Independent Banker - March 2018 - 71

Lender Life
STUDENT LOANS
Loans for learning
Getting into the student loan market can be risky, but there are options that can
help community banks expand their loan portfolios and capture new customers.
By William Atkinson
W
hile the student
loan market can
be a profitable
one for community
banks,
fintechs and large national banks are
grabbing and holding on to this market.
" As community banks look for
opportunities to diversify their loan
portfolios, I am a bit surprised that
not as many of them have focused on
student lending, " says Kevin Tweddle,
CPA, group executive vice president,
innovation and financial technology,
for ICBA.
There are some ways that community
banks can profitably add
this market to their portfolio, and,
in so doing, build additional banking
relationships with students. However,
it is not always straightforward
for community banks to enter
this market.
" There are some risks involved
with student lending, and most community
banks tend not to have a high
risk tolerance, " says Tweddle.
He notes that lending risk isn't the
only consideration in this market.
" One challenge for community banks
that want to get involved in this market
is that it is a niche play, " he says,
" and a lot of niche banking opportunities,
especially on the lending side,
require volume to make it profitable
for the bank. "
Another challenge relates to
branding. If a small community bank
is operating in a specific market, there
may not even be enough student
lending opportunities in that market.
" As a result, with the lack of volume,
it may be difficult for community
banks to be competitive from a
pricing perspective, " says Tweddle.
He notes that most lenders that
have gotten into student loans are
doing it at a national level. This
volume means they can be more competitive
from a pricing perspective,
he says.
" Still, there are real opportunities
for community banks in this segment
of lending, particularly for banks that
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Independent Banker - March 2018

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Table of Contents
Independent Banker - March 2018 - Intro
Independent Banker - March 2018 - Cover1
Independent Banker - March 2018 - Cover2
Independent Banker - March 2018 - Table of Contents
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