A teacher credit union is a private financial corporation that operates much like a bank, but for a limited number of select participants. Most countries have laws setting out the conditions under which credit unions can operate and transact business. Although the specifics of what a credit union is or who can join varies from jurisdiction to jurisdiction, in most places, a credit union is a financial entity encouraging savings and extending credit on a private or semi-private basis. Most of the time, a teacher credit union is designed for teachers and educators in a certain fixed location. Increasingly, however, teacher credit unions are opening their doors to a wider body of potential applicants, and though their unions remain small, they are not always as insular to the education community as they once were.
In most cases, the goal of any credit union is to foster a sense of financial community. Sometimes, credit unions are designed to cater to employees of a specific, usually large, company, while other times they are designed to connect individuals who work in a certain economic sector. Such is the case with a teacher credit union. A traditional teacher credit union or educators credit union operates as a private banking entity open to participation from anyone within a defined geographic area who is a teacher, educational aid, or other school employee.
The terms and conditions of educational credit union membership are typically set by the union’s board of directors. A hallmark of credit unions is that they are owned by their members in most instances. This means that each individual credit union member is at least partially responsible for the financial stability of the union as a whole. Most credit unions are insured, but investors nevertheless usually want to be sure that the financial community of the credit union is a sound one before buying in.
Accordingly, credit unions are usually allowed to be quite discriminating in their membership. The communal nature of the credit union model is also one of the reasons why so many credit unions, including those following the the teachers credit union and public employees credit union model, are industry-specific. A community of teachers is likely all going to be in a similar financial position, and there is often a sense of solidarity that forms between individuals who share similar day-to-day challenges and experiences.
Teacher credit unions exist in many countries, usually at the city or school district level. Some teacher credit union groups have begun accepting non-teacher members, particularly in the United States. Most of the time, credit unions still require their membership to be based in a certain local community, however. Some of this occupational leniency may be owing to a decline in overall membership interest in some places, or a teacher credit union desire to compete with local banks. It may also be due to the struggles that many financial institutions feel as people in some communities are borrowing more, but saving less: in order to sustain an increase in loans going out, there must also be an increase of money coming in, which sometimes requires fresh membership.