As we prepare for a new year, forward-thinking credit unions are resolving to diversify their loan portfolios. During CU Student Choice’s Empower U conference, credit union economist Bill Hampel noted that credit unions should be considering other categories of loans in 2025 such as student lending and business lending to supplement lower car sales and slower mortgage volumes.
With higher quality automobiles being produced and the rising use of rideshare apps by younger Americans, car sales are no longer keeping pace with overall population growth. “We are not going to return to the level of auto sales per member we enjoyed ten to 15 years ago,” said Hampel.
What opportunities lie ahead in student lending?
- Traditional higher-education financing: First and foremost, credit unions have an opportunity to help younger members and families with one of their biggest financial challenges—paying for college. By providing affordable and flexible options such as an education line of credit, cooperatives can live their mission while building lifelong relationships with younger members.
- Career education & training: In addition to traditional four-year degrees, there’s an increasing demand for employees in high-paying skilled trades nationwide. If there are training programs for aviation maintenance, commercial pilots, nurses, or energy trades within your community, there may be an opportunity to provide financing for these additional career pathways.
- Refinancing: With recent rate drops and the Fed expected to continue lowering rates in 2025, we will see new opportunities for college graduates to refinance their higher-rate student loans. Rather than losing borrowers to online lenders, credit unions have an opportunity to capture these refinances and help their members enjoy significant savings.
- Referral options: Don’t want to hold student loans on your books? Your members can connect with leading credit unions for their student loan needs, while keeping your credit union as their primary financial institution. Your credit union is credited for the referral and earns fee income upon funding. It’s a win-win for cooperatives and members alike!
What else should i know about student lending in 2025?
Over the past several years, there’s been a lot of headline noise in the student loan marketplace. From payment pauses to potential loan forgiveness, these news stories all relate back to federal student loans. They don’t apply to the private student lending solutions that credit unions offer, and any changes in the federal student loan program under the new administration could provide new opportunities for private student lenders.
Beyond meeting the immediate financing needs of students, credit unions should consider the lifetime value of student loan borrowers. Our analysis of 13 years’ worth of Student Choice borrower data from TransUnion showed that after taking out a student loan with a credit union, 81% of borrowers took out an auto loan; 60% took out a credit card; and 48% took out a mortgage. Naturally, we think credit unions should have the opportunity to provide all these loans.
How can my credit union get started?
Student Choice makes it easy to get started in the private student lending space and more fully live your cooperative mission in 2025 and beyond. Our private education line of credit requires a low lift for a high return.
Contact us to learn more about how CU Student Choice can help you offer customized student lending solutions that benefit your current and future members.
