The Washington-based student lending CUSO has 24 credit union partners that have funded more than $23 million in loans since the CUSO was formed in May 2008.
The plan proposed by President Obama includes expanding the size of existing federal loan programs, a provision that would allow the administration to lend directly to students and the end the Federal Family Education Loan program by the beginning of the 2010-11 school year.
The Federal Family Education Loan program provides subsidiaries to banks and other private lending companies to provide Stafford loans, unsubsidized Stafford loans, federal PLUS loans and federal consolidation loans.
"Shifting all federal student loans into the government's direct-loan program will obviously have a huge impact on lenders who participate in the FFEL program, but it underscores the tremendous opportunity that exists for credit unions in private student lending," said Jon Jeffreys, president of CU Student Choice. "The demand for private student loans, which help students fill the financing gap that exists after federal loans have been exhausted, continues to rise. And the need for lenders who can provide fair loan choices to America's college students has never been greater."
The average interest rate on all private student loans disbursed by the CUSO and its credit union partners is 5.875%.
"We see a tremendous opportunity for credit unions in private student lending and feel strongly they can leverage their cooperative structure and balance-sheet-lending capability to deliver superior value to students," said Mike Weber, vice president of marketing for CU Student Choice.
The CUSO plans to add 25 more credit unions to its network over the next three months.
"I'm confident we will continue bringing unmatched value to borrowers," Jeffreys said. "We also look forward to helping those credit unions who have been active in the FFEL program, as they will be forced to look for new business solutions in replaces those federal student loans."
In January, the CUSO helped MIT Federal Credit Union develop a student loan program for the MIT Sloan School of Management to replace Citibank as a lender.