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  1. Resource Center
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  3. Stronger Portfolios Start with Students: Lending That Builds Loyalty

Stronger Portfolios Start with Students: Lending That Builds Loyalty

  1. Resource Center
  2. Allied Insights
  3. Stronger Portfolios Start with Students: Lending That Builds Loyalty
By Allied Solutions,
August 11, 2025

As student debt continues to shape financial futures, credit unions face a pivotal choice: remain reactive or step forward as leaders in a national challenge. The ones that thrive will see student lending not just as a product, but as a platform to drive growth, build trust, and earn generational loyalty when members need it most.

Stronger Portfolios Start with Students: Lending That Builds Loyalty

 

Let’s face it—student debt isn’t just a number on a spreadsheet. It’s a growing national challenge affecting millions of families, recent graduates, and future borrowers. But here’s the opportunity: it also could be one of the smartest, most strategic ways your credit union can grow, diversify, and build lasting member trust.

At a time when consumers are craving financial guidance—and credit unions are looking to connect with younger generations—student lending isn’t just relevant. It’s essential.

The Student Loan Landscape: Big Problem, Bigger Opportunity
Here’s your first aha moment: Student loan balances increased by $16 billion, climbing to a total of $1.63 trillion.1 That’s not a typo. And the average borrower? They're carrying around $39,075 in loans. As federal student loan payments resumed after nearly five years, delinquencies rose sharply—fueling a spike in accounts falling behind.

But it’s not just about the debt. It’s about what borrowers need: clarity, trust, and help navigating repayment. That’s where credit unions come in.

Refinancing: Your Foot in the Door with Millennials and Gen Z
Let’s zoom in on a prime segment—recent college grads and early-career professionals. Many are employed, creditworthy, and eager to refinance into lower monthly payments. They're looking for a lender who gets it. They’re looking for you.

Compare this:

  • Federal loan rates hover between 6.8% and 7.5%.
  • Credit unions can often offer refinancing as low as 4.5%2 (as of this publication), delivering substantial savings and reinforcing member loyalty.

That’s real savings—and real value you can provide. Better yet? Those borrowers are just getting started in their financial journey. When you help them with student debt, you earn their trust for future needs: mortgages, auto loans, investment products, and more.

In fact, research from Deloitte shows that over 80% of Gen Z and millennials expect their financial institution to offer debt management tools and education. This generation isn’t looking for a transaction. They’re looking for a partner.

Participation Programs: Purpose Meets Portfolio Growth
Here’s another aha moment: You don’t have to go it alone. With nationwide participation programs in private student loans, in-school lending, and student loan refinancing, your credit union can tap into:

  • Proven underwriting models
  • Shared risk frameworks
  • Consistent revenue streams

This means you're not just supporting your members—you’re smartly growing your portfolio and strategically managing risk.

And let’s not overlook the retention value. Members who engage in lending relationships—especially early in life—tend to stick around. That’s not just loyalty; that’s lifetime value.

A Community-Centered Solution to a National Problem
Student lending is more than a financial product—it’s a bridge to meaningful engagement. And credit unions? We’re built for this. We're mission-driven. We're local. We're personal. And we’re trusted.

Whether it’s helping a first-time borrower pay for college, or guiding a graduate through refinancing, we’re doing what credit unions do best: meeting members where they are and helping them move forward.

Why You Should Act
If you’re looking to:

  • Diversify your loan portfolio
  • Attract younger, creditworthy members
  • Support families in your community
  • Generate sustainable revenue

…student lending needs to be on your radar. Let’s turn rising debt into rising opportunity—and do it the credit union way: with heart, purpose, and performance.


[1] https://www.newyorkfed.org/microeconomics/hhdc.html  

[2] https://www.lendkey.com/student-loan-refinancing/  

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