LOS ANGELES – All indicators show college tuition costs will continue to rise, but members of credit unions who are college students or are parents with children in college have another option to finding the money to pay for higher education. The solution is Trojan Financial Services dba Education Loan Resources, a wholly-owned CUSO of USC CU. Initially formed as a CUSO in 2001 to facilitate real estate loans, the CUSO expanded its product menu in 2002 to include student loans. The CUSO has since discontinued the mortgage side of its business – USC CU makes mortgage loans under the CU umbrella – and focuses now entirely on making student loans for USC CU's more than 41,000 members and partnering with other CUs to help them facilitate student loans for their members. Education Loan Resources is the largest student lender of all CUs in the U.S. – it did more than 15,000 student loans in 2004 valued at over $86 million – and it ranks 56th in the country of all student loan lenders, including banks, says ELR President Michael Kim. "Student loans offer credit unions the opportunity to reach younger members which is a demographic group credit unions typically have done a poor job marketing to," says Kim. "It's important to offer a value-add product to attract the younger demographics, and student loans offer a very important service to members and opportunity to credit unions. The loans start young members off with a checking and savings account at their credit union. Then down the road the same place they looked to for their student loan will be where they turn to for a car loan or mortgage." So far, ELR has partnered with two California credit unions – Foothill FCU, Arcadia and Partners FCU, Anaheim – but Kim says ELR is emphasizing partnering with CUs throughout the U.S. The CUSO recently gave a presentation on student loans at the Educational Credit Union Council conference last month in New Orleans, and it is scheduled to do the same in May at the NACUSO annual meeting in Las Vegas. Working with partnered CUs, Kim explains that ELR helps set them up as student lenders including obtaining their lender ID code and being approved by the U.S. Department of Education. The approval process typically takes a couple of months. "Because of the volume of student loans we generate annually, we can negotiate the servicing and origination of the loans and extend the same deal we get to our partners," says Kim. That includes paying no origination fee or servicing fee expenses. In addition, Kim says ELR has a partnership with a couple of servicing companies, and the CUSO is able to extend that benefit to its CU partners as well. ELR makes two types of student loans – Stafford loans are issued in the student's name and are taken out by the student each semester. Payment is deferred until six months after the student graduates although there are deferment options available for after then; PLUS loans are taken out in the name of a student's parent or guardian and are payable once the loan is dispersed. While the secondary market is usually associated with mortgages, Kims says, "There is also a very active secondary market for student loans. We're able to pool the volume of our loans and negotiate a good rate." He added that, "Student loans are a very competitive market. When the student loan is sold on the secondary market, the member's credit union gets the premium depending on how the program and borrower benefits are structured. We're always working to get the best borrower benefits." -

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