From the Archives: February 2013

CU Student Choice Partner Credit Unions Emerge as Leaders 

As college costs continue to skyrocket, millions of families rely on private student loans to fill educational funding gaps that federal aid and savings can leave behind. To help more credit unions offer solutions to their members’ college financing needs – all while creating valuable long-term relationships – CUcorp is proud to have partnered with CU Student Choice, the leading provider of private student lending services to America’s credit unions.

After an extremely successful lending season in 2012, CU Student Choice’s 200 credit union partners have now funded more than $876 million in fair-value private loans nationwide, including $36 million from Michigan credit unions alone. With zero origination fees, lower interest rates and a unique line of credit structure, the Credit Union Student Choice program simply offers members a better deal when compared with other financing options. Compared to the average private student loan, these credit union loans will save borrowers nearly $500 million over the life of their loans while also returning strong results to credit union bottom lines. Now that is value.

Unlike many other models, the Student Choice program puts credit unions in full control – allowing you to leverage your balance-sheet lending capability to make direct loans to students in the communities you serve, providing a genuine opportunity for a productive member relationship. Participating credit unions control the rates offered and key lending criteria, while the CUSO handles the most difficult and time-consuming aspects of student lending, including loan origination, school-certification, and servicing.

Student Choice’s team of experts also provide hands-on operational, marketing, and business development support to position your credit union for success. Through on-site seminars and online resources, you’ll help educate your members on the full range of college financing options to ensure they take advantage of free and low-cost funding sources.

Private student loans are a long-term relationship and a necessary financial product for many students and families. As credit unions seek to grow their lending portfolios and attract a new generation of members, helping students finance their educational goals is proving to be a tremendous opportunity.

Contact your league representative at (800) 262-6285, to learn more about the Student Choice program.

How to Make Retirement Planning Unavoidable
Your organization offers its employees a retirement plan. You spend a fair amount for this benefit and use internal human resource staff to manage the plan. Every quarter, your management team reviews the retirement plan, and you’ve even paid an advisor to help make sure you’re offering an effective, complete menu of options. You’re proud of the plan, except for one thing: It isn’t working.

At least one in four employees choose not to participate, and most who do participate aren’t investing enough to achieve your plan’s main goal: guiding each employee to a financially secure retirement. What’s wrong?

Chances are, nothing’s wrong with the plan itself. But something is wrong with how your employees are educated and motivated to take responsibility for their own retirement security.

An Epidemic of Nonpreparedness
Being under-educated and unmotivated to save adequately for retirement would place your employees squarely in the middle of a national epidemic.

The aggregate retirement income deficit for all Baby Boomers and Gen Xers—that is, the amount by which their savings, plus Social Security, falls short of the projected amount they’ll need to maintain their lifestyle after retiring—is $4.3 trillion, according to the Employee Benefit Research Institute. One reason is that, on average, employees contribute only 6.4% of their paychecks to a 401(k), according to Plan Sponsor Council of America research. Typically, financial advisers recommend 10% as a baseline minimum and 15% for those who start saving for retirement late (in their 40s or even 50s).

Four Steps for Plan Sponsors
To help employees get started on a retirement plan and stay on track, try these four steps in partnership with your retirement plan sponsor:

  1. A mandatory get-started program: When new employees are eligible to join a retirement plan, require them to complete a worksheet or software program that helps them determine specific goals, contribution amounts, and investment mixes. Set aside time just for this.
  2. An annual employee review: As part of management’s annual employee review of personal development goals, include the employee’s progress on retirement savings goals.
  3. Regular education: Insist on a provider that offers quality education focusing on how to implement an effective retirement savings plan. Hold regular, mandatory educational meetings.
  4. Get employees up to tech speed: If your provider offers self-service planning software, schedule 15 minutes per year for your employees to use it, and be sure the provider offers personal service for anyone who has questions while using the software.

Following these steps makes retirement planning almost unavoidable for employees. This has become necessary, because for so many employees, committing to a retirement plan and following up regularly is like going to a dentist. They’d rather not.

But dentists put patients on a schedule of regular check-ups and cleaning because they know exactly what happens when folks wait to see a dentist until they get a toothache. Don’t wait for employees to be pro-active about their retirement. In the end, they’ll appreciate you for it.

Rob Peters is a retirement strategist for CUNA Mutual Group, which offers the RetireOnTarget® system. Contact Rob for more information at Rob.Peters@cunamutual.com.


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