A group of University of North Carolina at Chapel Hill students is working to open a credit union that they would run themselves, and it could become the first new credit union in North Carolina in more than two decades.
The idea came from Shiva Rajbhandari, who ran into trouble finding a place to bank when he arrived on campus three years ago. He needed to deposit thousands of dollars from his Morehead-Cain scholarship, but the credit union he used growing up in Idaho would not accept a transfer that large through its app. Because he had pledged to avoid banks that invest in fossil fuels, including Wells Fargo near campus, and was not eligible for the State Employees' Credit Union, he said he had no option beyond the big banks. He told The Assembly as much.
Rajbhandari concluded that a credit union designed for students and run by them could fill the gap. Georgetown University and the University of Pennsylvania have had similar models for about four decades. He argued that large banks have little reason to build products for students, who are a small share of their market. A student-focused institution could tailor loans, offer financial literacy education and, as a nonprofit, invest back into the campus community.
Over about a year and a half, Rajbhandari recruited classmates to build what is now called the Carolina Students' Credit Union. They met with state and federal regulators, surveyed hundreds of students about their interest, and raised $400,000 in startup capital from students, alumni and others. Other credit unions around the country have also promised another $1.6 million in deposits.
In June, the group filed a business plan and charter application with the N.C. Credit Union Division. The agency said it has no estimated approval date and is still working with the organizers and the National Credit Union Administration. The students expect approval in time for the spring semester. Membership would be open to students and their families, and graduates could keep their accounts. The students say it would be the only student-run credit union at a public university in the country.
Once open, the roughly 45 students involved would each spend 10 hours a week as tellers and managing operations such as technology, human resources and marketing, without pay. Rajbhandari hopes to offer stipends for summer work eventually. For now, they are refining standard operating procedures from their office at the Innovate Carolina Junction on Rosemary Street. Chief financial officer Calie Justus, a junior, said the procedures help minimize risk and build confidence.
The credit union plans credit-builder loans for members with low or no credit, along with short-term, low-interest internship loans to help cover summer rental deposits. International students may benefit in particular. Sophomore Hasvi Muriki, from Hyderabad, India, said it took three months after she enrolled to get an American bank account and debit card, partly because she was 17 and had no Social Security number until she landed an on-campus job. "I've experienced the problem, and I don't want the next person to face it," she said.
A UNC-CH spokesperson said the university recognizes students' diverse financial needs and pointed to the Carolina Financial Well-Being Center, which offers one-on-one coaching on budgeting, credit cards and loans. The university has no official banking partner, the spokesperson said, and encouraged student initiative.
The students acknowledge that turnover every four years could make the effort hard to sustain, but their three recruitment cycles so far drew more than eight times as many applicants as they could accept. The CEOs of the Georgetown and Penn credit unions sit on the advisory board, though startup costs were lower for those institutions in the 1980s because they did not need mobile apps. Rajbhandari is compiling a step-by-step guidebook for students elsewhere, saying the project is about "putting the economy back in public hands."
