Credit Unions

Look Ma, No Debt! A Credit Union’s Student Strategy

High school students are getting an up-close and personal look at money and how to manage it, thanks to in-school credit union operations run by classmates. In the newest Credit Union Innovation Tracker™ — powered by CO-OP Financial Services — Jennifer McHugh, director of financial education for Royal Credit Union, tells PYMNTS how student-run branches are helping the CU win members for life — and teaching students important lessons about money. This month’s issue also includes a discussion on the latest on the new tax bill’s impact on credit unions.

Notebooks? Check. Long division homework? Check. Peanut butter and jelly sandwich? Check.

Deposit? Check.

It may not be part of every student’s morning routine, but in some Wisconsin elementary schools, students and their families are packing dollars in their lunchboxes — not for the cafeteria, but to be turned into savings at regularly operating school-site credit unions.

With the help of fourth and fifth grade student “staff,” Wisconsin-based Royal Credit Union sets up operations once a week on a banquet table in the lunchroom to offer services to children and staff at 17 elementary schools. Five middle schools and six high schools are also served, but with longer operating hours and from permanent physical spaces.

In a recent interview with PYMNTS, Jennifer McHugh, director of public affairs and financial education at Royal, explained the CU’s school-site program, its 25-year history and how community-centered services can attract members.

Turning students into savers

Serving and educating kids — and teaching them to serve each other — requires a unique approach.

According to McHugh, starting relationships early and winning over those looking to do good for their community, as well as their finances, have brought in new customers.

Interested students — even the elementary school-aged ones — apply, interview and train for positions like taking deposits from students and staff. Middle schoolers help run in-school promotions to raise awareness about the CU and high school student tellers can bring their skills to work at off-school branches as well.

To turn students into savers, Royal gives prizes to students every time they make a certain number of deposits. Students manage these rewards by getting punch cards stamped each time they make a deposit of any amount.

“It can be a penny,” McHugh said, “The whole goal of the program is just to get them in the habit of saving.”

Students can then cash in at four stamps for a small prize, or fill out all 16 punches for a larger one.

“We’re trying to teach them about choices with that,” McHugh explained.

The credit union also has offerings created with younger members in mind. Among them is a smart start checking account, aimed at those aged 18 to 25, that includes a twice-per-year overdraft forgiveness plan. Members must call or stop in to request and use the feature, and a staff member will talk with them about why the overdraft happened and how to prevent it from occurring in the future.

To emphasize good habits, the account’s loan programs also give users financial incentives to make payments by the due date rather than during the grace period.

Depositors for life?

While data isn’t available for the whole history of the credit union’s school-site program, numbers from the last decade suggests a small but significant level of member retention for those who start early with the CU.

In 2017, for example, Royal learned that out of its 190,000 members, approximately 2,500 had been associated with a school-site code in the past ten years, equal to roughly 1.3 percent. This included 895 members who had taken out loans — meaning they had stayed with the CU until at least age 18. Among those, 28 had taken out home loans, indicating they continued membership into later adulthood.

“We’re seeing some data showing that if you get them in your system, get them hooked up with accounts and get them set up for financial success, you can retain those members — hopefully throughout their lives,” McHugh said.

What’s more, the ability to retain young members is set to increase going forward. That’s thanks, in large part, to the proliferation of digital banking that makes it possible for members who join as children to continue membership at their local FI even when they move or go away to college, she noted.


While the intentions of Royal’s program are noble, adding a school site isn’t something a CU can — or should — do on a whim, McHugh attested. For one, it requires the same regulatory approval as establishing a standard branch office and, perhaps more pressingly, it costs a lot.

Setting up a pop-up location that’s run off a table in the cafeteria requires a roughly $5,000 investment for expenses like laptops and a receipt printer. Add staffing on top of that and, for a permanent in-school space, any potential construction expenses and school-based branches can quickly become expensive endeavors.

Given that these sites largely serve children who don’t tend to be financially independent, the locations are unlikely to bring in high-value accounts — at least to start. According to the CU’s website, students made 17,000 deposits in 2017, accounting for just $530,000 in total savings.

The value, instead, is found in the hope of starting a lifelong membership, and in fulfilling the company’s mission to serve the community.

“You don’t invest in youth financial education to get an immediate return on your investment, with kids depositing pennies, nickels and dimes,” McHugh explained. “But, if you can look long-term, provide great member service and help them learn good financial habits, then hopefully you’ve created a loyal, financially smart member that will stick with your credit union for rest of his or her life.”

It’s not just students who may be drawn to CUs through programs like these, though. Millennials are a customer group making themselves known for an emphasis on giving back, she added.

Giving back to the community, becoming partners with the communities you serve — whether that’s through involvement in school districts or supporting community events — those are things that credit unions do extremely well,” McHugh said. “They attract individuals to want to become a member, to utilize your service and to be a part of an organization that they feel is making a difference.”

For Royal Credit Union, at least, school is in session — and will be for the foreseeable future.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.