Updated: April 26, 2018 at 9:35 p.m.
The foundation of GW’s first student-run credit union was created in the rooms of Thurston Hall.
Freshman Sahil Pankhaniya, a finance major, first began researching credit unions – nonprofit banking systems with pooled funds from members – before he arrived at GW. Pankhaniya said the credit union could be a community builder for students interested in financial independence, so he started knocking on doors in GW’s largest residence hall to find a team of students that could help him offer a new way to manage student finances.
Pankhaniya and two other freshmen won $5,000 as runner-ups in the New Venture competition, a business creation contest, last week. The team said they are one step closer to opening GW’s first student-run credit union by May 2020 – which they hope will help students save money through a banking system that focuses on community rather than profit.
The competition awarded the team an office space and funds that Pankhaniya said will help the team finish its strategic plan to fundraise, launch a website and get the business up and running – which they hope to complete by June or July.
Pankhaniya said students will be interested in the credit union because it will offer lower interest rates and fees than typical banks. He said the credit union will also provide members with financial independence because the setup requires members to vote on how the funds inside the credit union are managed and what services will be offered.
“You own a little part of the credit union that you decide to be a part of,” he said. “When it comes to your money, you should be in control every step of the way.”
Freshman Allen Wang, the head marketer on the team, said his two goals are making sure students know they have an alternative to traditional banking and helping to raise the estimated $100,000 needed to get the credit union off the ground from alumni, students and other business competitions.
Students will be interested in donating and participating in the credit union, Wang said, because students at GW want to be in control of how their capital is spent, which they can’t do at a traditional bank.
“It’s your money and you get to decide what you what to do with it on behalf of the community,” he said. “At a politically active campus like ours, I think that’s something that’s particularly appealing.”
Though the student team does not have an official association with GW, Wang said the team will pitch the credit union at University President Thomas LeBlanc’s office hours next week in the hopes of receiving financial or verbal support from administrators.
Christian Trummer, a freshman and the team’s IT designer, will focus on centering the credit union’s operations online so students have a “streamlined” experience. He said computer science professors are working with students to optimize the design.
“We had to put together an advisory board just to make up for the fact that we don’t have much experience, we’re learning as we go,” Trummer said.
Several other universities have credit unions, including University of Virginia and Georgetown University.
Nick Aquino, the chief financial officer of the Georgetown University Alumni & Student Federal Credit Union, said the school’s credit union offers lower rates on loans and a credit score builder program, which banks don’t offer because they want to profit rather than help borrowers.
“Credit unions exist to benefit their members in any way possible with profit only being made to ensure the continuation of the credit union,” Aquino said in an email. “Banks have customers while credit unions serve members.”
He said starting a credit union is difficult because a positive reputation is necessary to be successful and there is limited ability to disperse loans when the organization first gets started.
“Establishing a well-respected brand presence and competing with corporate giants with more funds can be extremely challenging,” he said in an email.
Chip Filson, the co-founder of credit union consulting firm Callahan and Associates and an adviser to the group, said with increasing federal regulations, getting a charter from the National Credit Union Administration to establish a credit union is challenging even for someone who has already finished their undergraduate education. But all startups face similar bureaucratic obstacles to becoming a reality that veterans in the industry can help alleviate, he said.
“In the startup process, you are crazy for trying to do this,” Filson said. “They are all trying to do something that does not currently exist.”
Filson said credit unions are particularly useful to college students who may want to use the setup as an opportunity to raise their credit scores using low-risk loans. He said a GW credit union will help students learn about managing their own finances as young people, rather than using their parents’ banks.
“The reason why that’s a critical, fundamental role is to strengthen connections within that community,” he said. “The model of credit unions is people helping people.”
This post has been updated to reflect the following correction:
Due to misinformation from the source, The Hatchet incorrectly reported that the CEO of Utz Potato Chips has pledged to donate an unspecified amount to the credit union. This donation has not been confirmed. We regret this error.