A Path To Prosperity And Financial Wellness

Many credit unions have long provided college scholarship opportunities in their communities, but some are also taking steps to put a skilled-trades education more easily within reach. Not only is there a need for those programs – which provide well-paying jobs without requiring a four-year college degree – but they also underscore that good jobs are key to financial wellness.

Hiring remains a critical challenge for American employers, and many essential industries are struggling to recruit enough workers to fill open positions. Some of the hardest-hit sectors include manufacturing, aviation, home service, and utilities – jobs that usually require education outside of the traditional four-year college route. As skilled tradespeople continue to retire, efforts have increased to get more young people into these careers.

But as young people seek paths other than attending a four-year institution, what options are there for financing those educations? The nation’s largest university-based credit union may have an answer.

Airlines in North America alone are going to need around 130,000 new pilots in the next 20 years, and an expensive application process is contributing to the shortage. That’s where Michigan State University Federal Credit Union ($7.8B, East Lansing, MI) comes in.

“Traditional student loans don’t really work with somebody attending a pilot-education program,” says CEO April Clobes. “They’re very focused on four-year institutions and are tied to semesters and credits versus, you know, flying hours.”

When Eaton RESA and the Capital Region International Airport in Lansing, MI, partnered to create the Aviation Careers Institute, they approached MSUFCU about introducing a specialized loan program.

“We worked to create a component similar to our traditional student loans for those going to Michigan State University — meaning competitive rates,” Clobes says. “I always tell everybody we’re between a federal student loan and a private student loan on the market at a favorable rate.”

This specialized loan program has only been available for one semester, with one loan funded in June for $20,000. Approximately 350 students are enrolled with the Aviation Careers Institute, and membership at the credit union is not required in order to apply for the loan.

In addition to applying for loans up to a specific dollar amount, students gain access to exclusive discounts and a checking account with direct deposit that they keep throughout the repayment process. The students have a six-month deferment before repayment begins after completing their coursework.

MSUFCU has also introduced its Dreams Take Flight Scholarship, which awards $5,000 each to two high school students planning on pursuing a career in aviation.

“It helps us stay connected with the young people in our community and attract individuals to our institution,” Clobes says. “They may think we’re just supporting students who choose a traditional path at Michigan State University, so [this program] helps us demonstrate to our community that we help other students be successful in their future as well.”

Encouraging Bright Futures

Developing the younger workforce is one of the utility industry’s biggest challenges, according to 2023’s Energy Workforce Survey, a biennial poll by the Center for Energy Workforce Development. This comes as evolving technology has also driven the need for more jobs in renewable energy.

Utilities Employees Credit Union ($1.3B, Wyomissing, PA) or UECU has been serving the utilities industry since 1934, beginning with the East Coast and gradually expanding its field of membership nationwide.

“We deal with so many utility workers for all their loan needs,” says Julie Ward, UECU’s vice president of lending. “Over the years we’ve had members mention that in order to be a lineman you have to go to a special school and sometimes your company doesn’t pay for that, so it would be nice if we could help.”

UECU worked with Student Choice to introduce its custom loan program for trade school students in July 2022, starting small and expanding over time.

“We’ve booked over 310 loans totaling around $6.3 million in just two years,” Ward says. “That’s sort of a gradual start with us only having three schools involved at first to now serving over a dozen.”

Today, these loans are available for students pursuing a lineman, propane, HVAC, electric, wind, or renewable-energy program at 13 different institutions. Membership is not required to apply, and students can borrow anywhere from $1,000 to $45,000 at rates ranging from 7.49% to 16.49%.

Bret Krevolin, UECU’s president and CEO, says interest only continues to grow, with a lot of inquiries coming from word of mouth.

“Now we’re getting calls from other trade schools throughout the country who have heard about our lending program and want to become part of it,” he says.

“Once they graduate, [these students] have such a great opportunity within the industry, and we definitely see the fruits of that when they come to us for their auto loans and their mortgage loans,” Ward says, noting the program’s current delinquency rate is just 0.35%. “They’re great borrowers and they’re great savers.”

Attracting Lifelong Members

Salaries in the skilled trades start in the $60,000 to $70,000 range, while airline and commercial pilots earn between $100,000 and $200,000 a year. Both fields pay are significantly more than the median annual salary of the majority of adults in their twenties. By making it easier for the next generation to pursue these paths, credit unions are helping their young members build a foundation for long-term financial wellness.

While Michigan State University FCU and UECU target different industries with their specialized student loan programs, both say they are striving for a similar outcome: that these students go on to be long-term members. This often means forming relationships with their families as well.

“Our purpose is to be our members’ trusted financial partner for life,” Krevolin says. “If we can get them in early we can hopefully expand the relationship over the years.”

Both CEOs agree it’s all a part of their larger mission to help their members achieve financial success.

“This is an opportunity for students who want a different path of education and career to still be successful and achieve their dream,” Clobes says.