Why Private Student Lending?


Faced with skyrocketing education costs, students and families have become increasingly reliant on private student loans to fill educational funding gaps - the difference between the cost of attendance and the amount covered by savings and lower-cost sources, such as scholarships, grants and Federal Stafford Loans.

The growth of private student loans exploded in the 2000s, fueled not only by rising costs, but also by free-flowing capital from the secondary market. All too often, borrower value took a backseat to investor demands. While many lenders exited the market when the secondary market collapsed in the 2008 mortgage meltdown, borrower demand has remained strong due to a challenged economy and ever-increasing college costs. Nearly $8 billion of private student loans were funded in 2011 alone.

In spite of the costs, a college degree has never been more valuable to the long-term success of young adults. As student and parents make difficult decisions on how to best pay for a college education, credit unions can play an incredibly important role by providing straight-forward financial advice and fair-value financing options.

Private student lending gives credit unions a unique opportunity to:

  • Grow and diversify your loan portfolio with a variable rate loan product
  • Build life-long relationships with young adults (and families), many of whom may be new credit union members
  • Efficiently enter the market with no additional staff by partnering with Student Choice
  • Achieve optimum portfolio performance by employing sensible risk mitigation policies
  • Meet your members needs by offering a superior product

Learn more about our solution or contact us to discuss the program in more detail.