Getting Smarter with Student Loans 

graduate with ball and chain of student loan debt
By Sandi Papenfuhs

4 minutes

First Tech Federal Credit Union talks with members before launching its Student Loan Refinancing Program. 

With student loan debt escalating each year, many Americans are more focused on making a living than living their lives. Student loan holders are struggling to pay rent, cover basic expenses or start a savings account while also paying off their education. In fact, less than half of parents are saving for college and 40 percent of people estimate it will take six to 30 years to pay off their loans. 

This national issue led us at First Tech Federal Credit Union to roll out our Student Loan Refinancing Program and last fall, we started offering help to people who are buried in debt. Hundreds of people have taken advantage of this opportunity to bring their loans under control and get on the fast track to prosperity. Members saw tangible results, including savings in interest, reduction in payoff time and lower monthly payments. 

Not all existing student loans will qualify for refinance under our program; eligibility depends on the school of graduation and the degree. The school must be Title IV eligible (under the Higher Education Act), non-profit and offer bachelors, masters and/or doctorate degrees. A Title IV school is an institution that processes U.S. federal student aid.

First Tech FCU’s Student Loan Refinancing product suite was uniquely designed to help support our members in reaching their life goals. The product lineup includes three fixed-rate loan types that assist members to pay less interest over the life of the loan, pay the loan off faster, increase their monthly spendable income and/or helping members choose different loan payment options based on how they are compensated by their employers. For example, some get a big bonus every year and might want to make a bigger payment once a year using that income.  

The key factors in designing our loan products was feedback from our members and SEG sponsor companies. Our members shared that their life choices were being heavily influenced by the burden of student loan debt. Forming families, buying homes and even what types of employment to accept were driven by their student loan debt rather than their desires and goals. In addition, the companies that we serve shared the difficulty their employees were facing and the need for their credit union to help them attract and retain talented staff while reducing the effects of financial stress.

Our student loan program focuses first on members and their needs through a blend of seamless digital experiences and skilled member advocates. We have student loan specialists who engage with our members to uncover their goals, tailor meaningful financial solutions to each member’s objectives and then deliver these solutions using digital tools wherever our member is most comfortable from in the branch to a mobile device. 

By focusing on our members’ goals first, our members are saving an average of $16,000 and reducing close to seven years of student loan payments through refinancing with our products—allowing them more freedom to make the life decisions they want.  

We encourage credit unions who are considering doing student loans to spend time talking to their members. Understanding members’ needs is the most important first step to developing a meaningful student loan program. In addition, thorough research into student lending is necessary, as these loans are operationally unlike any other consumer loan product. They require a thoughtful approach to ensure regulatory compliance (and many regulations may apply, see sidebox), while also delivering an outstanding member experience.      

Today, 70 percent of college students graduate with a significant debt load: over 44 million Americans collectively hold almost $1.5 trillion in student debt. At First Tech FCU, we believe that student loans shouldn’t stand in the way of our members’ future, which is why we’re committed to helping students live a debt-free life and achieve financial success. cues icon

Sandi Papenfuhs is SVP/consumer lending at $12 billion First Tech Federal Credit Union, San Jose, California.

Regulations That May Apply to Student Lending
  • Truth in Lending Act, Regulation Z
  • Proper disclosure of Truth in Lending forms within required timeframes
  • Right of Rescission/Right to Cancel allowance prior to disbursement
  • Disclosure of Federal student aid benefits
  • Electronic Funds Transfer Act
  • Fair Debt Collection Practices Act
  • Privacy Act
  • Equal Credit Opportunity Act
  • Unfair or Deceptive Practices
  • Higher Education Act
Some possible resources include: NCUA, U.S. Department of Education and the IRS Tax code Publication 970 (2014).


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