Five years ago Reiley Schoen was set to undergo a gender-reassignment surgery but needed a way to help pay for the procedure.
At the time, a loan product did not exist at Alternatives Federal Credit Union in Ithaca, N.Y., where Schoen serves as chief operating officer, to assist transgender members undergoing these procedures, which can cost tens of thousands of dollars.
So instead, Carol Chernikoff, chief lending officer at Alternatives, came up with the solution of having Schoen refinance an existing car loan to pay for the procedure.
“Alternatives at that time didn’t have a loan product to do this, but I did fund my own personal surgery through an innovative idea,” Schoen said.
After learning about North Side Federal Credit Union's gender affirming procedures loan program, Schoen was inspired to do the same at his credit union. After proposing the idea, the credit union eventually developed a partnership with a local Planned Parenthood chapter that was located across the street.
Since July, Alternatives has offered two loan products to assist transgender and non-binary members undergoing a transition. The program’s goal is to help members pay for this costly treatment, but programs such as this could bother some credit union members.
“There’s going to be a potential for upsetting some credit union members, but I think an institution weighs not only the financial pros and cons, but for a credit union specifically the intrinsic DNA benefits as well,” said Steve Reider, president and CEO of Bancography. “A credit union at its core is not a profit-making institution, and so it exists for the members of its community, and particularly for underserved population.”
The need for gender-reassignment surgeries continues to increase. Between 2000 and 2009, these surgeries tripled.
These procedures are also expensive. A gender-reassignment surgery can run between $10,000 to $50,000 and even as high as $150,000, depending on the type of procedure, according to Healthline.
And that doesn’t account for other necessities that those transitioning may need, including hormonal therapy, vocal coaching, facial surgery and breast augmentation.
Alternatives FCU’s program, called the TransAction Financial Empowerment Program, offers members an unsecured consumer loan or an unsecured line of credit. The maximum unsecured credit is $20,000 per employed borrower while the maximum personal loan also clocks in at $20,000.
The line of credit’s flexibility allows for those who are pursuing ongoing needs whereas the term loan is more suited toward one-time payment options.
“[T]here are needs as little as $100 and needs as much as $20,000 depending on what the person is looking to do and on what time frame,” Chernikoff said.
The $112 million-asset Alternatives worked with Planned Parenthood to map out the details of the loan program. Staff from Planned Parenthood visited Alternatives to train employees on how to assist transgender members. That particular Planned Parenthood chapter is also the first in the state of New York to offer hormonal replacement therapy for transgender patients and where Schoen received hormonal therapy during his transition.
“We approached Planned Parenthood and they were ecstatic,” Schoen said. “It would make for a great partnership because people need money to fund their journeys.”
Alternatives is willing to consider applicants for the program even if they don’t have perfect credit by taking into account the member’s debt ratios and employment history.
“People could have a 450 credit score and we could lend to them – it’s not that they’re disqualified just because of a credit score,” Chernikoff said.
Still, offering such a lending program can pose risks. Even though some consumers moved their business to Alternatives to show their support, others have been less enthusiastic.
When Schoen reviewed account closures in July, he noticed that one longtime member had moved all of their funds because they couldn’t support the program.
“So they wanted to take their money and move it elsewhere and that’s fine; that’s how they live, that’s how they feel, that’s what they choose and I’m OK with that,” Schoen said. “I do feel that we have more people supporting and rallying [behind] this individual product than we have people coming forward and saying, ‘Wow, that’s terrible.' "
Alternatives is also based in New York, a more liberal state that is known for being supportive of LBGTQ issues. Credit unions in other geographies may face more pushback than Alternatives has, but that could still be minimal.
There could be a need in areas that are generally more conservative for this type of product as well. West Virginia has the highest rate of teenagers who identify as being transgender, according to a January 2017 study from UCLA.
“I think the vast majority of consumers are seeking a strong service proposition in a convenient location and are not going to render an institution choice based on what products they offer,” Reider said.
Setting up the program has naturally taken time and resources at Alternatives. The institution is using a $23,000 grant from the National Credit Union Administration to help pilot the program. That money went primarily to paying overtime for employees to develop the program and creating marketing materials.
“The NCUA awarded approximately $2 million in CDRLF grants in 2017 to low-income-designated credit unions to assist with activities including leadership development, digital services, capacity building and outreach to underserved communities,” an NCUA spokesperson said.
To secure the NCUA grant, Alternatives had to provide an application that explained the need the program would address with the grant, a budget and likely outcomes.
“One thing that impressed us is that we submitted this idea and found that the NCUA was receptive to it,” said Liz Hudson, director of development at Alternatives.
Two members have applied for loans through the TransAction Financial Empowerment Program to date.
“This loan is absolutely necessary,” Schoen said. “If we could make this bigger and broader, I would love to see that happen.”
