Missoula (Mont.) Federal Credit Union offers alternative education loans for curriculum that requires financing but falls outside of traditional academic setting.
In 2015, Missoula College asked the $400 million asset credit union to offer financing for commercial driver’s license (CDL) training. Missoula Federal began offering the loans in the third quarter of that year.
The typical loan amount is roughly $3,000, to be paid back over three years.
Pricing is risk-based, but the credit union will approve loans on credit scores as low as 560, says Bill St. John, Missoula Federal’s senior vice president of retail branches.
Payments typically begin shortly after the five-week course concludes.
“The placement rate is very high,” St. John says. “In most cases, the people have jobs waiting for them as soon as they finish the course, especially if they work in construction.”
Based on the same premise, Missoula Federal also provides loans to students of the Montana Code School, which offers a three-month intensive course in computer programing.
The credit union offers a $9,500 loan to cover the $8,000 tuition plus an addition $1,500 for a laptop computer.
“Research suggests that 95% of code school graduates have jobs within 90 days of graduating, and the starting salary is between $40,000 and $50,000,” St. John says.
Since the third-quarter of 2015, the credit union has made seven CDL loans for $17,625 and 11 code school loans $83,300.
St. John anticipates the product will grow over time.
“It came about because of a need in the community,” he says. “When we starting these loans there was no government assistance available. When you’re talking $5,000 or $9,500, not everyone can afford that kind of money if they’re entering school. But more importantly, it’s a great opportunity for these students.”