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Illinois REAL Solutions partners explore growth
NAPERVILLE, Ill. (9/16/08)--Illinois’ REAL Solutions partner credit unions participated in three information-gathering sessions this summer featuring payday lending alternatives, the Volunteer Income Tax Assistance (VITA) Program and asset-building savings accounts, and student outreach. REAL Solutions, a signature program of the National Credit Union Foundation, expanded to Illinois during 2008. “REAL” stands for “Relevant, Effective, Asset-building, Loyalty-producing” Solutions. The program is designed to help credit unions offer services that succeed in serving people of modest means, working families, and "low-wealth" households. The meetings were hosted by the Illinois Credit Union League (ICUL). During the session on payday lending alternatives, the partners gained insight into the world of payday lending and payday loan borrowers. For example, 68% of the borrowers are under age 45, 4% are over age 65, 82% have a high school diploma or better, 52% have some college or a degree, 42% own their own homes; 100% have steady income and an active checking account, 96% are aware of the finance charge, and 92% believe that payday advance is a useful service. The partners heard presentations during the session on the VITA program from the Internal Revenue Service, who sponsors the program; the Center for Economic Progress, a non-profit agency that helps coordinate VITA sites throughout the state; North Side Community FCU in Chicago, which participates in the program; and Joni Senkpeil, ICUL’s director of Small CU Development and a VITA volunteer. Asset building savings accounts was another topic addressed. “Asset building is an anti-poverty strategy that helps low-income people move toward self-sufficiency, a tool to build wealth through appreciating assets such as higher education, vocational training, small business, and home ownership, and a catalyst that creates economic momentum that can help individuals to escape the cycle of poverty permanently,” explained Megan O'Neil, independent asset building consultant. Asset building is typically accomplished through individual development accounts (IDAs). IDAs are special savings accounts for qualified low-income individuals, which offer matching government or foundation funds that help the total grow quickly. To participate, a person must be EITC eligible or have an annual household income less than twice the poverty level (about $40,000 for a family of four), and a net worth of less than $20,000 excluding the value of a residence and one motor vehicle per household. Three credit unions discussed their experiences with operating student-run branches in local high schools at the student outreach meeting. At South Division CU’s high school branch at Brother Rice in Evergreen Park, the credit union has worked since 2002 to create a “center of influence” for students and their finances. It has counseled students about working with money, and establishing and using credit wisely. Credit cards are offered to students based on their grades. Students are treated as adults in the handling of their finances. The student outreach meeting was rounded out by RIA FCU, Rock Island, Ill., which discussed its Kids Are Rewarded for Saving program. The initiative teaches kids up to age 12 the value of saving, and provides rewards and activities to help them reach their goals. RIA also plans to bring “CU4 Reality” to local schools. The event, held as a financial reality fair, puts students through an exercise where they learn about all of the various expenses they could incur in the real world.
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