When looking to the banking industry for potential investment opportunities, few might consider a bank or lender offering the chance to win a scholarship as a reason to invest in it, let alone borrow from it.

While community involvement has long been a staple of many banks – credit unions in particular – a surge has been brewing in this area with both banks and other small lenders (not to mention related technology firms) offering scholarships for college and professional development programs.

This makes for a powerful marketing strategy as it can separate a lender from others in the marketplace and generate word of mouth advertising. Offering youth and other members a chance to gain financial literacy while potentially winning part or all of tuition paid is a sound strategy and one worth a look for investors and borrowers alike.

More than $6 billion in scholarships are awarded yearly, according to the U.S. Department of Education. These can pay some or all tuition costs for higher education and can be found in many places. Yet some scholarships are smaller and lesser-known, offered by banks and other lenders instead of mainstream organizations.

For example, a lending company called Moneykey offers two scholarships each academic year of $1,000 each to post-secondary students with excellent academic achievement – a cumulative 3.0 GPA or higher. Applicants must submit a short essay on what financial responsibility means to them along with how to plan a budget. This application procedure is similar for many small lenders and banks.

But there’s more behind the Moneykey scholarship offerings. Offered through its website is the CC Flow Line of Credit backed by Utah-chartered bank Capital Community Bank (CCBank). This small community-focused bank and its subsidiary company Security Home Mortgage announced in July 2024 that it contributed $2.25 million to Utah’s Children First Education Fund to support special needs students.

This scholarship contribution supports Utah students in low- and moderate-income families with over 80,000 Utah special needs students eligible to participate. The bank sees this as a way to be involved in the community through education, and it certainly makes for great marketing as well.

Lendza, a loan-matching technology platform, is also getting into the scholarship game by offering its “Better Than A Loan” scholarship, offering a $500 scholarship to a student who submits a winning essay (as chosen by the company) that best answers the question “You are the CEO of a new startup. You have $1 million in starting capital. Which areas of your business do you allocate the funds to? Why?” This tests the business acumen of young students while offering to pay part of their college tuition.

Lendkey, another loan and scholarship search platform, is also offering scholarships totaling $20,000 to 10 winners of $2,000 each toward college tuition. Recipients are chosen based on high academic achievement to students already enrolled in an undergraduate program at an accredited college or university. The company partners with credit unions to offer loans (including student loans) through a credit union network called Member Student Lending with hundreds of credit unions in its network.

In addition to small local banks and lenders, credit unions are no stranger to the community involvement game. Take for example Iowa-based Veridian Credit Union, which awarded $18,000 in scholarships in amounts of $2,000 each to eight students in partnership with the Iowa Credit Union Foundation.

Another unique program is Veridian’s Artshare – $2,000 awarded to a high school senior enrolled in a program that leads to a future in the arts. Students can also display art in Veridian branches as part of the program.

Indeed, credit union foundations and state organizations are heavily involved in granting scholarships. The Iowa Credit Union Foundation in April 2024 announced that it awarded $46,000 in Warren A. Morrow Memorial scholarships to 24 high school and post-high school students through its credit union partners. The foundation wants to honor William A. Morrow, known by many as devoted to helping the underserved find success through education.

Other scholarships are offered to those seeking careers in banking and business. For example, take the South Dakota Bankers Association, which aims to expand banking and financial education in South Dakota. It offers scholarships through member banks and directly to members. The association co-sponsors the Bolder Banking Scholarship offered for the Graduate School of Banking at Colorado (GSBC) as part of the Bolder Banking outreach campaign recognizing leaders in community banking nationwide.

While the above are just several examples of the wide range of bank and lender scholarship offerings, the message is clear for borrowers and investors alike: it’s worth supporting those who in turn support the community through education and financial literacy programs.

Moneykey also has a good reference article on finding responsible lenders looking at additional factors to consider in choosing lenders – common advice, but worth repeating. This advice includes finding licensed lenders and legitimate financial institutions that partner with lending communities promoting best practices such as solid online security.

Not to forget, lenders with established ESG (Environmental, Social, and Governance) policies and histories are good investment prospects. This guide provides a detailed overview of how to evaluate ESG ratings. While smaller loan companies and banks might not have much if any ESG rating data, their reputations in this area can be checked through their websites and reviews.

If a company offers scholarship programs – which some might consider part of ESG – it might be worth a second look. At the very least, it’s not a bad way to find a scholarship, even if from a larger bank or lender as the trend is not limited to smaller firms.

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