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Illustration of students constructing a building made from financial symbols, that protects them from a rainy day

The Ivy League’s only student-run credit union promotes financial literacy for its classmate clients.

In the early stages of quarantine, while Penn students were learning how to bake bread and squeezing in socially distanced walks, the executive board of Penn’s Student Federal Credit Union (SFCU) went to work figuring out how to help those whose lives had been disrupted the most by the coronavirus.

One of only three student-run federal credit unions in the country, the SFCU serves the Penn community—students, alumni, and their immediate family members—with all the offerings of a typical bank, like checking accounts, debit cards, and transition loans. But when COVID-19 left some alumni and students scrambling to find secure jobs and housing, the SFCU launched its emergency loan program, which ran in two waves from mid-March through July of last year.

“We wanted to get something out there as soon as possible,” says Tor Aronson C’22, SFCU’s former chief lending officer and its current chairman. The program dispensed more than $20,000 in loans with discounted interest rates and longer deferral periods, the majority of which went to alumni, who make up 35 percent of the credit union’s clientele.

While alums took the most advantage of the emergency loans, SFCU board members predominantly focus on how to help people they interact with on campus: their classmates, friends, and sometimes even roommates.

Much of its work is geared toward assisting international and first-generation, low-income (FGLI) students navigate a banking system that often feels foreign. “I think a lot of people who come from less privileged backgrounds have seen their family members or their friends fall into the trap of US debt,” says Mohammad Oulabi C’21, the SFCU’s former CEO and a FGLI international student from Cairo, Egypt. “So there’s a lot of negative association with taking out credit cards in order to build credit history and credit scores.” Among the benefits that the SFCU touts for international students are not requiring a social security number to open an account, free and unlimited incoming international wires, and a debit card that can be used worldwide.

Since personal finance is not generally taught in school, “not a lot of people know, at 18, how valuable things like credit scores are and how to build them,” Oulabi adds. To that end, the SFCU recently set aside $1,000,000 for a free credit builder program designed to help students build credit history without taking on a single dollar of debt. The program allowed participants to take out a $1,000 shared secured loan in a frozen account they couldn’t access. Then, the SFCU made monthly payments to repay the loan and any accumulating interest on the customer’s behalf, reporting these to credit agencies to allow the customer to increase their credit score.

“We’re just doing what we were founded to do,” Oulabi says. “As a credit union, all the revenue we make, we try to give back to our members. We wanted to help as many people as possible—and not just during a time of crisis. We wanted to make more permanent changes and improve people’s financial lives in the long run.”

About 100 employees manage the $7 million credit union, located at 34th and Walnut Streets (though much of the work is now done remotely). Founded in 1987 by Kenneth Beck WG’87, Steven Feld WG’87 GrD’03, and Robert Kaplan G’88 WG’88 as the first (and still only) student-run credit union in the Ivy League, the SFCU recruits students in much the same way that any other club on campus might. There’s an alumni board of directors that weighs in on broad strategies for the SFCU’s 1,000 members, but it’s the students who run day-to-day operations—a chance to earn real-word experience in the financial services industry that Oulabi says he “could not have imagined” before arriving at Penn.

“Part of what’s great about being small and entrenched in the community we serve is that we can move very quickly and not waste time wondering what the Penn community needs,” adds Emily Becker C’23, who was recently elected the SFCU’s chief lending officer. “We kind of just know that, or know how to find out.”

While lacking in experience compared to more seasoned banking executives, SFCU leaders believe being students is their biggest asset, not a hindrance. Case in point: the credit builder program was spawned after Aronson heard one of his friends complain about having a low credit score.

“Our clients are our friends that we used to see around campus all the time or talk with,” Aronson says. “We can hear really well what they are going through and tailor our services to those candid conversations.”

Beatrice Forman C’22

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