Executive Summary
For many students, financing an education is much less interesting than getting an education. Jessica Vogel, a graduate student at Th e George Washington University in Washington, DC, has endured two rounds of student loan funding in the past six years. She hardly remembers the first, where she and her mother completed a Free Application for Federal Student Aid (FAFSA) and—after calculating for family contributions and work-study income—simply signed up with the student lending company that appeared on the top of her college’s preferred list.
When she applied for graduate school loans, she again went with one of her school’s suggested lenders and has largely ignored marketing from financial institutions aimed at getting her to move her loans. “I wouldn’t have changed financial institutions, even if I saw a good offer,” she says.
But as many large lenders make headlines by exiting the student loan marketplace or cutting their relationships with financial aid offices, credit unions that effectively market to parents and students during transition periods stand to win a share of the growing student loan market.
What is the research about?
Many student lenders, including some of the largest, have begun to pull back from lending to community college students. Even students at larger institutions are feeling the squeeze as once- solid lenders and guarantors face troubles of their own during the credit crunch. Even though secondary market funding has dried up during the credit crunch, the consumer need remains. This brief outlines the opportunity and how credit unions can position themselves to target young adults.
What are the credit union implications?
Credit unions need young adults, and young adults need credit unions. Nowhere is this more clear than from the financial headlines that have documented many lenders’ speedy withdrawal from the student loan business.
This report is sponsored by PSCU Financial Services, the Credit Union Executives Society (CUES), Fiserv, and the Corporate Credit Union Network.