Entering 2026, the federal student lending environment is undergoing significant transformation, greatly expanding the opportunity for credit unions to step up and serve members.
The One Big Beautiful Bill (OBBB) Act introduced one of the largest shifts in student lending in decades. Beginning this July, new graduate and professional student borrowers will no longer have access to Grad PLUS (which pumped out more than $14 billion last year alone), as the program will be completely phased out in the coming years. New caps will also be placed on Parent PLUS loans — significantly reducing federal borrowing capacity for families. At the same time, repayment options are being streamlined, further limiting flexibility for borrowers navigating rising education costs.
Together, these changes will reshape borrower behavior and increase demand for clear guidance and reliable private financing options.
For credit unions, this moment presents both urgency and opportunity. As policy changes reshape how families pay for higher education, credit unions are uniquely positioned to step in, guide members through uncertainty, and fill essential funding gaps — while reinforcing the mission of people helping people.
Launching Or Expanding Student Lending Programs In 2026
Credit unions looking to grow in this space don’t need to build from scratch — but they do need to make educated decisions. Whether your cooperative is exploring partnership options or seeking to expand your current student lending program, there are several key points to consider.
1. Start With Flexible Product Design
Flexible education lines of credit are increasingly attractive as federal options shrink. A line of credit structure allows borrowers to access funds as needed across multiple academic years, reducing the need for repeated applications and providing predictability during an uncertain funding environment.
Refinance solutions can also offer simplified, private student loan refinance alternatives to support borrowers impacted by changing repayment structures on their federal student loans.
For any student loan product, compete effectively by offering both fixed and variable rates, as well as multiple repayment options.
2. Ensure Speed To Market
Timing matters. College decision timelines, tuition due dates, and graduate program start dates are not flexible, and award letters begin arriving in March.
Credit unions that have products live and promoted before the peak enrollment and billing periods of June, July, and August will be best positioned to capture demand and serve members proactively.
3. Integrate Education And Guidance
Product expansion should go hand-in-hand with member education. Clear explanations of the financial aid process and how private loans can responsibly fill funding gaps will build trust and confidence and help credit unions differentiate from other lenders in the space.
4. Leverage Partners To Gain Efficiency
For many credit unions, partnering with an experienced CUSO that provides comprehensive solutions can alleviate the pain points of a designing a new lending program. With a partner like CU Student Choice that has been in the business of student lending for nearly 18 years, there is no need to hire additional staff or invest in new technology.
The right partnership enables credit unions to focus on member relationships while expanding capabilities.
Turning Policy Disruption Into Member Value
Federal student loan policy will continue to evolve. By expanding or launching student lending products now, credit unions can close funding gaps, strengthen member relationships, and reinforce their role as trusted financial partners during times of uncertainty.
With its flagship education line of credit, refinance offerings, and new solutions for graduate and professional students, Student Choice is helping credit unions respond to today’s challenges — and prepare for what comes next.
Connect with Student Choice to explore how your credit union can launch or grow education lending, engage new borrowers, and reinforce your role as a trusted financial partner.
