Credit unions entering the student lending market this year are seeing their programs take off like Michael Phelps in the pool.
With tuition costs continuing to rise in this economy and other lending resources leaving the marketplace or drying up, credit union student lending programs this year are seeing success.
Holy Rosary Credit Union in Rochester, N.H., started its program on April 1 with a financial aid informational seminar that brought in 130 attendees. So far, the $141 million credit union has $8.5 million lined up to lend out to students.
“We didn’t start to really see activity until after July 4, and what we’ve seen has been way beyond our wildest expectations,” said Jane Gettens, senior vice president of operations at Holy Rosary.
The credit union has also received a good response from colleges in the area. Gettens said that one college even approached the credit union to ask if it could put Holy Rosary on its preferred lender list.
To market the program, Holy Rosary used radio spots, a billboard on a major road in the area, in-branch video, its Web site (www.hrcu.org), brochures and an electric sign outside its branches.
New members coming into the credit union for the loan have called and said that they like the loan product and the easy process. Students who are already members like that they don’t have to go someplace else for their loan now, Gettens said.
“We’ve had a lot of people come in saying other resources have dried up and they’re not comfortable going to other lenders they’re not familiar with and haven’t heard of before.”
Gettens said the credit union also connected the loan program to other Gen Y-geared products like a glow in the dark Visa card, free ATM use in college and a first car loan program.
Since launching its program in June, $169 million First Financial Credit Union in Wall, N.J., has funded more than 400 hundred student loans totaling close to $900,000, with more in the pipeline. Approximately 5% of the credit union’s new members have come from the program.
Robin Hickey, assistant vice president of marketing at First Financial, said that June was a little late in the lending season to start the program and that if the credit union had launched the program earlier in the year, it probably would have seen an even greater response.
First Financial is part of a cooperative student loan program, nj.custudentloans.org, headed by the New Jersey Credit Union League that went live in May.
“For the little bit of time we did have to market the program, we definitely did get a great amount of interest,” Hickey said.
First Financial has been sending out press releases to keep members up to date with what’s going on in the student lending marketplace and hosted a free seminar in July to provide members with general information on paying for college. The session was recorded and posted on YouTube, Facebook and Twitter.
Looking ahead to next year, Gettens said that she doesn’t expect Holy Rosary’s program to continue at this pace.
“I think we’ll see other credit unions coming into the market. Being a small credit union, we have the agility to get a new product up and running quickly. I think things will calm down after this and that’s perfectly fine for our strategic plan.”
Hickey said that looking ahead there still is going to continue to be a big need for private student loans.
“This was the perfect time to align ourselves with this product,” she said.
NuUnion Credit Union in Lansing, Mich., started its student loan program in May of last year. Since then the $837 million credit union has approved $5.2 million in loans and has funded about $1 million.
Director of Marketing Danielle Brehmer said that when the credit union started the program in May, it worked on getting it in place and up and running. The credit union’s approach was to develop relationships with local colleges and get on preferred lender lists.
After being put on the list for Hillsdale College, which is 60 miles from the credit union and not in an area where NuUnion has branches, 13 people came to the credit union in one day to get information about the loan.
“We’re hearing stories like this every single day. Colleges really do appreciate the personal approach and many have never had a local connection,” Brehmer said.
Now that they have relationships in place, NuUnion has been developing marketing campaigns to continue to build awareness. At welcome week at Central Michigan University, the credit union will have mobile billboards, sidewalk art and will be making money drops.
Student lending CUSO CU Student Choice has approved $130 million in student loans since May for both undergraduate and graduate students, according to vice president of marketing Mike Weber.
Last year at this time, Weber said, it had between $25 million and $35 million approved in loans with 10 to 15 active credit union lenders. This year the CUSO has more 70 active credit union lenders.
“We’re extremely pleased with that type of volume and are still pleased with the credit quality we’re getting as well,” Weber said.
As the program has grown over the past year, Weber said there has been more traffic from the general consumer on the CU Student Choice Web site, www.studentchoice.org, looking for information and guidance.
Recently, the CUSO launched CUSelect, a Web tool targeted to consumers to help them connect with credit unions in the Student Choice network.
UW Credit Union in Madison, Wis., is not new to the student lending marketplace. UWCU has been offering federally backed student loans since the early 1970s and introduced private student loans in 2006.
Sherry Nelson, educating lending coordinator at the credit union, said that it has seen a 20% increase across the board in loan volume over last year.
Nelson said that while what she has been seeing is mostly the same as what the credit union has seen in previous years, many people coming in are showing frustration with the student lending process and service.
“There aren’t as many private-loan options, and the ones that are still around are getting more business than they want. There’s not as much of a need to provide customer service especially with people that are being denied.”
Nelson said she’s also been seeing families that have had their financial situation change and now have more of a gap to cover to pay for college.
“Every year tuitions increase and federal loan limits don’t increase. The gap gets bigger and bigger every year.”
—lsiegriest@cutimes.com