Student loans may soon be a thing of the past for PSECU, the$4.2 billion Harrisburg, Pa., credit union founded in 1933 to servePennsylvania state employees.

According to President/CEO Greg Smith, the decision to discontinue student loans hasnothing to do with problems generated by Sallie Mae, which servicesloans for about 1,000 credit unions.

“We've referred several hundred of our members to Sallie Mae forloan servicing over the past year,” said Smith. “I haven't heardany complaints from the borrowers, and believe me they would havelet us know.”

Also Read: CFPB Says Sallie Mae Service Sags

PSECU members who have signed on with the former governmentagency, now one of the country's four major nonbank student loanservicers, may be in the minority if recent press reports aretrue.

The Newark, Del., firm, also known as the SLM Corp. and thenation's largest servicer of student loans, has attracted theunwanted attention of lawmakers in recent years for a varietyof alleged transgressions. It ranked last in a recent CFPB analysisin terms of servicersatisfaction.

Sallie Mae takes exception to the analysis and complaints thatit does a poor job servicing its 25 million student loan customers.In fact, Sallie Mae has ranked first in cumulative loan defaultprotection since 2009 as measured by the U.S. Department ofEducation, according to Patricia Christel, Sallie Mae's vice president of corporatecommunications.

“Our number one priority is to assist our customers and ensuretheir success, and our customers' track record is indicative of ourefforts,” said Christel, who says the firm works with an estimated1,000 credit unions. “We take great care in providing serviceto our credit union partners' customers, and their approval ratesand successful repayment trends are both very strong.”

Calls to the U.S. Department of Education to verify Christel'sclaims were not immediately returned, due to the governmentshutdown.

Sallie Mae's private education loans are designed to supplementfederal grants and personal savings as a way to pay theincreasingly high costs of a college education, Christel said.

The private education loan offers families careful underwriting,in-school payments to help students graduate with less debt, andon-time payment rewards. It is a popular alternative among creditunions, she adds.

Currently, 92% of the 40-year-old firm's private education loancustomers make on-time payments and defaults have fallen to just2.7%, the lowest levels since prior to the recession, Christelsaid.

During the past academic year, Sallie Mae said, it helped 2.1million past-due customers return their education loan accounts togood standing, preventing $41 billion in federal and privateeducation loan defaults.

“Sallie Mae's private education loan referral program can be agood choice for credit unions that want to offer an education loanto their members and their families, but prefer not to deal withunderwriting, funding and servicing the loan,” Christel said.