The average age of credit union members in North America is 53 years old, according to the World Council of Credit Unions. This trend, which seems to be moving in the wrong direction for many cooperatives, makes finding new ways to connect with young adults critical for the future of the movement and business continuity. So why aren’t more credit unions giving it the attention it deserves?
Making First Contact
Although you’d be hard-pressed to find a credit union executive who did not agree that engaging with the next generation of members is a high priority, the path to do so tends to be unclear for many. For some, marketing strategies targeting younger members or high school branches can help boost brand awareness, but what about offering products geared toward young adults — such as the first major loan they’ll need?
Enter Private Student Lending Solutions
Flexible funding solutions, such as CU Student Choice’s private education line of credit, allow students and families to fill the college funding gap that often exists after savings, scholarships, and federal aid have been exhausted.
Based on our recent analysis of 13 years’ worth of Student Choice borrower data from TransUnion, a private student loan is typically the very first trade ever taken out by these young adults. And naturally, we believe it should come from a credit union.
Paying for college is an extremely important and stressful financial event, for not only students but also their parents (who will likely co-sign a student loan). What if your credit union could offer the solution and gain a valuable new member relationship in the process? All while easing financial stress and strengthening relationships with your long-term members?
Valuable Today … And For A Lifetime To Come
Private student loan accounts have proven to be highly valuable in and of themselves — with the average loan returning more than $7,000 in net profit during the life of the loan. But our borrower data shows private student loans are a gateway to significant cross-selling opportunities, giving credit unions the chance to build meaningful relationships that last a lifetime.
Within 13 years of taking out a private student loan with a credit union:
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- 81% of student loan borrowers took out an auto loan, with the average being 2.5 auto loans.
- 60% of student loan borrowers took out a credit card, with an average of four credit cards.
- 48% of student loan borrowers took out a mortgage, with an average of two mortgage loans (including refinance).
Unsurprisingly, private student loan borrowers also tend to have incomes and credit scores that increase steadily over time. In fact, we found that by year 13, median credit sores and income reach:
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- 756 and $102,000 for those with auto loans.
- 751 and $92,000 for those with credit cards.
- 773 and $126,000 for those with mortgage loans.
The numbers tell the story. Young adults will be seeking out these loans, and it’s up to cooperatives to ensure they turn to their credit union for their student lending and subsequent borrowing needs. And although we used 13 years of data, it’s not necessary for credit unions to wait that long to start benefiting from these new relationships.
In fact, 46% of borrowers took out an average of 1.8 auto loans within just four years of getting their private student loan from their credit union.
Our TransUnion data doesn’t include opportunities like checking and savings accounts, but deposit accounts are also clear financial needs for young adults. Let’s examine the persona of a fictional private student loan borrower:
Lena is 18 years old when she applies for her very first loan through her credit union to help pay for her four-year degree at Rice University in Houston, TX. She also needs a checking account to deposit funds from her work-study job on campus. Her credit union’s free checking, debit card and mobile app make it easy, and she’s even able to build up a little bit of savings in her regular share account.
Sophomore year, Lena needs to finance a spring break trip and a credit card is required to make her hotel reservations. She applies for a low-limit credit card from her credit union. She’s responsible and pays on time each month, so her card limit is automatically increased by her credit union.
She graduates with a degree in mechanical engineering at 22 and is offered a high-paying job in Houston. Reliable transportation is a must, so she applies for an auto loan at her credit union.
Lena is promoted after just a few years. At 25, she’s ready to put down roots and buy her first home. Her mortgage application is easily approved by her credit union, which is also where she saved up for her down payment.
By offering Lena her first loan, the credit union in this example positioned itself to build a lifelong relationship with this young adult member. High-quality borrowers are taking out their first private student loans every day. Is your credit union ready to serve them?
CU Student Choice helps credit unions meet the evolving needs of the next generation of members. Our vision began with an education line of credit in 2008 and now has grown to include student loan refinance, skilled trades lending solutions, referral programs, next gen lead gen, and a dynamic loan origination system that simplifies the education lending process.
Contact us to learn more about how your credit union can partner with Student Choice to provide funding solutions to serve the needs of undergraduate students, parents, graduate students, and those pursuing new career education pathways. There’s no more important time than now to welcome younger members and build new community partnerships.
Mike Weber is the chief marketing officer at CU Student Choice.
