The ROA Case for Private Student Lending

Credit unions are earning a great return while saving their members thousands of dollars over the life of a loan.

 
 

Much has been written about the subprime mess in autos and mortgages, but what about the crisis in private student loans? The rates charged by some of the largest student lenders — which can reach 10-11% plus an origination fee — are downright usurious when compared to rates charged by credit unions.

Student lending offers a great business model that many credit unions can (and should) emulate to diversify their loan portfolio and earn a decent long-term return on assets. The formula consists of portfolio-based lending, knowledgable underwriting, networked strategies, and local member knowledge.

Let’s look at the numbers:

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We know student lending can be a good deal for the credit union, but what about its members? What kind of cost savings can they expect? Two words: A lot.

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As you can see, credit unions can save members between $16,653 and $22,516 in total cost savings over the life of a loan. In aggregate, the CU Student Choice portfolio will save the 2,200 members that financed their college education during the 2009 academic year approximately $44 million over the life of their loans. To see for yourself, click here to do the math on one of the CU Student Choice partner sites.

 

 

 

March 16, 2009


Comments

 
 
 
  • Great utikzation of "show and tell" that drives home the real expected impact to CU's and their bottom lines
    Anonymous
     
     
     
  • I like the use of the slides to make the case.
    Anonymous