As president/CEO of a small credit union, Lori Herrick said her credit union focuses on serving member needs. An that’s how Manchester Municipal FCU, Manchester, Conn., is able to run an in-house student loan program for the past decade and “never have a single charge-off, nor amazingly, have one of these loans reach even 30 days of delinquency,” she wrote in Credit Union Journal.
“Up until 2009, when we launched the program, we were turning away countless members who wanted to send their kids to college but didn’t know how to pay for it. We heard many stories from members who had student loans they’d been paying off for years without being able to make a dent in the principal. Or they’d been hit with fees. Or they were paying interest rates of 10% or more,” she wrote. “It broke my heart, and I knew we had to step in.
“The biggest concern, of course, was the risk. Anyone we consulted with on a potential program warned of that next big bubble, of the possibility of exposing the credit union to massive charge-offs,” Herrick added. “But we knew our members. We knew we could create a successful program.”
Herrick, the vice chair of CUNA’s Small Credit Union Committee, said she has been part of CUNA’s work to raise awareness of having a strategic focus as a small credit union.
Her op-ed details how Manchester Municipal FCU was able to launch the program, how it ties into the credit unions’ financial education efforts and how it led it to launch an equally successful student loan consolidation program.
“It should come as no surprise that this program benefits the rest of the credit union as well. Members who have taken out student loans now have credit cards with us, auto loans and personal loans. We are their primary financial institution,” I certainly would encourage anyone to consider this program for their credit union. It’s clearly a need across the country. But for me, it’s not really even about the student loans. It’s about our original purpose, our original focus as a credit union – serving the needs of our members. For small credit unions, for all credit unions, it’s really as simple as that.”