After launching the cooperative student lending network,cuStudentLoans.org, with the New Jersey credit unions this pastMay, student lending solutions and technology provider Fynanz isexpanding the network to Minnesota.
Members Cooperative Credit Union in Cloquet, Minn., has joinedtri-state area credit unions in the network as the firstparticipating credit union in Minnesota. Currently 21 credit unionsin New Jersey, Pennsylvania, New York and now Minnesota participatein the network.
The cuStudentLoans.org network works as a cooperative studentlending program where the participating credit unions pool fundsand spread risk. Each credit union owns 10% of the loansdistributed.
The Fynanz technology platform powers the cuStudentloans.org portaland insures the loans.
Robbie Thompson, vice president and general counsel at MembersCooperative, said that the credit union wanted to enter the studentlending market to better serve all demographics of membership,attract younger members, be there at each state of its memberslives, diversify its portfolio and aid in limiting interest raterisk.
To determine interest rate and creditworthiness on thecuStudenLoans.org loan, which is called the EdAccess Loan, thecredit unions use what is called the Fynanz Academic Credit Score.Fynanz looks at the FICO score of the signer and co-signer and themember's probability of graduation by examining the students major,years of study and grade-point average. While in school the studenthas to make a monthly $25 payment on the loan that gets applied tothe interest and principal in order for the student to get used tomaking monthly payments. Each year the underwriting on the loan isrewritten, which gives the student the opportunity to lower therate.
“I will tell you that the two primary reasons we chose Fynanz wasbecause of the culmination of things they did to minimize therisk,” Thompson said. “As a credit union we have an obligation whengiving loans, especially to young people, to educate them aboutborrowing and credit. These loans not only help students fund theircollege education so they can reach their dreams, they also makethe student more knowledgeable about borrowing and establishinggood credit in the future.”
Fynanz CEO Vince Passione said that during this past peak lendingseason, the program saw approximately $90 million worth of loanrequests and 90% of those approved for loans were new credit unionmembers.
Passione said that he will be going around to schools and creditunions in Minnesota to expand the program so it can have astatewide focus there. Passione said that he is also looking toexpand the program to credit unions in California, Illinois,Washington, Missouri and Nebraska.
“The beauty of the program is that you can position it locally ornationally. I can go into schools and say that I can guarantee thattheir students will be eligible to join one of our participatingcredit unions.”
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