Independent Banker - December 2024 - 47

Gen Z financial goal #2:
Although student loans tend to be
dominated by private student loan
lenders and bigger banks, one of the
key ways to capture this business is by
off ering a seamless digital experience.
" The process needs to be [available]
online with digital submission, have a
quick approval process, and have an
intuitive loan management portal, "
says Frank Buonomo, senior vice
president and chief marketing and
communications offi cer at $1 billionasset
Brentwood Bank in Bethel Park,
Pa. " With the continued rising cost
of college, community banks need to
be sure they have the right employees
and fi nancial partners who can help
students and parents navigate repayment
strategies and continue to be supportive
post-graduation, adding that personal
touch, which community banks do best. "
Setting up a 529 investment account
is an attractive option for many college
hopefuls because money both goes in and
comes out tax-free if funds are used for
school-related expenses.
In addition, the IRS recently passed
a rule that any funds left in a 529 can
be converted to a Roth account for the
benefi ciary or the student, with a lifetime
limit of $35,000 per benefi ciary-an
option if your community bank off ers
investment services.
" That really gives a 529 more
fl exibility, " says Crabill. A Roth
conversion also opens the door for an
advisor to talk to the Gen Z customer
about fi nancial planning, investing for
retirement and other fi nancial goals.
A Roth IRA is another way parents
or future students can save for college.
Money that is put into a Roth can be
taken out without penalty prior to age
59 1/2, which creates fl exibility.
Off ering 529 plans with nominal fees,
no initial deposit requirements and
easy-to-use online tools can make these
programs more accessible to the
parents of younger Gen Zers
or to older Gen Z members,
notes Buonomo.
" One of the most
important pieces here is
the education component, "
he says, " and working to
be sure your customers
understand the benefi ts
and how early saving
can reduce reliance
on student loans. "
-Michele Roark,
United Community
in student loans.
Adding to their debt woes,
Gen Z is growing up in a
" subscription economy "
where consumers use
their credit card or direct
payment to buy all kinds
of things that are charged
on a recurring basis, from
software and streaming
services to membership
fees. " Those bills just kind
of blindside your bank
account without any sort of
visibility or ability to control
from the consumer side, "
says Jordan Mackler, CEO
and cofounder of ScribeUp,
a subscription management
service for bank customers.
According to Mackler,
the average person now
has between 10 and 20
monthly bills, and Gen
Z skews on the higher
end of that because they
tend to embrace more
of the productivity tools
and experiences tied to
subscription fees. ScribeUp
partners with fi nancial
institutions to off er a
subscription management
tool that is embedded within
a bank's mobile and desktop
banking experiences.
When bankers talk
with Gen Z customers
about credit card debt,
customers typically want
to go straight to refi nance.
However, they may not
have built credit yet, so a
loan consolidation won't
typically be an option.
Again, it comes back to
educating customers.
" There are diff erent
exercises that we do when
we're out at events, such
as freshman move-in day,
to show students what that
credit card debt looks like, "
Roark says.
For example: If
you put a pizza on
your credit card, what
is that pizza really costing
you, and is it worth it?
Another example: If you
have $5,000 in credit card
debt at a 25% interest
rate, your payments could
be about $120 for 100
months. But if you're
able to pay $140 a month
instead, you can reduce
your term to 67 months
and save over $2,500 in
interest payments.
independentbanker.org // 47
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Independent Banker - December 2024

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