There's a lot of pressure on families with college-bound children as they navigate a complicated, and increasingly uncertain, process. Questions abound regarding higher education financing, from how to best pay for college to the impact of the Department of Education downsizing.
While many of us expect changes under the current administration, we don’t yet know what those changes will be. For the millions of families that rely on federal student aid each year, any changes could have a dramatic impact.
Fortunately, credit unions have been helping families responsibly manage higher education costs since 2008 by providing fair-value private student loans. As we look ahead, it’s clear that cooperatives can continue to provide much-needed student lending solutions—and peace of mind—for members.
A real member need
As the needs of families and students continue to evolve, credit unions are uniquely positioned to serve as a reliable, stable force in their members’ lives. CU Student Choice’s President and CEO, Scott Patterson, recently joined The CUInsight Network podcast and spoke of his own experience as a parent of college-aged children, as well as his professional insight into the world of student lending.
“I have two sons in college right now and it can be complicated to understand even for me, and I do this for a living,” Patterson stated. Unlike other big financing decisions, such as buying a car or home, paying for college typically only happens once or twice in a lifetime—depending on how many children a family has.
Families with limited experience benefit the most from having a trusted financial partner, ideally their local credit union, to help guide them. That’s why Student Choice was founded in 2008—for credit unions to collaborate as an industry with the goal of empowering students and parents to make better decisions as they invest in the future.
With most Americans searching online for answers, it can be easy to go down the wrong path and perpetuate the cycle of those who know the least paying the most for financial services. This is where credit unions have a real opportunity to help families make informed decisions.
A major financial commitment
For the 2024-2025 academic year, the average cost of attendance for full-time undergraduate students ranged from nearly $30,000 per year for in-state students at public universities to well over $60,000 a year for private, non-profit universities. This is a major financial commitment for most families and especially for credit union members who are committed to attaining a college degree—whether for themselves or their young adult children.
It’s a critical moment for cooperatives to be there for their members—especially in today’s elevated rate environment.
This is why credit unions exist—to effectively serve members’ kitchen table financial issues. And, as not-for-profit cooperatives, our industry has the ability to be there for the member when they need us most.
An opportunity for credit unions to lead, collaboratively
In 2008, several of the nation’s leading credit unions and CUSOs came together with a goal of helping members responsibly overcome the increasing costs of higher education, and a new collaborative organization was born.
It was an interesting time to launch a business, especially in financial services. During the Great Recession, a lot of lenders were pulling back in major ways as many relied on the securitization markets for the loans they were originating. At the time, those markets were dislocated, which really drove up the cost of student loans for consumers.
However, challenging times are when credit unions tend to step up and do what they do best. A collaborative business model enabled credit unions to help members with one of their most pressing financial needs. After launching in 2008, dozens of credit unions joined in the effort to offer fair-value private lending solutions, primarily because the member need was so pronounced at the time. Parents and students weren’t able to get the solutions they needed in the marketplace without their credit union’s assistance. Today, credit unions still have a real opportunity to be part of the solution.
How families are going to pay for college is an issue that continues to keep moms and dads up at night. This is especially true as uncertainty grows around federal student loans. Private student loans were designed to fill the gap that is left behind after a family’s savings, scholarships, and federal financial aid have been exhausted. Now, there are new questions like: “Will there even be a Department of Education in the near future? How will I obtain a federal student loan for my son or daughter?”
CU Student Choice offers one-of-a-kind solutions, such as a private education line of credit that offers tremendous convenience to borrowers and is truly unique in the marketplace. This solution can greatly ease the stress of one of the biggest financial milestones your members will experience. With no implementation fees or need for additional credit unions staffing, the Student Choice student lending program offers a low lift for a high return
Contact us to learn more about how Student Choice can make it simple to offer customized student lending solutions that benefit your current and future members.
