CUNA, NAFCU Support Student-Run CUs in CDRLP, NFCDCU' s Rosenthal Strongly Opposed

ALEXANDRIA, Va.-CUNA and NAFCU supported a proposal from NCUA to allow student run credit unions to obtain funds from the Community Development Revolving Loan Program, but the proposal is facing some opposition from the National Federation of Community Development Credit Unions. The CDRLP makes low-interest loans and technical assistance grant to generally low-income designated credit unions. Though student-run credit unions are defined as low-income by NCUA, they have not been able to participate in the CDRLP due to limited funding. Now, with the declining number of student-run credit unions and increased congressional appropriations, NCUA has proposed the institutions should be eligible. “NCUA’s position is that student credit unions do meet the program’s criteria, including the requirement that they have a significant impact on their communities,” CUNA Associate General Counsel Mary Dunn wrote. “In the case of student credit unions, this is accomplished through financial services as well as financial education. “CUNA agrees with NCUA’s revised position concerning the economic contributions of student credit unions and supports the agency’s proposed rule that would allow them to seek assistance through the CDRLP.” NAFCU President and CEO Fred Becker wrote that his organization “believes that they should not be treated differently than other credit unions who wish to participate in the CDRLP.” CUNA added that though it supports student-run credit unions, it also is a strong backer of community development credit unions. “As part of the approval process for the proposal, CUNA respectfully requests that the agency consider ways to ensure fair and sufficient support for community development credit unions, as well as ways to expand funding in the future for this important segment of the credit union system,” Dunn wrote. NFCDCU wrote in its official comment letter that the purpose of the CDRLP “was, and remains, supporting credit unions that alleviate poverty within low-income communities. To include student-run credit unions simply because NCUA chose to classify them as low-income in the mid-1980s clearly contradicts the spirit and intent of the CDRLF (Community Development Revolving Loan Fund).” NFCDCU also sent a copy of its letter to House Appropriations Committee Member Marcy Kaptur (D-Ohio). NFCDCU Executive Director Cliff Rosenthal told Credit Union Times, “Students are not low-income as envisioned by Congress.” There is a fundamental difference between low-income credit unions that work to revitalize impoverished communities and student-run credit unions, despite NCUA defining them as such, he explained. The proposal is clearly driven by the decline in the number of student-run credit unions; it is “not driven by broader, coherent public policy,” he stated. For Rosenthal, it is a matter of “principle.” He worries about the message this puts in the bankers’ heads about the remainder of low-income credit unions. He added that student-run credit unions play an important role in the industry and if NCUA worked to create separate funding for them, NFCDCU would be entirely supportive of that. [email protected]