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News Now

Washington
Obama signs new student loan law
WASHINGTON (4/2/10)--Federal student lending regulations were officially changed earlier this week when President Barack Obama signed legislation that eliminates government subsidies to credit unions and banks that take part in the Federal Family Education Loan Program. Starting on July 1, education loans will be originated by the government. Obama on Tuesday estimated that this change would save taxpayers $68 billion, and the government is projected to offer $61 billion in funds to active and prospective students in the form of need-based Pell grants. The Credit Union National Association (CUNA) estimates that this change could affect 1,000 credit unions that currently participate in publicly-funded student lending. However, private student lending still provides valuable market share opportunities for credit unions. A recent Fynanz survey revealed that private loans accounted for 10% of the $229 billion total cost of higher education in the 2008-2009 academic year, and cuStudentLoans.org, private student lending cooperative of over 30 credit unions in New Jersey, Pennsylvania, New York, Ohio and Minnesota, handled $90 million in student loans in late 2009. The cuStudentLoans.org network is backed by Fynanz and lends to students at over 700 schools in 47 states. According to Fynanz estimates, 90% of those loans go to new credit union members, “which is welcomed news for credit unions looking to expand their customer base and offer programs that attract younger credit union members.” Earlier this year, CUNA Strategic Services Inc. (CSS) joined with Fynanz Inc. to help credit unions get a piece of the private student loan market, attract new members, and assist borrowers with financing tuition and achieving higher education goals.


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