Local Credit Unions Step In To Help With Student Loans | Marlborough's DCU leads charge to fill the gap
With private lenders increasingly withdrawing from the student loan market, some credit unions are stepping in to fill the gap in the local area.
Digital Federal Credit Union of Marlborough and Fitchburg-based Workers Credit Union recently entered the market, as part of a nationwide initiative known as Credit Union Student Choice.
“We hadn’t done student loans in the past,” said Thomas J. Gray, senior vice president of lending at Workers. “They’re very complicated to originate and to service.”
Money Pool
DCU was one of a number of credit unions across the country that helped form CUSC in May, according to public relations manager John LaHair. The joint initiative allows the credit unions to pool the administrative expenses of making the loans.
Since the start of the program, LaHair said, DCU has made 397 loans. Workers signed on with the program in June and made 104 loans, according to Gray.
Gray and LaHair said the credit unions are stepping in to fill a serious need. A number of lenders have stopped offering student loans, including the Massachusetts Education Finance Authority.
“With what’s going on in the marketplace we felt it was our duty as a credit union, as a not-for-profit balance sheet lender to collaborate and get into the student lending business,” LaHair said.
Gray said many students have come to Workers because they found the lender they had used in previous years would not offer them a loan for the coming school year.
Loans made by the credit unions come directly from members’ deposits and are not sold off on larger markets, making them immune from some of the problems that have hit other lenders.
“We’re not a for-profit so we don’t have to tell our shareholders that we’re going to make a zillion dollars this year,” Gray said.
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