No Need to Tackle Student Loans Alone
Posted by Nathan Quade, Unknown, Unknown on 5/31/2018

For many college-bound students, the homework doesn’t stop when school is out of session. Students and parents are spending a lot of time and energy trying to find financial aid options to cover the growing cost of college. After all, a higher education now requires a higher price tag.

When seeking ways to cover this growing cost, it’s best to look first for scholarships and grants—money that doesn’t need to be repaid. Then, explore federal student loans. In most cases, however, these options don’t cover the full cost. To tackle the remaining balance, families can consider a private student loan.

According to a national study by Sallie Mae, the average American family paid more than $23,000 in 2017 in college expenses. Nearly a fifth of those expenses are covered by loans. Additionally, 84 percent of students receiving loans expect to be solely responsible for repayment – even if a parent or guardian initiated the loan.

Can a credit union help?
As credit unions, we try to meet members’ needs. And as student loans become a bigger part of what members need, credit unions recognize the imperative role they can play in that process.

Why should credit unions offer student loans?
Student loans allow a credit union to expand its product line and membership base simultaneously. Many students seeking loans are currently unaffiliated with a financial institution. A student loan gets them in the door to become a member. Student loans also benefit current members seeking out responsible financial aid options.

Imagine increasing your credit union’s product line and membership base without increasing the balance sheet risk. With loans like the Smart Option Student Loan, offered through a partnership between Catalyst Corporate and Sallie Mae, it’s possible.

Such an arrangement allows credit unions to provide referral-based student loans to members without taking the credit risk associated with private student loans. It also provides a great resource for members and fee income for credit unions, as credit unions receive a referral fee for each loan.

What can members expect?
Students who choose to take out a Smart Option Student Loan may receive funds applicable to any accredited U.S. institution; other loans may have limitations. Schools receive the approved funds directly from the lender, so borrowers don’t have to worry about disbursement dates and amounts. This particular type of loan has no origination fee, no prepayment penalty and offers a 0.25 percent interest rate reduction if the borrower enrolls in monthly automatic debit payments.

Do student loans only apply to undergraduates?
That depends. Some lenders have loans designed for graduate students, too. It’s just as important to look for responsible private loan options for:

  • Dental School

  • MBA Programs

  • Health Professions

  • Law School

  • Medical School

  • Graduate School

How can I learn more?
Now is the busiest time of the year for student loan requests. Take a few minutes and check out this free webinar explaining student loan options for credit unions.

College students are under enough pressure. Let them know your credit union is here to help!

 

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