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Student lending isn’t what you think it is – it’s better. For years, private student loans and refinancing products have been dismissed as risky or unprofitable, but the reality couldn’t be further from the truth. These products represent a prime opportunity to serve creditworthy borrowers, attract younger members and diversify your loan portfolio while minimizing risk. With strong repayment trends, high cosigner participation and growing demand, private student loans are a hidden gem that align perfectly with the values and mission of credit unions. It’s time to rethink what you know about student lending and embrace its potential as a low-risk, high-reward product.
Strong Portfolio Performance
One of the most compelling reasons for credit unions to embrace private student lending is the strong performance of these loans. According to the latest Enterval Private Student Loan report, early-stage delinquencies (30–89 days past due) were just 3.20%, while late-stage delinquencies (90-plus days past due) stood at 1.62% as of Q3 2024. These figures are comparable to pre-pandemic averages, demonstrating consistent borrower responsibility. Additionally, the annualized gross charge-off rate has declined to 2.47%, reflecting improved repayment trends.
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To further emphasize the performance of private student loans, look at other consumer loan products. Credit card loans, for instance, typically have higher delinquency and charge-off rates compared to private student loans. As of recent data, late-stage delinquency for credit cards stands at about 2.05%, which is higher than the 1.62% for private student loans. Additionally, the charge-off rate for credit cards is around 3.34%, compared to 2.47% for private student loans. Auto loans generally perform better than credit cards but still have higher delinquency rates than private student loans, with late-stage delinquency at approximately 2.21%. In contrast, mortgage loans tend to have much lower delinquency rates, with late-stage delinquency at about 0.57%. Overall, the strong performance of private student loans, with early-stage delinquencies at 3.20% and late-stage delinquencies at 1.62%, along with a declining gross charge-off rate, demonstrates their stability and makes them an attractive option for credit unions.
High-Quality Borrowers With Cosigner Support
Private student loans attract highly creditworthy borrowers, often supported by cosigners. The Enterval report reveals that 93.53% of newly originated private student loans in the 2024-2025 academic year were cosigned, with undergraduate loans showing an even higher rate of 95.98%. Cosigners play a vital role in ensuring repayment success.
The report notes: “Cosigners enable lenders to extend credit they otherwise would not extend, based on the cosigner’s ability to repay and support repayment of the loan obligation. Cosigner rates are associated with higher loan performance outcomes.”
Private student loans are an attractive option for credit unions looking to minimize risk while serving members due to that additional layer of financial security.
Growing Market Demand
The private student loan market remains robust, with an outstanding balance of $134.19 billion, accounting for 7.57% of the total U.S. student loan market. Despite a slight year-over-year decline in originations (-0.24%), demand remains strong at $4.21 billion for Q3 2024.
Credit unions are uniquely positioned to offer competitive rates and personalized service in this growing market. By doing so, they attract younger members who will likely need additional financial products in the future.
Refinancing: A Strategic Growth Area
Student loan refinancing is another opportunity for credit unions to engage with borrowers across different demographics, from young professionals just starting their careers to older individuals still grappling with student debt. By offering refinancing options, credit unions can attract financially stable borrowers, foster long-term relationships and expand their portfolio of low-risk lending products.
Engaging Young Professionals
Refinancing is particularly appealing to young professionals who are beginning their financial journeys. Many recent graduates face high-interest student loans and seek better terms to manage their debt more effectively. For example:
- In 2025, private student loan debt reached $134.3 billion, with approximately $29.3 billion (21.8%) attributed to refinance loans, according to an Education Data Initiative report, indicating a growing demand for refinancing among borrowers seeking to lower their interest rates or consolidate multiple loans.
- Young professionals often have stable incomes and good credit scores, making them ideal candidates for refinancing. These borrowers can save significantly over the life of their loans by securing lower interest rates or shorter repayment terms.
- Refinancing also simplifies loan management by consolidating multiple loans into one, reducing the risk of missed payments and late fees.
Supporting Older Borrowers
Older Americans represent another critical segment for student loan refinancing. Many have carried student debt for decades, often struggling with high interest rates or defaulted loans.
As of 2023, 1.48 million older Americans (62 and above) had held student loans for over 15 years, according to Department of Education data. Refinancing provides these borrowers with better loan terms, such as reduced monthly payments or extended repayment periods, helping them regain financial stability.
Refinancing also offers flexibility by allowing borrowers to switch lenders or remove cosigners from existing loans – an attractive option for older individuals managing complex financial situations.
By addressing the needs of older borrowers, credit unions demonstrate social responsibility while tapping into a growing market segment.
Statistical Insights
The current student loan debt total of almost $1.7 trillion highlights the critical role of refinancing as a strategic financial solution. Private student loans alone account for over $130 billion of the total amount of student debt, demonstrating the significant demand for more manageable repayment options. Refinancing offers borrowers tangible benefits, including securing lower interest rates – sometimes as low as 3.85% APR – and reducing their monthly payments or overall borrowing costs.
These advantages alleviate the financial burden on borrowers and provide credit unions and lenders with an opportunity to engage with a broad demographic of borrowers seeking stability and savings.
Alignment With Credit Union Values
Private student lending aligns seamlessly with credit unions’ mission to support members’ financial well-being. By offering these products, credit unions empower members to achieve their educational goals without resorting to high-interest alternatives, building trust and loyalty in the process. Nearly all private student loans are school-certified (99.97% in AYTD 2024/25, according to the Enterval report), ensuring that funding aligns with actual financial needs and reducing the risk of overborrowing.
That alignment reflects responsible lending practices and positions credit unions as community-focused institutions addressing a critical financial challenge – student debt. By offering competitive rates and personalized service, credit unions differentiate themselves from larger banks and private lenders, reinforcing their role as champions of financial wellness within their communities.
Data-Driven Confidence
The Enterval report provides ample evidence that private student loans are a solid product category, reporting “indicators continue to point to high asset quality with 93.53% of loans as cosigned and nearly 100% being school-certified.”
These metrics demonstrate that private student loans attract financially responsible borrowers and offer strong repayment trends.
Actionable Steps for Credit Unions
The following steps outline how credit unions can effectively enter the student loan space, creating value for both their members and their organizations:
1. Develop or Expand Student Loan Programs:
- Partner with established private student loan providers or build in-house capabilities.
- Offer competitive rates tailored to students and recent graduates.
- Target young professionals with existing federal or private student debt.
- Highlight potential savings through lower interest rates.
- Use insights from reports like Enterval’s to refine underwriting criteria.
- Prioritize cosigned and school-certified loans for better performance outcomes.
- Provide resources on responsible borrowing and repayment strategies.
- Position your credit union as a trusted advisor in navigating education financing.
It's time to think differently. It’s time to offer student lending.
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