How to build profitable relationships with younger members
Finding new ways to connect with young adults is critical for the future of credit unions. This industry need has been clear for some time, but the path to do so remains unclear for many.
While marketing strategies targeting younger members or high school branches can help boost brand awareness, there is a simpler solution hiding in plain sight. Why not offer the specific products young adults need—such as their first major loan?
The importance of private student lending solutions
Paying for college is an extremely important and stressful financial event, not just for students but also for their parents (who will likely co-sign a student loan). What if your credit union could offer the solution and gain a valuable new member relationship in the process? All while easing financial stress and strengthening relationships with your long-term members?
Flexible funding solutions allow students and families to fill the college funding gap that often exists after savings, scholarships and federal aid have been exhausted.
Based on our recent analysis of 13 years’ worth of Student Choice borrower data from TransUnion, a private student loan is typically the very first trade ever taken out by these young adults. The only question is, will the financing they need come from your credit union?
Profitable from the start with lots of room to grow
Private student loan accounts have proven to be highly valuable in and of themselves—with the average loan returning more than $7,000 in net profit over the life of the loan. But our borrower data shows that private student loans are also a gateway to significant cross-selling opportunities, giving credit unions the chance to build meaningful relationships that last a lifetime.
Within 13 years of taking out a private student loan with a credit union:
- 81% of student loan borrowers took out an auto loan, with the average being 2.5 auto loans
- 60% of student loan borrowers took out a credit card, with an average of 4 credit cards
- 48% of student loan borrowers took out a mortgage, with an average of 2 mortgage loans (including refinance)
Private student loan borrowers also tend to have incomes and credit scores that increase steadily over time. In fact, we found that by year 13, median credit scores and income reach:
- 756 and $102k for those with auto loans
- 751 and $92k for those with credit cards
- 773 and $126k for those with mortgage loans
A clear & compelling opportunity
The numbers tell a clear and compelling story. Young adults will be seeking out these loans, and it’s up to cooperatives to ensure they turn to their credit union for their student lending and subsequent borrowing needs. And although we utilized 13 years of data, it’s not necessary for credit unions to wait that long to start benefiting from these new relationships.
In fact, 46% of borrowers took out an average of 1.8 auto loans within just four years of getting their private student loan from their credit union. Deposit accounts—another clear financial need for young adults—are not included in this data but opportunities to gain checking and savings accounts from these borrowers remain.
Is your credit union ready?
High-quality borrowers are taking out their first private student loans every day. Is your credit union ready to serve them?
CU Student Choice helps credit unions meet the evolving needs of the next generation of members. Our vision began with an education line of credit in 2008 and now has grown to include student loan refinance, skilled trades lending solutions, referral programs, next gen lead gen and a dynamic loan origination system that simplifies the education lending process. Contact us to learn more about how your credit union can partner with Student Choice to provide funding solutions to serve the needs of undergraduate students, parents, graduate students and those pursuing new career education pathways. There’s no more important time than now to welcome younger members and build new community partnerships.
