Increased Demand for Credit Union Student Loans as Students Struggle to Finance 3rd Level Education
With the results of the Leaving Certificate due out later this week, credit unions have noted an increase in applications for student loans this year. With the general economic deterioration, the five percent decrease in the student grant announced in last December’s budget and with students finding summer or part-time work particularly hard to come by, it has become more and more difficult for students to finance their third level education this year.
According to Fintan Ryan, Manager of Tralee Credit Union:“Certainly this year has seen a marked increase in enquires for both our student bursary and indeed our student loan. Families are struggling to make ends meet and this has resulted in an increase in the number of student loan applications”.
He went on to say: “In the past, parents would have ring-fenced funds to help finance children’s third level education. Given the current economic conditions, many families have had to use these funds to finance their day-to-day expenditure.” Research produced by DIT Office Campus Life* has highlighted that over a nine-month college year, the cost of living for a student living away from home is €7,470 and €3,789 for a student living at home. Rent can account for over a third of the cost of students who live away from home. Tony Dennis, Manager of Athenry Credit Union has noted that the difficulty for students in getting a job during the summer months has further increased the burden.
“Although some costs such as rent have fallen this year, many students have struggled to find work during the summer and have been unable to put away savings to help tide them through the college year. We have noticed a 25% increase in student loan enquires as more and more students require assistance, particularly to cover upfront costs such as registration fees or deposits for accommodation.” He added that Athenry Credit Union have set their education loan rate at 5.4% (5.54% APR) in order to help students cope with the costs of third level education. The credit union’s standard loan rate is 8% (8.3% APR).
Credit unions lead the way in relation to student loan rates on offer. Many credit unions have a dedicated student loan rate. We have put together a student loan package to deal with the financial difficulties of going to college. Our Smart Student’s loans are one of the most competitive on the market. The loan is insured at no direct cost to the member and the repayment terms can be agreed to suit the member’s circumstances. Depending on individual circumstances, a parent will be required to act as guarantor for the loan.
For a €3,000 one year variable interest rate loan with monthly repayments of €257.37 , an interest rate of 5.4%, an APR of 5.54%; the total amount payable by the member will be €3,088.44 For a €3,000 one year variable interest rate loan with monthly repayments of €255.45 , an interest rate of 4%, an APR of 4.1%; the total amount payable by the member will be €3,065.40.
Interview with Kieron Brennan, Chief Executive of the Irish League of Credit Unions - Sunday Tribune - 8/8/2010
Interview with Kieron Brennan, Chief Executive of the Irish League of Credit Unions - Sunday Tribune - 8th August 2010
Credit where it is due Not only does he not welcome persistent interference from the Financial Regulator, the ILCU boss plans to take on the banks, he tells Jon Ihle. Click here for more..
Independent Review of Credit Union Sector
Extract From League Media Release..
The Irish League of Credit Unions welcomes the forthcoming strategic review of credit unions, to be carried out by Grant Thornton, on behalf of the Financial Regulator and sincerely hopes that it will meet its objective of developing a strong, modern credit union movement that will continue to serve its members for the next fifty years.
Credit unions have weathered the economic storm well and as you acknowledge, have not required a bail out from the taxpayer.
A large proportion of arrears on Credit Union loan books that have accrued to members who have become unemployed or who have suffered pay cuts and have had to reduce their repayments. We are confident that the majority of these loans will be recovered, in full, over a longer period of time. Credit unions exist to improve the economic and social well being of all members and accordingly have adopted supportive yet stringent credit control policies. They are willing to help with difficult circumstances but will not tolerate defaulters. The most recent figures to hand show that the total bad debts written off amount to just half of one per cent of the total loan book for credit unions. Credit unions have put reserves in place over the pervious years to cover potential bad debts.
In accordance with the Credit Union Operating Principles, a prime concern of credit unions is to build their financial strength, including adequate reserves and internal controls that will ensure continued service to membership. Reserves have been prudently built up by credit unions by paying lower dividends in recent years. Indeed, credit unions are required to meet a Regulatory Reserve Ratio of 10% by the year 2012. The majority of credit union have reached this goal already.
From Kieron Brennan, CEO, Irish League of Credit Unions
08 September 2010
Independent Review of Credit Union Sector
