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NCUA: Military members will count toward LICU designations
The NCUA Thursday announced it is taking a new approach as it relates to military personnel when determining a low-income credit union (LICU) designation. The NCUA will now consider military personnel "in a similar manner as students attending colleges, universities, vocational or technical schools."
"At the NCUA, we’re always looking for ways to foster greater financial inclusion, accessibility, and opportunity for all Americans, which I consider to be the civil rights issue of our time," said NCUA Chairman Rodney Hood in a release. "This is a great step in being more inclusive when it comes to the members of the military. Because so many military members are just getting started, they may not have much experience in working with financial institutions, at least not yet. Currently, the NCUA encourages higher education by counting students in our methodology, and under my direction, the agency has determined we can encourage military service in a similar way."
In its release, the NCUA explained that its income assessment tool only geocoded the incomes of members with a physical street address, which left many service members who use PO boxes out of the evaluation. More information about the updated methodology is expected to be released in an upcoming Letter to Credit Unions.
The NCUA also noted the benefits of being a LICU, including:
- an exemption from the statutory cap on member business lending;
- eligibility for grants and loans from the Community Development Revolving Loan Fund (CDRLF);
- ability to accept deposits from non-members; and
- authorization to obtain secondary capital.
Credit unions have strong relationships with the nation's servicemembers. NAFCU consistently advocates to protect credit unions from harmful provisions in the annual National Defense Authorization Act (NDAA) and leads efforts to ensure credit unions can provide safe, affordable financial products and services to military members.
In addition, NAFCU has urged Congress to fully fund the CDRLF, as well as the Community Development Financial Institutions (CDFI) Fund, and provide additional funds amid the coronavirus pandemic to support credit unions that serve low-income and underserved communities. NAFCU has discussed efforts to provide credit unions assistance through the CDRLF with Hood and NCUA Board Member Todd Harper recently.