In the wake of the Wells Fargo scandal, many credit unions are reminded just how much they differ from big banks. While Wells Fargo employees drummed up fake accounts to meet quotas and make their stock-holders more money, credit union employees were focused on returning value to their member owners. Student lending is another area where credit unions help their members make smart financial decisions in the best interest of the member.
A few months ago, Wells Fargo was ordered to pay back $4 million in fines to student borrowers. The Consumer Financial Protection Bureau cited Wells Fargo for structuring its statements in an unclear manner that caused student borrowers to accrue unnecessary late fees. Although Wells Fargo claims this practice only occurred between 2010 and 2013, this practice still indicates an attitude to act in the best interest in the bottom line instead of consumers. By offering student lending options, credit unions aid members and their families make sound financial decisions as they uphold the principals of the cooperative financial model.
As not-for-profit institutions, credit unions and CUSOs have a different set of values than banks. For example, financial education is a key component to the credit union student lending model. Credit unions want to empower their members to balance their finances instead of squeezing them for late fees. Scott Patterson, CEO of Credit Union Student Choice, says, "Educating our members is one of the most important things we can do to help them make wise financial decisions. It provides the necessary transparency that should be part of any responsible student lending program." Credit Union Student Choice is a credit union service organization (CUSO) that positions credit unions as leaders in education finance by offering a comprehensive solution that helps them deliver fair-value private education loans and corresponding financial education to students and families. At Empower U – Credit Union Student Choice’s annual conference – the discussions, presentations, and panels focus on one thing: the member. That’s the credit union difference.