Offering student loans benefits both members and credit unions, says Michael VanErdewyk, chairman/CEO of ReliaMax, a financial technology company that partners with financial institutions on student loans.
Not only do members save money on a college education, "you get these members for a long time,” he says. “You have a relationship with them for a life.”
VanErdewyk addressed the CUNA Lending Council Conference Monday in Nashville.
Three key reasons to credit unions should consider offering student loans:
1. Demand. Private student loans are among the products consumers desire most. Parents often use nonattractive options to finance their children's education, such as dipping into retirement funds or taking out a second mortgage.
2. Attraction. Millennials and Generation Z are the primary market for these loans. And while it's the first significant financial investment for many of these members, it could be the start of a long financial relationship between the member and the credit union.
3. Diversification. Roughly 84% of credit union loans are auto loans and mortgages, VanErdewyk says. But with long-term trends calling for declining auto ownership—and therefore declining auto loans—offering student loans is a way for credit unions to diversify their portfolios.
In order for credit unions to grow their student loan portfolios, they must first attract borrowers. Examine the following areas:
Expect continued strong demand for student loans, VanErdewyk says. "The need is going to be even greater in the future.”
►Read more conference coverage from CUNA News, and get live updates on Twitter via @CUNAJennifer, @AdamMertzCUNA, @cumagazine, @CUNACouncils, and by using the #LendingCouncil hashtag. Learn more about the CUNA Lending Council, a member-led professional society for credit union executives, by visiting cunacouncils.org.