I grew up in California, but these days I’m a student at Williams College, located in a small, rural town in the heart of the Berkshires. My family has always been involved in the credit union movement, and while in college I’ve been interested to hear other students’ perspectives on this industry.
Williams College's campus in Northwest Massachusetts
I was directed toward the George Washington University Credit Union Initiative, a group of GW students working to charter a completely student-run credit union for the university community. All 20 members of the team are full-time students who run the project as volunteers in addition to attending classes, applying for internships, and enjoying the college social experience.
The students who run the initiative hope to not only offer the benefits of a traditional credit union – higher interest rates on savings, lower rates on loans, and member ownership of the institution – but they also plan to provide services tailored to the unique needs of college students, such as internship loans and financial literacy programs.
The internship loan stood out to me because money is oftentimes a large obstacle for students searching for internship opportunities. Many internships are unpaid, which presents a hurdle for students who lack the resources to take on unpaid work, yet still need the experience that comes from interning. Small loans to help cover expenses during an internship, explains Julian Daszkal, GWCUI’s CEO, can help students not only accept amazing summer opportunities, but also build a credit score which will help them as they seek larger loans in the future.
“When students come in, they don't really have a credit score; they're either no-file or thin-file borrowers,” he says. “So when they go out to get their first job and they start to take on, say, an auto loan, or they want to buy a house in the future, they need to have a good credit score. Being able to start that early is really important.”
The project is also focused on helping ensure GW students graduate with a solid base of financial literacy. While many students take classes on economics and finance, Daszkal told me those lessons don’t always translate to personal finance.
“What you learn academically isn't necessarily the same thing that you'll learn when you go and in the real world apply for a loan, he says, noting a lack of understanding around how credit scores affect interest rates on loans, or the nuances of having personal guarantors or cosigners on a loan. “There are a lot of small things that I think are very important that you don't learn in the classroom, that are necessary to learn at a young age that I think that a credit union on campus would be able to really create a difference.”
That felt familiar. Economics is one of the most popular majors at Williams, and many of my peer have internships and jobs in banking already lined up for after graduation. Despite this interest in financial institutions, however, I recognize a lack of understanding of basic financial skills and concepts. When I tell my peers I work in the credit union industry, they often ask me what that means.
My conversation with GWCUI leaders illuminated how college campuses can be a perfect environment for credit unions, and how much students and the school can benefit from the collaboration and community that comes from local financial institutions. Aside from the growth opportunities credit unions can find on campuses, if students finish college more financially literate and empowered, they are likely to look back on their college experience more positively and generously, and be more likely to give back to the community that nurtured them as young adults.
Not only can that involvement create interpersonal relationships that help ingrain students in a community, explains Umar Madhi, GWCUI’s chief technology officer, since the students are also the employees, “when you're volunteering on behalf of your community, there's a lot greater incentive to help the people that are in your position.”
I am convinced this initiative is a great opportunity to educate students and recruit for the future of the industry. George Washington seems like the perfect place to test this, with a large, diverse student body located in the heart of the nation’s capital and the advantage of having a similar success story nearby – the Georgetown University Alumni and Student Credit Union, which has been entirely student-run for over 30 years.
I am curious to see if this model could be applied to other colleges around the country like mine, with fewer than 2,500 students and located 40 miles from the closest city. Hundreds of credit unions serve universities in some manner, either because they were chartered to do so or as an on-campus financial institution. And many more still have a presence in college towns or near major universities. Deepening those partnerships could not only help expose more students to the industry, but also provide first-hand experience with real-life financial concepts, as well as the workings of a financial cooperative.
I know that on whatever college campus you look at there are students who would benefit from the credit union model and the professional development that comes with working in a legitimate financial institution and serving your peers.