Private student lending: The more things change, the more they stay the same

This summer has ushered in one of the most significant shifts to the federal student loan system in decades. With the July 1 implementation of the One Big Beautiful Bill (OBBB), financial aid offices, students, and families are navigating new borrowing limits, repayment options, and funding challenges.

The headlines over the past year have understandably been focused on what's changed. But as lenders enter the busiest weeks of the college financing season, it's worth remembering what hasn't.

Students are still preparing to head to campus this fall. Families are still reviewing financial aid offers, discovering funding gaps, and wondering how they'll cover the remaining cost of attendance. And just as they have every summer, many will turn to trusted financial institutions for guidance and financing solutions.

For this year's incoming freshmen, the new federal lending landscape isn't a disruption—it's the only system they've ever known. They aren't comparing today's options to yesterday's rules. Their focus is much more immediate: finding a way to pay for college so they can begin the next chapter of their lives.

July and August have always been the busiest months for education financing, and this year is no exception. As tuition bills arrive and enrollment deadlines approach, families often discover that scholarships, grants, and federal loans don't fully cover college costs.

Those funding gaps create a familiar challenge—and a familiar opportunity. Members begin looking for affordable financing from institutions they know and trust, giving credit unions a chance to provide personalized guidance and responsible lending solutions when they're needed most.

This year, that opportunity extends beyond traditional undergraduate lending. With big changes to federal borrowing affecting graduate and professional students, credit unions should also consider lending programs equipped to meet the needs of members pursuing medical, dental, law, and other professional graduate degrees.

Long before this year's federal changes, hundreds of credit unions were helping members bridge college funding gaps with affordable private education financing. While federal policies have changed over time, the need for trusted lending partners has remained constant. Families continue to value transparent products, competitive rates, and guidance from institutions that put their financial well-being first.

Just as important, they value flexibility. As federal repayment plans become more streamlined, offering borrowers a choice of repayment allows them to select an approach that aligns with their financial situation while they're in school and after graduation.

While the “student debt crisis” often dominates the news, those stories typically center on the federal loan program—not responsibly underwritten private education loans. For credit unions, private student lending has proven to be a stable, well-performing asset class when paired with disciplined underwriting and thoughtful program design.

Credit unions originating loans with Student Choice have experienced strong portfolio performance for more than 18 years, with annual gross charge-off rates of less than 1.5%.

That performance is driven by a lending approach built on sound risk management, including:

The buzz surrounding federal student loans may continue, and future legislation will undoubtedly bring additional changes. But the fundamentals of higher education financing remain remarkably consistent.

Every summer brings new students, new families, and new opportunities to serve. By offering education financing solutions like those from CU Student Choice, your credit union can help members confidently navigate college costs while building relationships that last well beyond graduation.

Connect with us to learn more about launching or expanding your credit union’s private student lending program.