Referral Programs and Credit Unions

Why the Easy Path Isn't Always the Wise Path

Written by: Lance Teinert

In early 2018 I joined CURevl as its founding Chief Executive Officer. I came to CURevl with nearly 30 years of education and consumer finance experience and a passion for helping students and families improve their lives through the most affordable higher education experience possible. As a credit union service organization (CUSO), CURevl works directly with credit unions across the nation to develop products that are positive yielding to the credit union and low-cost to the borrower.

In order to grow CURevl into the CUSO it has become, we diversified our product offering very early in order to build a foundation of credit union clients. One such product offering included a referral program for both education finance and refinance loan products. While we found success in attracting new credit union clients, we also found that both CURevl and its clientele were losing control of the application process and approval percentages. In some cases, we were not able to obtain the identity of credit union members applying for these loans.

Just over a year ago we made a strategic decision to no longer offer new referral programs to credit unions. Instead, we offer full-service program that combines loan origination, loan servicing and capital markets support that allows credit unions to sell their loans before going into repayment. This lender experience is unique, cloud-based, and highly turnkey for our clients.

Today, well over 1,000 credit unions are under referral program arrangements that offer private student loans to their members. The primary reason so many credit unions have signed up for these programs is simple: it's the easy path. By signing up for a referral program, the credit union essentially "checks the box" on student loans then moves on. However, choosing the easy path does have its pitfalls.

Pitfall #1: The credit union may literally be turning over its member to a third party that may sell competing products.

Pitfall #2: The credit union may have no control over the underwriting of its members' private student loan application.

Pitfall #3: The credit union may be giving up significant revenue opportunities by signing up for a referral program.

Before taking the easy path, we invite you to re-think your potential offering and consider a full-service solution in partnership with CURevl. Our team of experienced professionals are highly skilled in product development, program administration and portfolio management. And our commitment extends beyond just managing your program. We also buy loans directly from your balance sheet, enabling you to manage liquidity and mitigate credit risk.

For more information about us, please check out www.curevl.com.