“With a delinquency rate less than 2%, our portfolio has performed much better than any reasonable person would have anticipated given the severity of the economic downturn,” said Perez. “If our losses were lower than anticipated, that validated the point where we can remove some of our conservative shields and start helping members again with this critical product.”

USC CU and other credit unions that believe in a brighter future for student loans sit at the center of a maelstrom in which major lenders such as J.P. Morgan Chase and U.S. Bank have exited the market.

Even other credit unions have become gun-shy when faced with a loan category that, at an aggregate $1 trillion, is second only to home mortgages as the highest level of U.S. consumer debt.

“We were once at $100 million in student loans,” said Greg Smith, president/CEO of the $4.2 billion PSECU in Harrisburg, Pa., which formerly was one of the nation's top 100 FFELP participants. “Now we have about $20 million in student loans and we're slowly easing ourselves out of the market.”

Not all credit unions see such a dark horizon. In fact, student loans are on the rise, according to NCUA data.

Private student loan activity among federally insured credit unions has risen significantly over the past two years, growing from about $1.5 billion in December 2011 to slightly more than $2 billion in December 2012, an increase of almost 36%.

In the first six months of 2013, the total rose nearly 13% more, to slightly less than $2.3 billion.

Delinquency rates were 1.29% in December 2011, 1.36% in December 2012 and 1.2% in June 2013. Loan charge-offs were even less.

Student loans have attracted the attention of $5 billion CEFCU in Peoria, Ill. The credit union, which serves 280,000 members in central Illinois, began offering student loans in a market where almost no banks or credit unions had such a program., according to Katie Mueller, CEFCU's private student loan manager.

“The growth that we have seen since starting our program in February 2011 has been outstanding,” said Mueller. ”We projected reaching $20 million in five years and we did $24 million in three years. We are very excited.”