Credit union's student lending to 'help fill gap'
CHAMPAIGN — The University of Illinois Employees Credit Union will re-enter the world of student lending — with help from a Wisconsin company that has been in the business a long time.
Beginning Thursday, the credit union will offer private student loans to students attending any University of Illinois campus.
Private student loans are used by students and families who have exhausted their federal student loan packages, but still need money for school expenses.
"Making college more accessible for University of Illinois students is something the credit union feels very strongly about," said Greg Anderson, senior vice president and chief operating officer of the credit union.
"The private student loans we can offer through this partnership with CU Campus Resources will help the credit union fill the gap in financial needs for that education," he said.
CU Campus Resources, a Madison, Wis.-based company that is wholly owned by the UW Credit Union there, provides private education loan products and services that participating credit unions — like the UI Employees Credit Union — can make available to members.
The UW Credit Union has been active in student lending for more than 40 years. It has an education loan portfolio of about $400 million.
Anderson said students can borrow up to $12,500 per school year from the credit union, with a maximum of $40,000 per borrower.
They can make interest-only payments from the start; make regular payments on principal and interest from the start; or defer their first payment until six months after graduation, he said.
Normally, such loans have a 12- to 15-year repayment schedule.
The credit union requires a $50 minimum payment and has no pre-payment penalty, he added.
Anderson said the credit union will initially limit student lending to 5 percent of the credit union's assets. He said the credit union eventually hopes to expand the lending program to students attending other colleges and universities.
Anderson said the UI Employees Credit Union had "a very strong student loan program in the '80s and early '90s."
But when the federal government moved to direct lending, rather than guaranteed lending, in 1996, the credit union got out of the student-loan origination business.
As the costs of education continued to escalate, the credit union saw a need to return to the student-loan business.
Applications for the loans will be taken online at the UI Employees Credit Union website, with CU Campus Resources processing the applications and the local credit union marketing the program.
You're kidding, right? Here, a wonderful institution like UIECU, which provides some of the lowest interest rates for personal 'emergency' loans, automobile financing, and retail banking services for individuals with low credit scores and less than stellar credit histories is again finding another way to help the East Central Illinois community and you blame them for student debt? If you want to blame someone for student debt look to state and federal government. Every year the amount students pay for their education increases because the government pays less. We have expected students to pick up the tab as funding decreases. Welcome to right of center education policy. Do you know the true cost of one year of education is more than triple full price tuition? There are physical plant costs, personnel costs, development costs that institutions are increasingly having to find new ways to pay for. The state owes institutions of higher education MILLIONS of dollars. It costs money to keep higher education going. At this time, with soaring tuition, the returns to a bachelor degree, or even a few years of enrollment excede the cost and opportunity cost of lost low-skill wages that could be earned. I encourage you to think before you blame people who are trying to help.
Not kidding. Shackling children with huge amounts of debt is immoral. And you are right that the government is ultimately to blame.
Government paying less for education is a function of the massive increase in government payments to retiring baby boomers. The government gets to exploit our kids so they can pay off the Social Security promises they made under Lyndon Johnson during the Vietnam War.
The money lenders are being enriched as an enticement to play this immoral game.
Hey it's either take on debt or don't go to school. Pick. Waiting tables and working retail gets old and doesn't pay well/offer insurance usually. If you want a decent life you have to stop whining and put in some work. Some people can't get financial aid and their parents can't afford to help or choose not to. What's wrong with all the help you can get. Go compare UIECU's rates with some other banks as far as loans go and see why this is news.
Statistically, there’s no proof that smart, ambitious, aggressive people, won’t benefit enormously from a five year head start against their peers who choose to spend five years doing homework and drinking beer and going to frat parties. Smart ambitious people succeed whether they go to college or not.
The system needs you to be in debt. Needs you to pay tens of thousands of dollars to read the same Plato you could’ve read in the bathroom at your local library. “You’ll have a better life”. “life is secure now”. Yes, you are fully secured by the shackles they hand you on graduation day.
with this philosophy, why not stop your education at 8th grade, get a GED, and then get an extra 4 year jump on society.
Obviously you havent been job searching lately, when a good chunk of the postings say either, "bachelors required or highly recommended"
Not to mention you are obviously out of touch with reality and the truth behind fraternity and sororities. Yes they do party during their college years, however, there are a good number of alumns from the greek system that prefer to hire fellow brothers and sisters from the greek system. Havent you ever heard, "its not so much what you know, but who you know".
Also, apparently we dont need teachers right for grade school, you know since anymore any educator most certainly have a college degree
Populist hatred of education is so 1920. If you want to read about research in the area of returns for higher education I suggest going to Google Scholar and typing in 'returns to bachelor degree/higher education/educational attainment'. Knowledge is a wonderful thing.
It is true that knowledge is a wonderful thing. However, a University granted credential is a very expensive thing. Increasingly, it results in an unemployed and permently indebted next generation.
Do you know what debt servitude is? It is impossible to discharge college debt in a bankruptcy. Education debt is also guaranteed by the government, they cosign every loan. So, it is guaranteed profit for the lender, with the default risk assumed by the government. But to the student, if you fail to procure a high paying job, you are not protected from the debt in any way. It is permanent. Inescapable debt for a generation of graduates who struggle to find jobs waiting tables.
How wonderful is knowledge to the graduates who cannot convert? Among the members of the class of 2010, just 56 percent had been granted even one job by spring 2011, one full year later. (source: New York Times).
Good question, I don't know what the population was.
Here is the article:
http://www.nytimes.com/2011/05/19/business/economy/19grads.html
and here is the quote:
Among the members of the class of 2010, just 56 percent had held at least one job by this spring, when the survey was conducted. That compares with 90 percent of graduates from the classes of 2006 and 2007. (Some have gone for further education or opted out of the labor force, while many are still pounding the pavement.)
All debt should be impossible to discharge. The "old timer" idea of buying things with cash is over, and you are gonig to go into debt, that is really the only way to live, so people need to be taught how to manage debt. Unless you have someone giving you money (not lending) then you cant really get anything. A decent used car cost $7k+. Who has $7k just sitting around when they are 18 (out of high school) to spend on a vehicle to get to and from work without someone lending them some money.
When you buy a car, all that secures that loan is a depreciating car (hard to repo, and they probably lose money on the resale). Therefore, a bank has a strong incentive to lend you no more for a car than you can afford to repay.
Educational debt is guaranteed by the US government. If your grandson's college debt was secured by his future service to an employer, the banks would have a similar incentive to loan a student only a responsible amount. But, since the government secures the debt, the banks are eager to load up a student to hundreds of thousands of debt, even for useless degrees. It is irresponsible, and it is immoral.
how is it immoral. this is a good lesson in business for the young kid. Is your education worth what you are getting? That is like me telling you that it is stupid that you went in debt to buy a house. You might have paid thousands more then i feel the house is worth but isnt that up to you as the consumer to decide that. When it comes to education the student is the consumer. If he/she feels paying $35k/year is a good investment for School A rather then $6k/year for School B, then that is their right as a consumer to make that decision.
Comments
News-Gazette.com embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.