October 5, 2026
Fifteen years ago, lenders turned away from private student loans. Today, credit unions are feeling the pain of a lost generation.
In 2010, Congress ended new Federal Family Education Loan Program (FFELP) lending, which transformed government-backed student loans from being offered through a decentralized network of private lenders and credit unions to a government-run federal loan system.
When financial institutions lost the ability to offer federal loans, they decided to close up shop on private student loans too. Within a couple of years after the end of FFELP, most banks (including major players like JPMorgan Chase and Citi) and most credit unions no longer offered any type of student loan.
What happened after FFELP was eliminated
Nearly a generation since FFELP ended, we can see the long-term impacts that these regulatory changes – and the credit union system’s reaction to them – had.
- Young people have too few options
The U.S. Department of Education became the sole source of federal student aid, today managing over $1.7 trillion in loans. For better or worse, students must now navigate federal government programs to access federal student loans and other financial aid. On the private side, the student market has evolved into a specialized landscape more focused on student loan refinancing and private student loans that fill the gap between federal aid and the full cost of college. - The impact on the wider market
When most banks and credit unions exited student lending in 2010, it left a gap in the market that was quickly filled as existing organizations pivoted and new players emerged.
For example, Sallie Mae restructured to lean heavily into private student lending, savings accounts and other student services. SoFi was founded in 2011 specifically as a student loan refinancer, later expanding to offer a range of deposit, loan and investing products.
- Credit union membership: an age-old problem
Credit unions have an aging member problem that was exacerbated when they turned away from student lending in 2010, losing an important source of growth and potentially an entire generation of members.
In 2012, the average age of a credit union member was 47 years old, up from 40 years old just a few years before. In 2020, the average age had increased to 53 years old. Today, many credit unions recognize private student lending as the positive, long-term relationship-building tool it is – helping establish early membership while providing young people with crucial support as they navigate their education and beyond.
History is repeating itself
On July 1, 2026, new changes to federal student loan programs began. Reminiscent of the confusing shuffle that happened in 2010, students and lenders must again navigate new rules and regulations, including the end of certain loan programs, changes to other programs and new repayment rules.
Just like 16 years ago, this is a moment when lenders will pivot to new opportunities while other companies and entrepreneurs will emerge to meet changing borrower needs. Likewise, this is a chance for your credit union to act – to support existing members, acquire new members, build relationships, and rebuff the fintech companies that are ready to swoop in.
The only question is – will you act?
Get the tools you need to seize the moment
Check out our latest research on SoFi and see how they turned student lending into a deposit growth machine, including the six-part playbook for what credit unions should do right now.
Want to discuss your lending strategy? LendKey helps credit unions and community banks of all sizes offer private student loans and refinancing through our streamlined platform. Talk to us about your needs and how LendKey can help your institution.