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Just blocks from the White House, a group of students at The George Washington University hope that a forthcoming NCUA pilot program may finally allow them to achieve their goal—starting a student-run credit union.
For years, the “chicken and egg idea” has hampered those efforts, said Brad Taber, the CEO of the nascent “GWU Credit Union Initiative.”
Taber, a Senior at GW, said for years, students trying to open the credit union were told by the NCUA that unless they had $500,000 in donated capital, the agency would not charter the credit union.
The leaders of the initiative have raised about $125,000—far less than the $500,000 needed.
Without a charter in hand, “Getting to that $500,000 number would have been very difficult,” Taber said.
‘Chicken and Egg’ Problem
NCUA board members have acknowledged the “chicken and egg” problem and plan to propose authorizing a provisional charter program to allow an organization trying to start a credit union have the agency’s backing as they try to raise capital.
The GW initiative began in 2017, according to Taber. Organizers have submitted an application to the NCUA five times and have received multiple deferrals.
He said that the organizers want to see what the provisional charter program looks like before going further.
“It makes sense to wait for that,” Taber said.
Revolving Door
He acknowledged that the credit union team has changed since the effort began, since students have graduated.
“There’s a pretty constant revolving door,” he said, adding that that issue has led to increased scrutiny from the NCUA.
“Year over year, we are recruiting new students,” said Jonnie Jackson, the initiative’s CFO and a Junior at GW.And the NCUA and initiative officials want to be able to ensure that as students come and go, new credit union employees have the training needed to operate the financial institution, the two students said.
“The most important thing for us is that that institutional knowledge doesn’t fade away” Taber added.
Financial Literacy Remains Goal
Jackson said that a key goal for the credit union would be to provide students with the financial literacy needed after they graduate.
“We are here to give students a much-needed tool,” he said.
The initiative’s website makes that clear.
“Our mission here at the GWUCUI is to strengthen the GW community by helping students bank affordably, build credit, better manage their finances and develop valuable skill sets that they can bring to their careers,” the website states.
The initiative’s website continues, “We aim to solve a critical problem that our peers face: a lack of financial literacy education and training to manage their personal finances.”
The credit union also wants to help students build credit.
Taber said that those working on the initiative want to be able to demonstrate that a student-run credit union model can work.
Meanwhile, all indications are that students at GWU want the credit union effort to succeed.
“There is a desire for this on our campus, whether the NCUA realizes it or not,” Jackson said.
Federal & State Charters
