Filling the Gap: How Credit Unions Can Lead the Charge in Post-Grad Lending

What’s Changing in 2026
Beginning July 1, 2026, the federal government will implement sweeping reforms to student lending under the One Big Beautiful Bill Act (OBBB), signed into law on July 4, 2025. These changes aim to streamline repayment and reduce borrower burden, but they also significantly reduce federal support for graduate and parent borrowers. 

Key changes include: 

• Elimination of Grad PLUS Loans: The federal government will no longer offer Direct PLUS Loans to graduate and professional students. This move alone removes approximately $14 billion in annual funding from the system. 
• New Borrowing Caps: 
  • Graduate students will face lifetime borrowing limits of $100,000 for most master’s degrees and $200,000 for professional programs such as law and medicine. 
  • Parent PLUS loans will be capped at $20,000 per year and $65,000 lifetime per child, replacing the current policy that allows borrowing up to the full cost of attendance. 
• Reduced Grant and Work-Study Funding: The Federal Supplemental Educational Opportunity Grant (FSEOG) program will be eliminated, and Work-Study funding will be reduced from $1.23 billion to $250 million.
• Interim Exceptions: Students enrolled before June 30, 2026, will be grandfathered into the current system for the duration of their expected program completion. 

These changes reflect a broader federal strategy to reduce exposure to student loan debt and encourage private sector participation in education financing. 

Real-World Impact: A Young Dentist’s Dilemma
Consider a student named Maya, who is entering her first year of dental school in the fall of 2026. Under the new rules, Maya’s borrowing capacity is capped at $200,000 for her entire education. While this may sound substantial, the average cost of dental school, including tuition, fees, and living expenses, can exceed $400,000 over four years. 

Without access to Grad PLUS loans, Maya must find alternative financing to cover the remaining costs. Private loans may be available, but they often come with higher interest rates, stricter credit requirements, and fewer repayment protections. Maya, like many of her peers, faces a difficult choice: take on riskier debt, delay her education, or abandon her dream altogether. 

This scenario is not hypothetical. It is the reality that thousands of aspiring doctors, dentists, and professionals will face as federal support recedes. The stress of navigating complex financial decisions at the start of a demanding academic journey can be overwhelming and discouraging. Credit unions have an opportunity to change that narrative. 

Why it Matters
The elimination of Grad PLUS loans and the introduction of strict borrowing caps will leave a significant funding gap for graduate students and families. Many will find themselves without sufficient resources to cover tuition, fees, and living expenses. This disruption could lead to increased financial stress, delayed graduation, or even decisions to forgo advanced degrees altogether. 

Credit unions, known for their member-first approach and community focus, are uniquely positioned to respond. By offering tailored student loan solutions, credit unions can provide the support students need while building long-term relationships that extend well beyond graduation. 

The Credit Union Advantage 
Credit unions have a long history of stepping in where traditional financial institutions fall short. In the wake of these federal changes, they can:

• Offer competitive interest rates and flexible repayment terms. 
• Provide personalized service and financial education. 
• Build trust with members during a critical life stage. 
• Strengthen their value proposition to younger demographics. 

This is more than a lending opportunity; it is a chance to demonstrate leadership, empathy, and innovation. 

Corporate Central’s Student Loan Solution
Corporate Central has already laid out the groundwork for credit unions to succeed in this space. Our Student Loan Program with ISL Education Lending equips credit unions with the tools and partnerships needed to launch branded student lending solutions. 

Through collaboration with Corporate Central and ISL Education Lending, credit unions can: 

• Access turnkey lending platforms. 
• Receive marketing and compliance support. 
• Customize programs to meet member needs. 
• Align with the industry mission of “people over profits” with a nonprofit student lender. 

This solution is designed to help credit unions establish a sustainable, scalable presence in the student loan market, especially as federal options diminish. 

The 2026 changes are not just a challenge; they are a call to action. Credit unions must prepare now to meet the needs of graduate students and families who will soon be navigating a very different financial aid landscape. 

By embracing this moment, credit unions can do what they do best: serve their members with integrity, innovation, and heart. Contact Corporate Central today to discuss our student loan option.