According to the U.S. Department of Commerce, employment opportunities in science, technology, engineering and math (STEM) are booming, with 24.4 percent growth over the last decade. Yet, not enough students are pursuing degrees and careers in the STEM fields to meet the increasing demand. There are currently two STEM job openings for every qualified job seeker.
The lack of STEM representation is even more prevalent among Hispanics, who although account for approximately 20 percent of the U.S. population, only represent about 7 percent of the STEM workforce.
STEM workers enjoy a pay advantage compared with non-STEM workers with similar levels of education. Therefore, increasing the number of Hispanic students pursuing STEM degrees is one way to promote the continued socioeconomic mobility of Hispanic families in the U.S.
There are likely many factors that play a part in the underrepresentation of Hispanic students pursuing STEM – lack of information or academic resources, unfamiliarity of STEM opportunities among parents, etc.
However, according to a July 2018 study from the Hope Center for College, Community and Justice, a lot also has to do with finances. The study found that university students from low-income families who were offered need-based grant aid were 7.87 percentage points more likely to declare a STEM major than similar peers, representing a 42 percent increase.
What does this mean for credit unions?
The Hope Center study means credit unions have the opportunity to impact the number of Hispanic students who are pursuing STEM careers. This can be accomplished by connecting members with a variety of college savings products and opportunities – supported by culturally relevant financial education for parents and children. Consider the following opportunities:
• 529 college savings plans. These savings plans are tax-advantaged college savings vehicles and one of the most popular ways to save for college today. Much like the way 401(k) plans revolutionized the world of retirement savings a few decades ago, 529 college savings plans have revolutionized the world of college savings.
• Coverdell ESA plans. These savings vehicles are often used as supplements to 529 plans or other savings vehicles because they only allow parents to invest a maximum of $2,000 in them each year.
• UGMA/UTMA accounts. Parents or grandparents can also set up custodial accounts available under the Uniform Transfers to Minors Act (UTMA) or Unified Gift to Minors Act (UGMA). These accounts allow parents or grandparents to invest as much as they would like each year and in total. However, these investments are not tax-free like they are with 529 plans and Coverdell plans.
• College savings reward programs. Consider ways you might be able to help members save for college through purchases they’re already making. Can you offer credit card points or cash back that go toward a 529 plan or college savings account?
• Separate savings accounts. Perhaps the easiest solution for members is to set up a savings account dedicated to college savings and keep it separate from other accounts. Encourage members to set up automatic contributions and bolster the contributions anytime they receive a raise, bonus or other financial influx.
• Scholarships. Providing a scholarship may be just the financial – and confidence – boost a deserving high school student needs to attend college and pursue a STEM career. Just look at Gabriel Hernandez, who received a scholarship from JetStream Federal Credit Union, made possible by the Warren Morrow Hispanic Growth Fund Grant. In his scholarship essay, Hernandez wrote, “I know that I will succeed in college, but this scholarship will show me that others believe in me, too.”
No matter how your members plan to pay for college, it’s important that they save early and often. Consider offering educational classes and information – in both English and Spanish – to communicate the importance of saving for college and share resources to make it easier. The more financially prepared they are, the more likely it is they will go to college and pursue their dream career – STEM or otherwise.Leave a comment
Through Partnerships (and Great Videos) Ascentra Credit Union Accelerates Financial Education Initiative
To fully understand the reason Ascentra Credit Union is using its grant funds the way it is, it’s helpful to consider two important stats:
• 90 percent of Hispanic consumers stream video on their mobile devices.
• 7 in 10 Hispanics regularly use YouTube.
With the grant funds, the credit union has translated 16 video scripts into Spanish for a series of financial education videos. Not only are these videos available on Ascentra’s YouTube channel, they have also been airing on its local NBC affiliate, KWQC-TV, serving the Quad Cities area of southeastern Iowa and northwestern Illinois. The videos are available on the television station’s website, as well.
In addition, the grant funds enabled Ascentra to add Spanish subtitles to their existing financial education videos.
“The Warren Morrow Hispanic Growth Fund Grant has been instrumental in providing lasting and ongoing content in Spanish for Ascentra’s Financial Wellness program,” said Alvaro Macias, Ascentra AVP of community development. “We are now in the process of working with our local Spanish/English newspaper Hola America News to use their social media channels to share these informative one-minute videos to effectively reach local Spanish-speakers.”
Ascentra is also offering a series of financial education presentations in partnership with Esperanza Legal Assistance Center, a low-cost immigration service provider. The grant provided the funds needed to translate three presentations into Spanish. Spanish-language flyers were distributed throughout the predominantly Hispanic neighborhood in which the center is located, and the content was also used to promote the seminar on Facebook.
“We have plans to further utilize the translation services; we have some brochures that need to be translated and are planning to re-launch our website later this year,” Marcias said. “Our goal is to have the entire website available in Spanish.”Leave a comment
In an article ranking the best cities for Hispanic entrepreneurs, WalletHub asked a panel of minority-business experts about the biggest challenges faced by Hispanic entrepreneurs. Nearly everyone mentioned access to capital and financial education.
“There is a clear issue with lack of access to capital to start and grow their venture,” said Pedro F. Moura, an MBA candidate at the Haas School of Business at University of California. “This is also influenced by cultural aspects in which Latinos would rather rely on family and friends for funding than outside investors. Plus, limited financial education also plays a crucial role in understanding the funding that could be unlocked by entrepreneurs.”
What does this mean for credit unions?
This means Hispanic communities represent a huge opportunity for credit unions to grow their lending business – and become those communities’ preferred financial provider. If there is a known preference for borrowing from family and friends, the question for credit unions becomes, How can we build and nurture a similar relationship with Hispanic members?
Below are a few strategies to consider.
Offer small business-friendly loans. Small-dollar loans or Small Business Administration (SBA) loans up to $5,000 can be a great way to help entrepreneurs get their ideas off the ground. With an SBA 504 loan, for example, a borrower may only need 10 percent of equity, rather than the 20 percent required with a more traditional loan. Also, the loan is normally divided into two parts. One, which tends to be 50 percent of the loan, is held by a lender. The rest is held by nonprofit groups, such as the Certified Development Corporation, with this portion backed by the SBA.
Provide microloans. Microloans are typically very small (under $500) short-term loans with a low interest rate, extended to self-employed individuals, new startups with very low capital requirements or small businesses with only a few employees. Microloans can be a good source of funding for a business to hire its first employee, cover startup costs or purchase initial inventory.
Offer Individual Taxpayer Identification Number (ITIN) loans. ITIN loans are designed to help people who have a tax ID number but are not eligible for a Social Security number. Credit unions see the possibilities in serving a population that is not being served well by traditional financial institutions and they understand the value of inclusivity.
Provide lines of credit and credit-building loans. During the early stages of developing their companies, entrepreneurs may not have diversified enough to generate a constant positive cash flow. Lines of credit accommodate the seasonal credit demands of businesses along with ups and downs in cash flow. They also enable entrepreneurs to purchase inventory in anticipation of future sales. Credit-building loans, on the other hand, can help entrepreneurs build their credit as they work to grow their business.
Offer small-business financial education. Even the most robust small-business lending program can be ineffective without the right education plan in place to help entrepreneurs understand their options and select the right loans for their businesses. Ensure your marketing and education materials are available in Spanish and are culturally relevant to Hispanic populations.
Build community partnerships. One of the best ways to expand your credit union’s Hispanic entrepreneur outreach efforts is to partner with organizations that offer small business assistance for Spanish-speaking entrepreneurs. Examples include local Hispanic chambers of commerce and small business incubators.
Credit unions desiring to be Hispanic entrepreneur-friendly should work to build the right mix of lending products supported by a strong financial education program. Those that get it right will not only provide a much-needed service to Hispanics in their communities, they will also benefit themselves through lending and membership growth.Leave a comment
Achieving a variety of inclusivity and diversity objectives is becoming more important for credit union boards of directors. One such board is that of Community 1st Credit Union in Ottumwa, Iowa. The Juntos Avanzamos-designated credit union recently welcomed Edith Cabrera-Tello to its board.
I’ve been a member of the credit union since 2011 and a board member since January 2016.
What is your view of credit unions as a financial option for the Hispanic community?
What changes have you seen in how Community 1st serves its members and specifically its Hispanic members since you’ve been a board member?
How has the work with Coopera and receiving the Juntos Avanzamos designation impacted outreach to the Hispanic community?
Could you describe your experience as a board member of a credit union from the moment you decided to volunteer until now?
What advice do you have for any potential Hispanic board members thinking about or having been approached to serve on the board of a credit union?