Student
Underwriting, Holt said. CU
Student Choice employs strict
underwriting standards that
CONT. FROM PAGE 10
The Rundown
Y Debate over a potential student loan
asset bubble increased when Sallie
Mae failed to attract investors for a $225
million debt offering.
Y Credit union student loan delinquencies
lower than private and federal loans.
Y Extending terms beyond 15 years could
hedge credit risk as graduate pay
increases with time.
In 2012, the average
total indebtedness of all
students who had some
debt was $25,000,
according to CUNA.
ed the price of higher educa-
tion, he also said tuition costs
have increased because campus
technology hasn’t improved,
saying the classroom experience
is “still an old person standing
in front of a chalkboard as it’s
significantly lower than that of
federal student loans also de-
creases credit risk for credit
unions, said Jim Holt, vice pres-
ident of sales op-
erations for CU
Student Choice,
a private student
loan CUSO in
Washington.
consider only the best FICO
scores, require a co-signer, and
loans are made to students at
certified, traditional degree-granting public and private four
year institutions, according to
Holt.
Additionally, the CUSO offers
a repayment relief program for
underemployed college grads
that modifies the loan with a
graduated repayment structure
and amortizes outstanding balances over a 40-year term.
“This is exactly the kind of
solution the (Consumer Fi-
nancial Protection Bureau) has
been asking lenders to put into
play,” Holt said. “And then once
(a borrower) finds that entry
level career job, there’s no pre-
payment penalty. It really helps
prop up those who are strug-
gling to start their career after
graduation.”
How does CU Student Choice
skirt the NCUA regulation that
prohibits credit unions from
making consumer loan with
terms of more than 15 years?
Holt said the loans are struc-
tured as open-ended, unse-
cured lines-of-credit, which
also feature an adjustable rate
that protects against interest
rate risk. The CUSO also offers
a closed-end student loan prod-
uct, he said.
“One might talk about a bubble in the cost of higher
education. But it’s different from the housing bubble
because student debt isn’t really tied to yesterday’s
cost of a college education,” Hampel said.
always been.” Dramatic reductions in government financial
support has also prompted tuition increases, he noted.
The fact that the private stu-
dent loan delinquency rate is
thermore, he added, CU Stu-
dent Choice loans have an even
lower 60-day delinquency rate
of 0.89%.
Holt said the fact that
the private student loan
delinquency rate is
significantly lower than
that of federal student
loans also decreases
credit risk for credit
unions.
Committee produced witness-es who testified that extending
terms could make college debt
payments more manageable
for underemployed graduates.
CUNA Senior
Vice President of
Legislative Affairs
Ryan Donovan
said during an
April 22 press call
that a provision
that would extend
credit union stu-
dent loan terms
beyond 15 years could even find
its way into regulatory relief
legislation.
Hampel said a borrower’s
ability to repay a student loan
increases as the graduate pro-gresses in his or her career.
However, while credit risk is reduced with an extended term,
Hampel said interest rate risk
would increase for the closed-end, fixed rate loans. n
Donovan
year by the House Education
and Workforce Committee and
the House Financial Services
NEXT STEPS
READ data from CUNA on college costs
CUTimes.com/collegecosts
Metsger
CONT. FROM PAGE 1
Metsger
on the board to-
gether if Fryzel’s
seat is left vacant.
According to the
White House re-
lease, Metsger is
currently presi-
dent of the Sa-
lem, Ore.-based
Parakletos Stra-
tegic Public Affairs LLC, a posi-
tion he has held since 2010.
In addition to serving in the
Oregon State Senate from 1999
to 2011, Metsger served on the
board of at Portland Teachers
CU, rising to the office of vice
chairman. Portland Teachers
has since been renamed On-
Point Community CU, and has
$3.3 billion in assets. Before
entering politics, Metsger was
a television sports broadcaster.
Metsger has a history of sup-
porting credit union legisla-
tion, having sponsored bills in
Oregon that would allow credit
unions to accept public funds
and raise a $100,000 member
business loan cap on state-
chartered credit unions. The
public fund bill was passed in
Fryzel
2010.
In a 2004 Credit Union Times
letter to the editor, Metsger
warned credit union leaders
against resting on their laurels
of victories past when confronting banker lobby efforts.
“As one who has worked hard
in passing both national and
state credit union legislation,
grassroots efforts of the 1990s
must not rest in hibernation
or we will all pay a very hefty
price.”
The Credit Union Association of
Oregon named Metsger its Leg-
islator of the Decade at its 2009
annual meeting.
Metsger unsuccessfully ran for
Oregon state treasurer in 2010,
despite CUAO support and
member credit unions campaigning in his favor.
“We congratulate former Or-
egon state Senator Rick Mets-
ger on his nomination to the
NCUA Board. In recent years,
the board has had to deal with
very difficult issues. The board
will need to continue to tackle
In addition to serving
in the Oregon State
Senate from 1999 to
2011, Metsger served
on the board of at
Portland Teachers CU,
rising to the office of
vice chairman.
Matz
those issues and more in the
coming years.”
Fred Becker,
NAFCU presi-
dent/CEO said.
“Upon confirma-
tion, we look for-
ward to working
with him and the
NCUA Board and
staff on behalf
of our members to promote a
positive regulatory environ-
ment for credit unions.”
A call to Metsger was not
returned.
NCUA Chairman Matz and
Board Member Fryzel both is-
sued statements welcoming
President Obama’s intent to
nominate Metsger to the board.
“Serving on the NCUA Board is
a tremendous honor, and I sin-
cerely congratulate Sen. Mets-
ger on his appointment by the
Obama administration,” said
Matz. “Rick will bring valu-
able perspectives to the NCUA
Board, having served as a vol-
unteer credit union board
member as well as a state legis-
lator. I look forward to welcom-
ing Rick as soon as he is seated
on the NCUA Board.”
“I extend my sincerest con-
gratulations to Sen. Metsger on
his nomination by President
Before entering
politics, Metsger was
a television sports
broadcaster.
Obama,” said Fryzel. “It is an
honor and privilege to serve,
and I wish him every success in
his confirmation process.”
Carla Decker, president/
CEO of the $46 million District
of Columbia Employees FCU,
withdrew her nomination to
the NCUA board in February
2012, after former board mem-
ber James Talbert leaked the
credit union’s CAMEL score.
Talbert was banned from fed-
erally insured credit unions
by the NCUA in March 2012
for the disclosure. Decker had
been nominated to fill Hy-
land’s seat. n
Sebastian
to Retire
endell Sebastian
will retire on June
30 as executive
director of the Na-
tional Credit Union Foundation.
Sebastian has served at NCUF
for almost exactly three years, from
May 2010, after serving as CEO at
Tampa, Fla.’s GTE FCU, now GTE
Financial, for 20 years.
He has also been a key executive
at NCUA and helped found Cal-lahan & Associates, a noted credit
union consulting firm.
“Bucky has done an outstanding
job over the last three years in directing the foundation to focus its
efforts on financial education and
a number of key initiatives to benefit the credit union movement,”
said CUNA President/CEO Bill
Cheney.
“We will miss him and want to
thank him for his many contribu-
tions to the foundation as well as
the CUNA system.”
The NCUF’s board chair, Flori-
dacentral CU CEO Laida Garcia,
announced she will appoint a
search committee to recruit for a
successor. n
16 | May 22, 2013 | Credit Union Times | cutimes.com
