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Private Student Lending Leads To More Than Just A Loan

A college loan can be, and often is, the foundation of a long-lasting relationship between a member and a credit union.

As credit unions evolve and look to expand their offerings and loan portfolios, private student lending has become an increasingly popular solution. However, some believe student loans are a one-time interaction point and not worth the effort of adding an additional product. The fact is that private student loans can be a stepping to stone to lasting, valuable relationships with young adult members. Whether the loan is the first point of contact or one in a series of touchpoints, hundreds of credit unions are proving it’s about more than just the loan dollars.

According to research conducted with nine credit unions (representing nearly 8,000 borrowers) that offer the Student Choice lending program, average checking account penetration for their Student Choice borrowers was nearly 65%, while more than 21% had a credit card. More than 10% had an auto loan with the credit union. These numbers indicate young adult borrowers are likely to continue to seek out their credit union for their ongoing financial needs.

Building Lasting Relationships

Credit unions often have the reputation of being antiquated or better suited for older generations. This couldn’t be further from the truth, but establishing themselves as a hub for millennials’ financial matters takes calculated strategy for success. Wright-Patt Credit Union in Beavercreek, Ohio, has a focused young adult initiative that is showing results.

In addition to offering the Student Choice loan solution, WPCU has convenient products to serve all of its student members’ needs. Young members can take advantage of online home banking and mobile banking platforms to access their accounts on the go. WPCU also has a major presence in the local college community; one of the credit union’s Member Centers is located inside the student union of a local college. During the first few weeks of classes each year, the WPCU team works to help students open checking and savings accounts, and continues to serve as a resource for students throughout their college careers.

Young adults are a key demographic for growing our business, said Tracy Fors, WPCU’s vice president of marketing and business development. By offering millennials relevant products such as student loans, free checking, and mobile banking, we’re able to develop lasting relationships that are mutually beneficial for years to come.

Of members who have a student loan with WPCU:

  • 80% have a checking account
  • 25% have a credit card
  • 14% have an auto loan

These additional borrower relationships mean more of WPCU’s members will continue to use its services even after they graduate from college or pay off their private student loans.

Affinity Plus Federal Credit Union in St. Paul, MN, has also seen the rewards of private student loans among young adult members. In a recent evaluation of its borrowers, 64% also have a checking account with the credit union. As we examine the relationships our student loan borrowers have with Affinity Plus, these individuals are outpacing average members by one full product or service and deepening their relationships by adding a checking or savings account, or even a mortgage, said Levi Wilson, consumer lending software administrator. And that number grows by an additional product or service for co-borrowers.

Stories From Real Borrowers

To further emphasize the value of young adult relationships, Student Choice collected stories from borrowers as part of its 2015 Lend Your Voice marketing campaign. One respondent told Student Choice, The lending process with my credit union was smooth and very stress free. I also have an auto loan through them and the lending process for that has been equally as good. The credit union lending process in general has helped me to plan to budget and manage my finances in a more responsible and efficient manner.

The numbers and narratives show that private student lending is about more than loan dollars it’s about building connections with students and their families that can last far beyond college and repayment. By attracting a younger member base, credit unions can drive down their average member age and connect with millennials in lasting and meaningful ways.

– This article originally appeared on CreditUnions.com on April 18, 2016.

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
September 26, 2016

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