It’s safe to say that 2025 brought about some of the biggest changes to the student lending landscape in decades. While legislation brought clarity to federal student loan borrowers who had been in limbo for years following the COVID pandemic, it also confirmed that widespread student loan forgiveness proposed by the previous administration was officially off the table.
Here’s a quick rundown of key decisions from The U.S. Department of Education (ED) over the past year:
- March 2025 – ED announced a large workforce reduction/reorganization.
- May 5, 2025 – Collections on defaulted federal student loans resumed.
- July 4, 2025 – The One Big Beautiful Bill Act (OBBB) was signed into law, with significant federal student loan changes going into effect July 1, 2026.
- Aug. 1, 2025 – Interest accrual resumed for borrowers in the SAVE Plan.
- Nov. 6, 2025 – ED concluded its negotiated rulemaking session where the Reimagining and Improving Student Education (RISE) Committee reached consensus on federal student loan-related changes under the OBBB.
Meanwhile, college tuition and enrollment continued to rise, according to The Education Data Initiative:
- In the last three years, the average annual cost of tuition at a public four-year college increased at an average annual rate of 3.21%.
- At all four-year universities, public and private, tuition is projected to increase by an average of 2.28% for AY 2026-27.
The biggest changes—and opportunities—lie ahead
From streamlining repayment plans to implementing borrowing caps and eliminating graduate loan programs, the OBBB emerges as the biggest student lending headline of the past year.
Graduate student shortfall
One of the most impactful changes under the OBBB is the elimination of the Grad PLUS program—a critical funding source for graduate and professional students that disbursed more than $14 billion last year alone. With this federal option removed, these borrowers will have fewer choices to cover their full cost of attendance and will increasingly turn to private lenders to fill the gap.
For credit unions, this represents a clear growth opportunity. The loss of Grad PLUS opens the door for expanded lending solutions tailored to graduate and professional students—an audience that typically demonstrates strong future earning potential and long-term member value.
The Parent PLUS gap
Significant changes to Parent PLUS loans create a similar opening. Historically, Parent PLUS has allowed families to borrow up to the full cost of an undergraduate education, minus other aid. Beginning July 1, 2026, new Parent PLUS loans will be capped at $20,000 annually per student, with a $65,000 lifetime limit. With the average cost of attendance now exceeding $38,000 per year, many families will face significant funding gaps that will need to be filled elsewhere.
What we’ve learned and how credit unions can step up
Student lending as we know it shifted dramatically in 2025. Federal policy changes, the resumption of collections and interest accrual, and the passage of the OBBB Act have fundamentally reshaped how students and families will pay for higher education beginning in 2026. At the same time, tuition continues to rise, increasing the financial pressure on borrowers just as federal borrowing options become more limited.
Now is the time to evaluate your student lending strategy for 2026 and beyond. Credit unions that are prepared with competitive private lending solutions will be positioned to capture new growth, support member families, and build long-term loyalty.
Student Choice is actively developing new products and resources to help credit unions meet this moment. Connect with us to explore how your credit union can launch or expand an education lending program, reach new borrowers, and remain a trusted financial partner in a rapidly changing student loan environment.
Contact us to learn more about how Student Choice can launch or help expand your student lending solutions ahead of the historic changes coming in 2026.
