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N.J. CUs create cooperative student lending program
HIGHTSTOWN, N.J. (5/13/09)--Credit unions in New Jersey are collaborating through a new student lending program that aims to help students pay for school and drive credit union membership. Set for launch the first week of June, the program will comprise 17 credit unions and offer about $60 million in financing. Students and their parents will be driven to an online portal platform where they will take a membership test to see which credit unions they are eligible to join for financing if they are not already credit union members. From there, they can apply for a loan, which will be offered with common pricing, according to Paul Gentile, New Jersey Credit Union League president/CEO. “It is the ultimate example of collaboration and cooperation among credit unions,” he said. Aside from offering students financing, the program also strives to drive up membership. “It’s a great [way] for credit unions to get closer to younger members,” Gentile told News Now. Credit unions will be able to nurture relationships with their young members as they make monthly loan payments, he added. The program also is beneficial for small credit unions because the loans are offered cooperatively. No credit union will hold more than 10% of a student loan on its books. Each loan will have an originator, and financing will be spread among nine other credit unions. “There will always be 10 credit unions [total],” Gentile added. “[It helps] small credit unions get a piece of the action.” The league and credit unions are talking to local universities with the goal of being listed as a preferred lender. A high percentage of New Jersey high school students attend colleges in the state or within a three-hour radius of their hometowns, Gentile said. The league estimates that there are at least 200,000 potential college students in the state. Another feature of the program is that it will reward students who maintain good grades. A student who maintains a good grade point average will receive better rates on loans, because students who maintain good grades and are on track to graduate will likely pay their loans back, Gentile said. The key to creating a program such as New Jersey’s lending program is constant collaboration. “It wasn’t just the league telling credit unions, ‘Here’s what we’re going to do.’ We kept relying on credit union feedback,” Gentile said. “It was a fascinating experience.”
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