessing technology, CUSO Student Choice and third-party vendor LendKey are enabling credit unions and community banks to assist those folks by providing them with student loans and helping them refinance their college debt at a rapid speed.

Founded in 2008 by several credit unions, the Washington-based Student Choice ensures prospective students have obtained all available scholarships and federal student aid before helping them apply for private student loans, according to Jim Holt, the company's chief revenue officer.

“There's a surprising number of borrowers who don't exhaust their federal loan eligibility,” Holt said. “Credit unions today are trying to attract new members. What better way to do that [than] by doing this?”

In 2009, LendKey, which has offices in New York City and Cincinnati, helped some 26 credit unions originate private student loans – an area that is still an important part of the vendor's business. The company said the entire process of obtaining a private student loan should take about 15 minutes.

“Consumers want that instant decision,” LendKey Founder and CEO Vince Passione said.

They also don't want to have to walk into a bank or credit union branch to apply for that loan. That leads to a dilemma for those institutions, Passione said, because they must reach those prospective members even though they may never see them in person.

Linking those borrowers to lenders is imperative, according to LendKey, which boasts that by using the company's own market and lead generation, credit unions can access those potential members. At the same time, the company said it helps borrowers locate lenders in a neutral environment and calculate loan information such as interest rates.

Snagging business from millennials is a high priority for many credit unions, Passione said.

“They want to attract younger members,” he said, noting that LendKey enables them to do that. “We help them find a credit union. Our clients are getting into online lending. My clients wanted a single application process.”

Borrowers can take pictures of or scan documents and electronically send them to LendKey or the credit union. They can then watch the entire loan process, which includes document signing and disclosure review, progress online.

“As a borrower, you have a tremendous amount of transparency,” Passione said.

LendKey then renders a decision for the credit union.

“At the end of the process, [borrowers and credit unions have] a digital loan jacket,” he said.

After that process is completed, LendKey's service continues, according to Passione.

“We will dispense [funds] on behalf of the credit union,” he said.

And LendKey's credit union clients don't have to spend money looking for those prospective members. Since they may be faced with limited marketing budgets, these credit unions find that very helpful.

Through Student Choice, credit unions can establish their own loan policies. Student Choice offers loan origination and processing, call center support and loan servicing. And like LendKey, the CUSO helps students receive quick decisions.

In addition, the CUSO facilitates a school certification program, during which college financial aid offices verify a student's enrollment and academic progress, and checks the requested loan amount against the cost of education.

“We want to avoid overfunding what a student needs,” Holt said, adding that funds are dispersed to the college or university.

And in an answer to many students who are currently seeking a way to ease their debt burden, both companies are now offering former students ways to refinance their student loans.

The National Association of Realtors and American Student Assistance recently reported that in a survey, some 70% of respondents said their student loan burden was delaying their purchase of a house. Students simply cannot save for a down payment on a house because they have to repay their student loans early in their careers, when their salaries may still be low. The study found that as a result, those former students are delaying their home purchase for as long as five years.

“There's a terrific need out there,” Holt said. Student Choice's refinance loans are offered on a fixed-rate or variable rate basis and can be based on what a student initially borrowed.

“This is a fantastic opportunity to help members who are sitting on loans with high rates,” Holt said.

Services such as those offered by LendKey and Student Choice also enable credit unions to reach a unique group of potential members.

For instance, LendKey allows credit unions to reach an important audience with needs that may differ from other borrowers, one credit union CEO said.

The student loan market presents unique challenges, according to Shawn Gilfedder,

president/CEO at the $367.4 million McGraw-Hill Federal Credit Union in East Windsor, N.J.

“The administrative component is different,” he said, noting that the company understands the market. “LendKey has been a very strong partner. LendKey helps us walk through the underwriting process.”

Gilfedder said many students end their postsecondary education laden with excessive debt. The loan consolidation program McGraw-Hill offers in conjunction with LendKey allows those people to restructure that debt and improve their debt-to-income ratio.

That's an important move for former students to make, since it allows them to improve their financial health, Gilfedder said.

And as their financial standing improves, the credit union will be standing by, he said.

“We free up cash flow,” he said. “It gives them an opportunity to buy a home.”

The McGraw-Hill website has a page dedicated to student loan consolidation, with links to LendKey's services. Former students may borrow as little as $7,500 and as much as $175,000 to consolidate their debt.

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Student Loan Refis Draw Millennials

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