By Lori Herrick
I have long believed that credit unions can solve most of the financial challenges that entangle our members. That’s why I am so pleased to hear the industry and CUNA prioritize financial well-being for all.
This new emphasis has compelled me to share how we at Manchester Municipal FCU promote financial well-being in our little slice of the world in Connecticut. I think our work is a terrific example of how credit unions, collectively and collaboratively, can address all of the varying financial needs of Americans across the country.
Our focus is on student loans. A little more than 10 years ago, based on the increasing requests we were receiving from our municipal worker members, we launched an in-house student loan program that has now saved our members tens, if not hundreds of thousands of dollars, in interest and debt.
Unlike federal programs, the students and their co-signer parents begin making payments immediately on their loans, rather than deferring payments until after graduation. This approach not only saves the borrowers an incredible amount of money on interest, but it also involves students in the financial transaction from the very beginning, providing important financial education about how loans work and how paying down debt can strengthen one’s financial future.
A Personal Conversation
Every student loan we provide begins with a personal conversation with the family about how the loan works, why beginning payments immediately is so crucial, and how defaulting on the loan would impact their financial future success. As I’ll describe below, the program has been wildly successful for us. More importantly, however, it’s been a success for the financial well-being of our members.
But we didn’t stop there.
We later introduced a student debt-consolidation program for any members with existing student loans. In some cases, members would show up to the credit union with more than $100,000 in loans with outrageous interest rates that were suffocating their financial lives.
‘Tears of Joy’
I cannot adequately describe the appreciation members have shared with us – in some cases the tears of joy – when they realize they are now able to pay down both the interest and principal with each monthly payment. in some instances, loans are being paid off years ahead of the existing term on the federal loans they had.
Just as amazing to us, providing this service has built up incredible loyalty among these members. For many, we are their primary financial institution for all loans and savings needs. And they always pay the credit union first.
In fact, for both of our student loan programs we have never seen a single charge-off and have only seen maybe one or two of these loans go delinquent greater than 30 days.
Talk about a win-win.
And since we began offering the student loans, our asset size has doubled from $15 million to nearly $32 million as of today.
But, to be perfectly honest, it has nothing to do with income for us. It’s not about asset growth or products per member or any financial metric we track at the credit union.
It’s about listening to our members, understanding what their true financial challenges are, and providing them solutions that strengthen their financial health and well-being.
The Power of the Movement
And do you know what’s happening now? Not only are we helping our members, but after sharing the details of these student loan programs during recent small credit union webinars hosted by CUNA, we’ve had dozens of credit unions of all asset sizes reach out about how they can offer these in-house student loans, too. If you are interested in starting a program or hearing more about this, please contact Lori @ lherrick@mmfcu.net.
This is the power of the credit union movement. We can all play a role in ways that make the most sense for our diverse memberships. We can add and change our services to meet our members unique needs, proving again and again that our members are our number one priority.
Together as a movement, we can provide a strong foundation for financial wellness, for all members. We are stronger together; together, we can make the dream of financial well-being for all a reality.
Lori Herrick is president and CEO of Manchester Municipal FCU.