Credit Unions and Student Loans

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Credit Unions and Student Loans

• Tom Sakos
• XSS PARTNERS

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Willy Sutton
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• Because that is where the money is

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Background

• 8,088 Credit Unions
• 90.7 million members
• Not-for-profit financial cooperatives, organized
  solely to meet needs of members
• Tax exempt
• Field of membership requirements
• National organizations
• NCUA, CUNA, CUNA Mutual, Corporate CUs,
  CUSOs

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Credit Union Considerations

• Gen Y Members
• Low Cost of Funds
• Deposit Funding
• 15 Year Duration
• Recent Expansion Into Private Loans

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CU Member Age Distribution
Source CUNAs 2006-2007 National Member Survey
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Opportunity
400 Billion
Federal
Private
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Customized Programs

• Private Loans for International Students
• Wharton School and Digital Federal CU
• Sloan School of Business and MIT Fed.
  CU
• For Profit Schools
• ITT and Student CU Connect ( 7 CUs )
• State programs to provide funding
• New York, Illinois, Connecticut, Iowa,
  North Carolina

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Service Providers/Aggregators

• CUNA Mutual Student Loan Network
• FFELP aggregator with nearly 1,000 CUs
• Callahans Credit Union Student Choice
• Private loan aggregator with 44 CUs - lower
  pricing
• Fynanz, Cology
• Technology platform and program providers
• Credit Union Leagues
• Reliamax Private loan insurance

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Concerns and Issues

• Surprised by 1st Quarter Yields Forcing CUs to
  question participation in FFELP
• Administration budget proposal Looking at
  private loans as possible product replacement
• Tax-exempt status
• Corporate credit unions financial issues
• NCUA fees
• Only current FFELP Consolidation lenders