Time for a reset: Why your CU should take a fresh look at student lending

Imagine for a moment that you’re chatting with your neighbor. Their daughter is a senior in high school and for years now, the family has been saving and planning for college. They’ve done all the right things and she’s done her part in high school by earning high marks. She’s all set with her federal student loans and is even receiving some scholarship money. She’s thrilled to go to her dream school but there’s just one catch: the family is still $8,000 short. What advice would you give them? Can they turn to their local credit union for help? We sure hope so!

Offering a private loan to help finance the gap that remains after family savings, scholarships and federal student loans are exhausted, is important for credit unions. It’s a clear pathway to attracting the next generation of members and retaining long-standing members, who are increasingly finding college financing challenging.

Why take a fresh look at offering private student lending solutions now?

As a cooperative, the last thing you want to do is turn away a member. That’s especially true when they are the child of a loyal member looking to establish their own financial relationship. Offering private student loan solutions can help you welcome these young adults instead of pushing them away or referring them to a competitor to solve one of the biggest financial decisions they’ll ever have.

In addition to being the right thing to do for members, a recent confluence of events makes this product worth a second look. On one side, we have seen higher college costs. In fact, $56,000 per year is what you can expect to pay on average to attend a four-year private school, with public universities running about half of that. Either way, college is a big investment and a big goal for many members.

Enrollment levels have also rebounded after the pandemic, when they took a significant dip as many students and families opted not to pay full price for remote learning. After stabilizing over the past year or so, college enrollment is projected to increase – especially towards the end of the decade.

This is good news. More young adults are planning to attend college, and credit unions need new members. It’s a hyper-competitive time in financial services. Credit unions are competing with fintechs, mega banks, community banks and even the likes of Walmart’s money centers and Apple’s credit cards and high-yield savings accounts.

How do you reach members, especially younger members? Well, the confluence is the private student loan. It’s your neighbor coming down to a local credit union saying, “Hey, I need some help.”

Based on the member surveys we’ve done for credit unions currently offering private student loans, we’ve heard how much families appreciate it. Here are just two recent examples of direct member feedback:

“The process is very streamlined; as a credit union member, it’s nice to know that my financial institution has services that are accessible and relevant to me and my family.”

“I have very little experience with student loans, but a lot of experience with my credit union and they have always been wonderful with me and my family.”

It’s the perfect solution. We know that private student loans are sticky products that can help set up a credit union’s relationship with a student for life. If you serve them well in their time of need, they’ll always remember that, and they’re going to be there for the next milestone. Their auto loan, their mortgage loan, their retirement planning, their investments – everything credit unions provide.

We sponsored a Filene Study and it found that the private school loan really is sticky. For example, in the 31-37 age group, those with private student loans took out a mortgage with their credit union at almost twice the rate of those without private student loans through their credit union. It’s a great opportunity to demonstrate your cooperative’s commitment to member service by offering all the products and solutions members need during their financial journey.

If you’ve considered private student lending before, now is the time to reset and take a fresh look at your options. College isn’t getting any cheaper, so there’s always going to be a need for affordable, member-friendly lending solutions. Remember, our team is here to help.

At CU Student Choice, we put credit unions in the business of providing private student loans for their members to address college funding gaps just like the one described above. Credit unions shouldn’t be turning away members like these or pushing them to a competing bank, so we provide a simple way for them to say, “Yes, we can help.”

Contact us to discuss how CU Student Choice can make it simple to offer customized student lending solutions.