First they opened a school store selling everything from T-shirts and chips to bus passes. Then they sold 550 shares in an on-site operation to deliver chicken wings for lunch.
Now, a group of entrepreneurial-minded students at Tartan High School in Oakdale are tackling what could be their biggest challenge yet: running an in-school credit union to help students manage their cash.
Woodbury-based Postal Credit Union (PCU) officially launched the student branch Wednesday at Tartan, although the branch has been open since late January and has scored 10 accounts.
The large teller station in the school store sits between the Tartan Titan hoodies and the sodas. From there, student staffers offer Tartan’s 1,800 students free checking and savings accounts and debit cards for free access to the ATM in the hallway, as well as two savings products designed specifically for students. There are no credit cards.
School credit unions like Tartan’s have proliferated around the country, and at least 900 in-school branches are in operation, including many in elementary schools, according to numbers from the National Credit Union Administration. They’re big in Wisconsin and Michigan.
Tartan’s is the third in Minnesota, credit union executives say. St. Paul Federal Credit Union opened a branch at Como Park Senior High last October, and there’s a Hometown Credit Union student-run branch in Owatonna High School.
Kelsie Ferstl, an 11th-grader training to work at the school credit union, praised it as a great way to reach young people who don’t save. Some of her friends don’t even deposit their work paychecks, Ferstl said: “They just spend it.”
Ferstl showed off the large new ATM in the hallway that she thinks will be a key selling point since it’s free for those who sign up for the free checking account.
PCU President Brian Sherrick said he doesn’t expect the Tartan branch to be a big moneymaker.
“It really is a financial education piece,” Sherrick said. “It’s part of being a financial cooperative.”
It’s also smart marketing. Credit unions have struggled nationally to attract younger members, and students who form a relationship early with a credit union are more likely to join as adults.
Two products PCU helped develop are aimed at easing students into saving. With the Student Saver CD, students can get a certificate of deposit for $25 to $1,000 that matures on their 18th birthday and pays 2 percent interest, a nearly unheard of rate nowadays.
“All the parents want it,” said PCU Vice President Alisha Johnson.
Then there’s the Credit Builder loan for up to $2,500. A trainer loan of sorts, it enables students to establish a credit history with little risk since the borrowed money is stored in a secure account in the student’s name and can’t be accessed until the loan is paid off. PCU then sends the history to the credit bureaus. Johnson said she thinks it’s the first time this sort of loan has been introduced in the student market.
Establishing a credit history is a major financial hurdle for young people, said Craig Spreiter, Tartan’s marketing and business teacher, who spearheaded the credit union.
“That’s the No. 1 thing that college students or recent high school graduates struggle so badly with,” he said.
Spreiter is adviser for the school’s chapter of DECA, a popular business program for high schools run by the international DECA Inc. nonprofit in Reston, Va. The credit union, store and chicken wings project (which has since been wound down) are all DECA club projects.
Spreiter said he’s wanted to do a bank or credit union branch for years since financial literacy is a cornerstone of what he teaches. He approached PCU with the plan last spring because he’s a member and because PCU has worked with the DECA program for years providing student internships.
So far, results are promising.
According to Marc Buchmayer, an 11th-grader who works at the in-school credit union, students are very interested and he passes out a lot of brochures and applications. But students are required to have a parent or guardian cosign, and getting students to return the paperwork is a challenge.
“They tend to forget about it,” he said.