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Low-income standard would be broadened under plan

WASHINGTON (4/18/08)—The National Credit Union Administration (NCUA) proposed broadening its low-income designation to consider different income patterns in metropolitan areas. The designation is important in determining whether a credit union qualifies for assistance to help low-income members.

"The proposed rule will eliminate the confusion associated with adjusting median household income in metropolitan areas with higher costs of living," the board said. It set a 60-day public comment period on the recommendation.

The 2006 Member Service Assessment Pilot Program (MSAP) recommended that the formula for determining whether a federal credit union qualifies as low-income be reassessed. The NCUA Outreach Task Force agreed with the MSAP that the standard for low-income designation be changed to be consistent with the position of other federal agencies.

The board in a statement pointed out that presently agency regulations describe a low-income family as members whose annual household income falls at or below 80% of the national Median Family Income, but that the rule does provide a differential for certain geographic areas with higher costs of living.

The NCUA change would "revise the definition of 'low-income members' to base the determination on an income standard that relies on Median Family Income or the alternative of median earnings," according to the board statement.

It added: "For metropolitan areas, the proposal defines low-income members as those living in an area, within the metropolitan area, where the standard is at or below 80% of either the standard for the entire metropolitan area, or the national standard, whichever is greater."

In addition to eliminating the confusion associated with adjusting the national Median Family Income for metropolitan areas with higher costs of living, it will better align the criteria for low-income designation with that now used to determine field of membership and other credit union classifications, NCUA said.

The low-income designation is considered especially important to credit unions because it determines whether they qualify for subsidies from the Community Development Revolving Loan Fund.

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NCUA Proposal on Low-Income Standard