The Student Choice CUSO, built around student loans, is expanding and now has introduced a program that will enable credit unions to issue small dollar, emergency loans to members with no credit check.
These are not payday loans. Interest rates are capped at 18% per NCUA policies.
How can this be? On the show is Scott Patterson, ceo of Student Choice, and the episode starts with a view into the current state of student loans and the big changes that are transforming the market.
But Patterson came on the show to talk up the new Employer Choice program that will enable credit unions to make small dollar loans to employees of SEGs and to do so with little risk.
What kind of voodoo is this? Patterson explains and it’s definitely not voodoo.The key is that the lending is tied into the employee’s payroll system. Yes, there is no credit check but “instead [there are] employment-based underwriting factors, including job tenure, income stability, and employer characteristics.”
Patterson elaborates on this in the show.
The first credit union up with Employer Choice is Affinity Plus Credit Union in Minnesota which, Patterson indicated,has started by offering the program to its own employees.
Other credit unions, says Patterson, want to start by offering the program to SEGs who will set this up as an employee benefit. So, says Patterson, this has the potential to become a new member acquisition tool.
Remember this: estimates are that half of American families do not have $1000 on hand for emergencies. A friction-free emergency loan program just might be the life raft many families need and, says Patterson, credit unions can play a big part in helping out those families in need – and doing so at small risk and also low interest rates.
