The past year has been one that some would like to forget, but for many credit unions it has been a year of opportunity.Out of the rubble of the economic shakedown certain opportunities for growth have emerged for credit unions, and student lending is one of them. As unemployment has continued to climb over the past year and remains high, many students have found themselves without the financial support they were relying on from their parents. Without jobs available, many students have decided to continue with their education rather than enter the workforce, and many have made the decision to go back to school after losing a job.Cost of tuition has continued to grow. And a majority of large banks ceased lending and left the student loan marketplace. This opened up an area that needed to be filled.This past peak lending season, credit union student loan CUSO CU Student Choice lent out more than $100 million in loans, according to president Jon Jeffreys. Student lending technology and service provider Fynanz lent out $90 million this past lending season with its credit union private student loan program, and 90% of those loans were from new members, according to Fynanz President Vince Passione.With the Student Aid and Fiscal Responsibility Act still waiting to be voted on by the Senate, some of the approximately 1,000 credit unions that offer Federal Family Education Loan Program loans could switch to offering private student loans as the proposed elimination of the program would go into effect July 1, 2010 if enacted. The bill passed the House in September.The Department of Education has urged FFELP lenders to voluntarily change to direct lending, but those that oppose the elimination are still advocating alternative options.Since there is no information on credit unions' official call reports on student lending, it is difficult to compile exact numbers and balances, but Callahan & Associates has conducted its own analysis on credit union student lending.According to the most recent Callahan analysis, there are 142 credit unions offering nonreferral private student loan programs where the credit union originates the loan and holds the loan in its portfolio. In 2008, Callahan reported that there were approximately 38 credit unions offering their members a private student loan option. Callahan estimates that the total credit union funded private student loans is between $190 million and $220 million.Mike Mullowney, managing partner at Silver Sword Capital Partners, a sales and marketing firm that helps banks and credit unions set up student loan referral programs, said that he has continued to see interest in loan referral programs.In September, Silver Sword closed a deal with Members United Corporate Federal Credit Union. The corporate offers the option to its 2,100 natural person credit unions to refer members to Sallie Mae's private Smart Option Student Loan. Since then, Mullowney said the company has signed two additional corporates."Student loans are a complicated asset. We've all seen what's happening with default rates, but demand for student loans is still off the charts. Credit unions are interested in getting into it, but they want to test it out before they start lending their own money," Mullowney said.Passione said that while Fynanz has continued to add clients and see business grow this year he agrees that credit unions, like everyone else, are waiting to see what the government is going to do."They're interested in the space, but are cautious to see what's going to happen," he said.Next year, Mullowney said that he expects to see some of Silver Sword's current clients with referral programs start to get interested in lending their own money."Right now it's difficult. Student loans are unsecured, credit-based loans that come with a lot of risk. But things will get better, and we expect to have a number of our clients come back next year and say 'We're comfortable and ready to put our money to work,'" he said.With more and more people going back to school, Passione predicts that next lending season demand for student loans will be up and with the elimination of FFELP and big lenders still missing from the marketplace the playing field has been leveled for credit unions."Deposits are going to continue to come in, and credit unions need to figure out how to grow. Recovery is just around the corner and if you don't have plans in place you're going to miss it," Passione said.He added that he has been working with credit unions to at least do due diligence and research now so that when they are prepared to start lending they just have to sign a contract and their program can be up and running within 10 days.–[email protected]