credit - Michigan Credit Union League

www.studentchoice.org
giving
STUDENTS
the CREDIT
they deserve
“With this truly turnkey program, we hold the
loans on our books and control the pricing while
Student Choice manages the back end systems.
This easy-to-implement structure allows us to
focus on what we do best—serving our members!”
the
FIRST
ChoICE
in private student lending
Credit Union Student Choice is the leading provider of
Linda StephenS
Vp, Consumer Lending
Wright-Patt Credit Union
the opportUnity
nity in priv
privA
Ate StUdent
Ate
dent lending
private student lending services to America’s credit unions
positioning credit unions as leaders in education finance in
By working in a collaborative networked environment,
credit unions can do what is right for their members, the
future of their cooperative, and their country. all
ll while
offering a product that will truly enable members to
make better lives for themselves.
the 21st century. Our networked model manages the key
•
grow and diversify your loan portfolio—Leverage
—Leverage
your balance-sheet lending capability to offer fair
rates and terms that will benefit both members and
the credit union.
•
Build life-long relationships with gen y members
members—
deliver
liver a superior loan product to young adults and
recognize the full value stream that can only come
from a long-term productive loan relationship.
•
t n-key solution—enter this market easily and
tur
efficiently with our networked structure. no
additional staff is necessary as we handle the most
difficult and time-consuming aspects of student
lending.
•
Achieve optimum portfolio performance—Mitigate
risk and enhance performance by utilizing prudent
risk-based underwriting, school certification, and
optional portfolio insurance to maximize revenue.
•
y
your
members need you—With the bulk of credit
union members falling in the 45-54 age range, it’s
imperative that credit unions meet not only their
financial needs, but also those of their college-bound
children. help them achieve the dream of higher
education, without the higher price tag commonly
associated with private student loans.
– now serving more than 160 credit unions and their ten
million members. Founded, designed, and owned by 12
of the nation’s leading credit unions, Student Choice is
operational challenges and risks associated with private
student lending, allowing credit unions to recognize the full
economic return from these attractive lending relationships
without adding any additional staff or on-site expertise.
www.studentchoice.org
The Market
In the $200 billion a year higher education market, private student loans have carved out a
significant piece of the pie, becoming a critical educational funding component for millions of
American students and families.
· Filling the gap—private student loans help fill the
educational funding gap—the difference between
the cost of attendance and the amount covered by
other lower-cost sources of financial aid, such as
scholarships and Federal Stafford loans—faced by
many students and families.
“Through our partnership in the Student
Choice program, we can offer what I
consider to be the finest private student
loan in the market. Credit unions can
leverage the expertise of some of the best
professionals in the industry on a scalable
platform that allows you to be in business
quickly and cost effectively. These are your
loans, priced by you, for your members.
Student Choice can be your partner for
success in this emerging market.”
· explosive growth—Fueled by skyrocketing tuition
costs, record enrollment, and meager increases to
federal student loan limits, private student loan
volume grew more than 300% between 2000 and
2007. in 2010 alone, demand is expected to reach
nearly $10 billion.
· opportunity for value
value—With average private
student loan rates hovering around 8.5% and many
lenders tacking on expensive origination fees, credit
unions have an opportunity to leverage their balance
sheet lending capability to deliver much-needed
value to both borrowers and the cooperative.
ChuCk SMith
SVp, director of Lending
San Antonio Federal Credit Union
trendS in COLLege priCing - One-Year COSt FOr tuitiOn, FeeS, rOOM and BOard
private
rivate Four-Year
public Four-Year (in-State)
n-State)
public Four-Year (Out-of-State)
$35,636
$35,000
$30,000
$26,741
$25,000
$20,000
$15,213
$15,000
$10,000
$5,000
09-10
08-09
07-08
06-07
05-06
04-05
03-04
02-03
01-02
00-01
99-00
98-99
97-98
96-97
95-96
94-95
93-94
92-93
91-92
90-91
89-90
88-89
$0
Source: the College Board, Annual Survey of Colleges
The Solution
In hopes of redefining the economic value found in private student lending, several of the
nation’s leading credit unions and credit union service organizations (CUSOs) formed
Credit Union Student Choice in May 2008 to help members lower their overall cost of higher
education. The CUSO offers a turn-key solution that puts credit unions in the business
of private student lending while benefiting members in the form of lower loan rates, zero
origination fees, and flexible repayment options. This revolutionary new loan product fills
the growing funding gaps that federal student can leave behind, without the higher price tag
commonly associated with “private loans”.
· Credit Union Control—the Student Choice
program enables credit unions to make schoolcertified private student loans and hold them
on your own balance sheet, without adding any
additional staff. You control the rates and credit
tiers, ensuring value for both borrowers and the
credit union while establishing the foundation
for a long-term member relationship.
· CUS
CUSo expertise
xpertise—We
xpertise
—We handle the most difficult
and time-consuming aspects of student lending,
including loan origination, processing, and
servicing. Our team of experts also provides
hands-on operational, marketing, and business
development support to help position your
credit union for success.
· Scalable platform—Student Choice’s networked
business model offers the elasticity necessary
to successfully manage peak lending season (a
compressed three-month window during which
85% of annual loan applications are submitted)
while delivering first-rate service that your
members deserve.
· proven results—Since launching in 2008,
Student Choice has partnered with 160 credit
unions, originated nearly 20,000 loans resulting
in $275 million in loan balances, and certified
loans at more than 1,000 colleges across the
nation. ultimately, this effort has helped
credit unions develop thousands of new direct
member relationships while delivering millions in
economic value to students and families.
Staff training
Student ChOiCe prOVideS
Credit uniOnS deCide
CO-Branded
randed WeBSite
ite
with online application and
automated decisioning
intereSt
t rate and FiCO
F
tiers
24/7 CaLL Center
enter SerViCeS
LOan prOC
OCeSSing
and CertiFiiCatiOn by
school financial aid office
LOan Funding
unding
directly to financial aid office
on behalf of member
index
ndex
(which Student Choice will
use to adjust rates on a
quarterly basis)
MaxiMuM LO
LOan aMOunt
ability to MOnitOr
aLL LOan appLiCatiOnS and
override denial if desired
LOan Ser
erViCing
Ongoing Marketing and
BuSineSS de
eVeLOpMent
support
On-site member seminars
relationship-building
elationship-building
visits to area colleges
access to a library
of customizable
marketing collateral
The Right Choice
Selecting a private student lending partner that will best meet the needs of both the credit union and
members is your ultimate goal. Consider these key factors when making this important decision.
key FACtorS
the StUdent ChoiCe progrAM
Member experience
Content-rich co-branded website, online application with instant credit decision,
24/7 call center, experienced student loan servicing, and a scalable networked
platform that allows Student Choice to successfully manage peak lending season
all combine to deliver high quality service to your members
Member Costs – origination Fees
Zero origination fees charged to member
member, adding superior borrower value,
product differentiation, and excellent marketability
Member Costs – interest rates
extremely competitive as set by the credit union, helping you deliver value to
e
borrowers and the cooperative
loan type
t
innovative line-of-credit structure equals member convenience (greater
serialization), affordable repayment, and reduced expenses on subsequent draws
Member repayment options
Flexible repayment options, including full in-school deferment, based on a 20 or
25-year repayment period (dependent on loan balance) to allow affordable
monthly payments
School Channel opportunity
due to credit union “ownership” of the Student Choice program (your loans, your
d
rates, your members), you have an excellent opportunity to develop relationships
with local colleges seeking fair-value loan options for their students (with ongoing
marketing and business development support, Student Choice has helped connect
hundreds of schools with our credit union partners)
Credit Union portfolio economics
positive impact on the bottom line as the credit union holds the entire loan
p
balance, and due to the direct nature of the loan, you have a genuine
opportunity to develop a long-term member relationship
Credit Union risk
as with any loan, risk is present. numerous risk-mitigation tactics are utilized to
enhance performance:
· prudent risk-based underwriting, with credit tiers set by credit union
· due to underwriting criteria, co-borrower will be necessary for most
borrowers (98% of current loans have a co-borrower)
· all loans are school-certified (validate enrollment and loan amount)
· Loans are non-dischargeable in bankruptcy
· Variable interest rate that adjusts quarterly
· Only lend to schools with a proven history of low student loan default rates
· Optional portfolio insurance with 100% principal and interest coverage
organizational Structure
as a credit-union-owned and directed CuSO, our interests align with yours to help members and credit unions succeed
program Sustainability
Owned by your credit union peers with no exit strategy or pressure to maximize
profit for stockholders
Make the Right Choice for Your Members and Your Credit Union
The owners
collaborative spirit... in action
epitomizing the collaborative spirit of the credit union
movement, Credit union Student Choice has accomplished
what no single credit union program could. With
cooperation and a keen focus on the future, the CuSO
developed a networked business model that gives credit
unions, with just a small capital investment, the ability
to offer private student loans that deliver true member
value with minimal risk. the key to the CuSO is the unique
business model that relied on the leadership of several
of the nation’s leading credit unions and CuSOs to help
bring together partners that provide expertise in all areas
of student lending. these providers are much more than
just contractors. they are investors in a new model that
will help position credit unions as leaders in 21st century
education financing.
The Team
“It’s very apparent that the Student Choice
program was designed by credit unions, for
credit unions, as it’s been a real win-win
for Members 1st and our members”.
ed LehMan
aVp of Consumer Lending
Members 1st Federal Credit Union
FOunding OrganiZatiOnS
Affinity plus FCU: Saint paul, Mn
BeCU: tukwila,
ukwila, W
Wa
digital FCU: Marlborough, Ma
eli lilly FCU: indianapolis, in
Mit FCU: Cambridge, Ma
nASA FCU: upper Marlboro, Md
lake t
trust CU: Lansing, Mi
San Antonio FCU: San antonio, tx
x
Star one CU: Sunnyvale, Ca
Suncoast Schools FCU: t
tampa, FL
Workers CU: Fitchburg, Ma
Wright-patt CU: Fairborn, Oh
pSCU Financial Services: St. petersburg, FL
Callahan & Associates: Washington, d.C.
CUFSlp (Callahan Credit union
nion Financial Services
Limited partnership)
experience and innovation
Credit union Student Choice is led by a Management t
team that has a
collective wealth of experience in both credit unions and student lending.
With a keen understanding of today’s challenging business environment,
we are focused on continuing to develop innovative lending solutions
that will benefit students, families, and credit unions.
JOn JeFFreYS
president
SCOtt patter
a
atter
SOn
executive Vp
JiM hOLt
OL
OLt
Vp,
p, Sales
p
Operations
MeLiSSa hunt
Vp,
p, Client relations
p
and education
For more information, visit www.studentchoice.org/team.
dOug JaBBOur
Vp,
p information
p,
Systems
MiCheLLe peZZuLLi
Vp,
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MiChaeL WeBer
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America’s largest private student lending network
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“It was important for us to work with
an organization that understood the
credit union industry, was passionate
about serving members, and was
fully committed to helping credit
unions enter this market. We found
that partner in CU Student Choice,
and are very pleased with the results
thus far.”
riCk thOrnBurg
Senior Vice president, Lending
Eli Lilly Federal Credit Union
“Not only have we been able to provide hundreds
of parents and students with a valuable product
they’ve needed, but we’ve also been able to build
strong community relationships with local colleges,
universities, and high schools.”
rOBert MiChaud
Senior Vice president
Mid-Hudson Valley FCU
tereSa MaYer, Vice president, Lending
Lake Trust Credit Union
“The Student Choice solution was easy
ttoo implement and allowed us to begin
offering a much-needed product to our
members in a very short amount of time.
The ongoing support from Student Choice
has been outstanding and our members
love the program.”
“Credit Union Student Choice’s private loan solution
has proven itself as a differentiating product for MHV.
Because costs are so reasonable, we can offer a muchneeded member solution that delivers value to both
members AND the credit union.”
“This program allows BECU to maintain ultimate
control over pricing, underwriting, and marketing,
while Student Choice handles all of the complex
operational details. The support and guidance we’ve
received from Student Choice has been phenomenal.”
tOM BerquiSt
Senior Vice president, Member Strategies
BECU
“Quite simply, Student Choice has allowed
us to help student members at a critical
time in their young financial lives.”
COLLeen daLY
Senior Vice president, Lending
Northwest Federal Credit Union
“Not only can we now offer our
student borrowers an exceptional
private student loan product, but we
also have the opportunity to create
a lifelong relationship with these
younger members.”
diane riChard
Vice president, Consumer Loans
Digital Federal Credit Union
Jan MOOre
Vp/COO
Discovery Federal Credit Union
for more
t learn more about the Credit union Student Choice program,
to
including product specs and pricing, or to schedule a presentation,
simply contact Jim holt, vice president of Sales operations:
[email protected]
815-577-3334
by credit unions,
for credit unions