A major transformation is brewing in the student lending world, and credit unions are right in the middle of it. During her latest conversation on The Credit Union Connection, Sarah Snell Cooke sits down with Vince Passione, CEO of LendKey, to unpack how the Big Beautiful Bill will upend federal student loan programs and what it means for members and credit unions preparing for what comes next.
What begins as a policy discussion quickly turns personal. Vince talks about how the upcoming changes will narrow student loan repayment options and eliminate key programs like Grad PLUS loans. The result could be a wave of borrowers searching for help in an already complicated system that suddenly feels unfamiliar. For credit unions, it is a chance to be there when members need them most, and to attract a younger generation that may otherwise drift toward fintech lenders promising fast, digital solutions.
From there, the conversation shifts to what LendKey is building. Vince explains how credit unions in their network are working together through shared underwriting and pricing to buy and sell loans in real time. It is collaboration powered by technology and purpose, a new way to combine local member focus with the scale needed to compete.
But underneath the data and structure is a message about identity. If SoFi can call its customers members, why shouldn’t credit unions act like the anti-establishment badasses they have always been? Vince makes it clear that staying relevant means moving quickly, meeting borrowers where they are, and offering real products that solve real problems.
Sarah and Vince also dig into home improvement lending and the rise of embedded finance. Contractors are now offering credit union loans right at the kitchen table when members are signing their contracts for work. Members are getting financing at the point of need instead of waiting weeks for approval. It is a reminder that financial relationships start in everyday moments where credit unions can shine.
By the end of their conversation, the takeaway is clear. The next chapter for credit unions will belong to those willing to adapt and lead with purpose. Technology may set the pace, but people and partnerships will define the winners.
NOTE: AI is human, so it ain’t perfect. This transcript will have errors; it will receive its punishment later.
Sarah Cooke
Hello, everybody. My name is Sarah Snell Cooke. I’m your host with The Credit Union Connection, of course. And today I’m here with Vince Passione. Welcome.
Vince Passione
Nice to be here. Sarah,
Sarah Cooke
Yeah, it’s awesome to catch up again. So Vince is the CEO at LendKey, and you guys have expanded tremendously over the last many years. And so, yeah, I wanted to get a quick, you to do a quick, a quick yet deep dive into yourself, as well as the company.
Vince Passione
awesome, awesome. So look, I always like to start with the why. And I’ve been, I’ve been in financial services for my entire career, started in in IBM, then at Citigroup, then did a series of startups and obviously LendKey started back in 2009 and back then, like my why was simple, right? It was making lending simple. We pioneered this digital lending platform to really empower credit unions and community banks to offer lending solutions to their clients and really we came upon, and what I would talk to you prior to the call was this whole concept of network lending, which we’ve created a cooperative. It is really a shared services model where credit unions basically agree to common underwriting, common pricing, which basically means they offer the same loan to all of their members, which allows them to optimize liquidity, right because then they can very quickly sell part of that loan in a participation. It also allows them to buy other credit unions loans in the network, in participation. So whether it’s for credit risk or liquidity management, our clients in real time are originating and buying, buying and selling loans from each other. And we do that in three categories. We do it in in school education lending, which is where we started. We do it in education refinance lending, and we do it in Home Improvement lending today. And to my knowledge, we are probably the largest, we probably host the largest real time loan participation network in the credit union industry. We have over 400 credit unions that participate in it. We’ve originated well over $7 billion of loans. And as part of the solution, right? We have an origination platform, a decisioning platform, but we also service all the loans for our clients. So we take all that data right, and we enrich the network. And I always like to say that we’ve leveraged the wisdom of the crowds, right, of all the credit unions, all underwriting or looking at these loans right, to build out these networks. And a recent extension was our lira product. So we took the ability for LendKey to build out a network lending program, and now we allow credit unions and fintechs to do the same thing. So we launched with caribou, which is an auto refinance platform, and they will host with a single credit union who will originate a product, and that product that that particular loan will be sold once a week to a number of credit unions who all agreed to buy every single month right from that credit union. So as a result, that credit union is building its own network lending program. We’re also getting ready to launch with a fairly large credit union on the West Coast who’s going to originate auto loans and allows them to expand their auto loan business at the same time, since auto loans are in demand by many credit unions, they can buy those credit they can buy those loans and basically agree in advance to how much they’re going to buy every month for the year. So that’s us, and you know, we really wanted to spend some time with you today to really talk about the big, beautiful bill impact it’s going to have on credit union members as we think about what’s going to happen next big lending season, we just finished up big private student lending season, our clients this year, but the big issues are really going to hit in July of 2026 Yeah.
Sarah Cooke
So, so you jumped right into my first question there. So I know I got my notification that my student loan for my graduate degree is going to be changing, and that’s, of course, an extended from the big, beautiful bill, and what’s going on, everything that’s going on in Washington. So can you kind of give us a lowdown on what’s happening?
Vince Passione
Sure. So the first thing in that, that notification that you received, Sarah, was basically the Department of Education notifying you that the existing repayment plans, and there’s probably about, it’s probably a dozen of them, and there’s variations on them, and permutations on them that probably turn into more than a dozen are really going to disappear as of July 2026 and they’ll just be two that the government will offer. And my personal opinion is it’s great that there’s two. The problem is qualifying for the two is gonna become more difficult, and that’s gonna create financial stress, especially on those who took out. Up graduate degree loans like Grad PLUS loans where, let’s take a typical veterinarian. I was on the phone a few weeks back with the dean of a pretty large veterinarian school. You know, an average veterinarian is going to expend, probably through their entire college career, over $480,000 on education. They’ll graduate with $160,000 of education loans. Most of the time. In the past, they would have taken out a grad plus loan that would have covered full cost of attendance at that university, and they would, upon graduation, they would apply for Income Based Repayment, and that would allow them for a period of, let’s say, five years while they were working as a resident or an intern at a veterinarian practice to really afford paying back that loan, because it’s, it’s a portion of their income, right? It’s usually set somewhere between 10 to 20% of their annual income, and at the right time, usually five years in, they will probably purchase the practice. They’ll take out a small business loan to do that, or an SBA loan to do that, and then they’ll probably consolidate all that debt, right? And they’ll make more money doing it. So it made sense, right? There was a there was a path to get from where they are today, paying for all that tuition to paying back their tuition, their education debt, to fulfilling their career aspirations. That path now is going to be a bit more difficult to achieve, because that concept of, well, you can get a grad plus loan, and now you could apply for Income Based Repayment, it’s likely going to be really difficult to get to so the first piece is you talked about is most a lot of those repayment programs that are income based, there can be fewer of them. They can be harder to get to. It’s probably going to hurt professional students more than anyone else who have a large student loan debt, and it’s going to create stress on credit union members who are trying to figure out now what to do, because the only option is probably refinancing this debt and adding term to it. Right? So that’s the first piece. The second piece is Grad PLUS loans are gone. So Grad PLUS loans are the bread and butter right of these advanced degrees, these professional schools where student shows up, they’re going to get a degree in dentistry, they are going to take out a grad plus loan. That grad plus loan is full cost of attendance, right? Those are gone. So now what those graduate students will need to do is really avail themselves of the existing direct loan program. And there’ll be a cap on how they will, they will. They will be capped on what they can borrow when they are actually in school applying for that graduate degree. It’ll be probably about $20,000 a year. It’ll have a lifetime cap of about $100,000 which is you can see the gap right, for someone who’s going to spend over $480,000 becoming a veterinarian, right? They’ll have a significant gap. The third part is Parent Plus loans. And these are loans that parents take out, either to pay for undergraduate, graduate, other advanced degrees. Those also used to be full cost of attendance. Those will be capped at about $65,000 per student as a result. So, so if you think about in total, what will happen, couple of things. The impacts are, there will be less federal funding available for folks who are pursuing their education who need a source of financing. And what we estimate, it’s probably about a shortfall, about $15 billion now think about the entire in any given year, the private student loan industry originates about anywhere from 10 to $15 billion of education loans. So we’re talking about a doubling in probably a year from now. So that’s the first thing that will happen. The second is, as we said, you’re going to have members who are struggling, looking for options because the grad plus loan is gone, and parents, right, are going to have gaps that they’re trying to fulfill, and they’ll be looking for private lenders to fill those gaps. Today, we have about as little over 200 clients who are actively originating education loans. But across the entire credit union industry, there’s less than 1000 credit unions that are actively engaged here in a space where there are fintechs like Sofi, there are other lenders like Sallie Mae that see the opportunity and we’ll take it right to go out and get these members so significant crisis, I think, on the horizon for credit union members, and it’s the time I think that credit unions really need to take notice of what’s happening and make a decision. Right? Is this a demographic that makes sense then, which it has to because every credit union is. Trying to get younger, and these Parent Plus loans affect their current members, right? Because the average Parent PLUS holder is probably about 53 years old, yeah, yeah.
Sarah Cooke
I Yeah, we, fortunately, we didn’t have to take out a student loan for my son. Yeah. But yeah. I mean, people are obviously going to be effective, and the so it looks like private student loans, like you said, are going to be a much better option if the only option. And you know, it’s an opportunity that credit unions really need to seize. And they, and you brought up an interesting point too, about how that can help make the credit union’s membership younger, too. And it’s just like everybody’s complaining about that not having young enough members, and then only 1000 credit unions are offering student loans. So yeah,
Vince Passione
No, it is. It’s an interesting sort of anomaly. When I go to conferences all the time, like you do, Sarah, and I’ll see consultants stand up, I’ll see other credit unions stand up and talk about how they’re going after the Gen Z, how they’re going after the millennials, how they’re going after these younger members. And it usually leads in a couple of directions, right? It’s, it’s financial literacy programs, and the challenge with that and Ron Shevlin, I had him on my podcast, and Ron was great. He said, Look, the time for education is over. It’s time for product people real we need real products to solve real problems. And this is a product that solves an enormous problem, right? When you think of the cost of private education, just an average private you know, college is probably $40,000 a year, and the average student is graduating making about that much, right? So, you know, it’s a challenge for students today. It’s a challenge for existing credit membership. I mean, 20% of credit members have student loans from other lenders. I mean, it’s that’s over four $30 billion in loans. It’s sitting someplace else. And what we’ve seen, especially with clients like Navy, right, that about two thirds of these borrowers will turn around after they get a private student loan with their credit union and take out another product. They’re either going to get a credit card, they’re going to get a checking account. If they refinance their debt, it’s because of a life event, so they’re probably buying a home, right? These are the, these are the future members of your credit union. Um, it’s also, and we’ve celebrated 10 years originating education loans alongside of Navy. You know, navy, when they first started this program, it was all about, how do we, how do we create a multi generational product offering, and it’s worked for them, right? They’ve been able to leverage education lending to get parents who cosigned for their children in school right, to make certain those children we’re now going to turn around and bank at Navy. So that really did work for them. So we see it as a critical product for credit unions, and I also think it’s going to become more critical on as you talked about right, as as repayment options change and become more limiting for folks who avail themselves of Grad PLUS loans. Going forward, you have a lot of members that are in financial distress, they’re going to be looking for refinancing solutions. So fintechs, like so far, so far, is a wildly successful company, right? It calls its customers members, right? It’s the type. The name of the company is social finance sounds really familiar. I I always tell people SoFi is a credit union with a modern tech platform, right? And what they’ve been able to accomplish their upsell and cross sell is huge. They’ve grown the deposit base at just an exponential rate. This is everything that our credit unions want to be. And if they don’t step into this void, then every other Fintech is going to do it for them, and they’re going to build loyalty. Because, look, we all know that this is credit unions. Entire reason for being, for being established is, is really based on this, this creed of member, you know, helping your member, well, guess what? If you don’t help your member, someone else is going to and that’s going to generate loyalty, right? Especially for a parent that’s struggling, or graduate that’s struggling, or a student that’s trying to figure it out, having this solution is really going to be critical to maintaining, right, the longevity that relationship.
Sarah Cooke
Absolutely makes perfect sense. And so I mean that actually kind of, you know, it’s like the private student lending sector is going to have a huge opportunity here. At the same time, student loan demand peaked in like 2010 and then, of course, covid happened in that, like, we kept our son home, because why sent him to campus to pay for him to live there and then just take online courses, right? And so he took a little gap. You. But then now we’re calling Gen Z’s the tool belt generation. What is the future for college and student loans?
Vince Passione
Yeah, so look, I don’t think it’s really changed much. I think AI is going to change some things, right? Because for the first time ever, what we’re seeing is that that new graduates, right, are struggling. Their unemployment rate is probably higher than the national average. So that hasn’t happened in a very, very long time. Does it make sense? Right? You’re a new graduate, you’re well educated, right? Entering the workforce, it’s the opportunity for you to turn around and go work at a company, build your skills while they leverage right? All the things that you learned in college, all the new methods, whether you’re a doctor, a lawyer, an engineer, I think what’s happening now, and it’s still early, is what impact will AI have on those new graduates. And I think it’s still very, very early. However, right? If you look at when I talk to members, right? Because we run a Customer Service Center on behalf of our credit unions, with a custodian for those credit union members and parents will call me from time to time and say, Look, I’m trying to figure out what to do here at my child. And the questions are usually around, how are they going to do in school? Are they going to make it through? Right? Because the biggest determining factor in repayment of an education loan is graduation, and that has never changed, right? It makes sense you borrow money. You’re borrowing against a future career. You can’t start that career until you actually get the degree that you’re matriculating against. So if you think about that problem, the question really comes upon the family, right, making the right decision for that particular child, right, that family member? Are they disciplined enough to get through that college curriculum? Or would they be better off going to some type of, you know, training school and learning how to code, or becoming a carpenter, becoming an electrician? There are plenty of trades right today that would gladly pay someone without a college degree, right, who comes out of a trade school who has a specific skill set where they can put them to work right away, and we all saw post pandemic, right, try to get someone at your home as you repair it’s very difficult to do so. Trade schools are absolutely having a resurgence, and they really got a bad knock pre call it 2009 there were just too many issues with people going to school to become pilots and paying $90,000 a year, all of which they financed, and when they graduated, they could not get a job. But that’s changed, right? What we’re seeing is there is a need for pilots. These, these flight training schools are becoming very popular, and many of them are associated directly, right with the airlines. So you’ll see, and we’re starting to see more of that, and there’s a couple of companies now that are actually providing financing platforms directly at trade schools. So those trade schools now look a lot like your private school, your state school, where, when you showed up in the financial aid office, right? And you apply, they helped you figure out full cost of attendance, right? What, what scholarships, what grants you can get, and then they helped you get financing. And there was a platform to do it. Well, there are companies now that building those same platforms to trade schools, and I think you’re going to see a resurgence. And several of our clients today, including Navy right, have picked certain trade schools that they will finance for because their members are showing up with those trade schools, and it makes good sense to provide those loans.
Sarah Cooke
Yeah, no. I mean that. It like you said, Perfect sense. Perfect sense. Now. I know student loans is a big thing right now, but I think Home Improvement loans are also going to be maybe increasing in the future. People are seeing, you know, we have a issue with pricing of homes and the increasing pricing of homes in the United States. Tell us a little bit about what you foresee for Home Improvement then.
Vince Passione
Yeah. So look, Home Improvement is a huge business. And I think you can tell if you look at any of the 5300, ports of credit unions next to mortgages, right? Look at where their growth has been recently. It’s mostly been the HELOCs. And as you point out, what’s driving it? Well, there’s a couple of things driving it. The biggest issue is the cost right of homes, and it’s escalated significantly since covid. And the other is that, you know, like myself, probably yourself, right? I love my mortgage, right? I might not want to stay in this home for different reasons in my case, right? I’m an empty nester. We’re talking about that. And you’d say, well, love to sell this home right, but I had a fantastic mortgage. So the market right is really kind of stuck in this position where new home buyers are struggling finding housing that’s affordable existing home buyers who typically would be retiring at some point. Right? Downside. Saying are probably a little bit reluctant to do so right now, until existing mortgage rates drop a bit. So that’s the first problem. So what do you do when you turn around and you or you’re, you’re, you’re someone who purchased a home not too long ago, got a great mortgage, you probably need a bigger home, but you’re reluctant to do it because you recognize going to cost you more, because the cost to finance that home has gone up. So if you love your mortgage and hate your home, what do you do? The answer is you improve it, and that’s been driving this cycle right of home improvement. We saw it immediately after covid. Was staycations. Everyone was putting in pools. Pool loans just surged, and it was driven by a bunch of new homes that were new home buyers right prior to covid. And then, as a result, all the people who vacated cities, who went and purchased homes in the suburbs, who all decided, well, I’m going to need an office and I’m going to need a pool, because I want to stay home, right? I can’t go anywhere. So we saw a huge research resurgence in in home program loans, specifically in pools, and now it’s all about repair. And look, the average home in the United States is probably well over 40 years old. So housing stock is old. It means that new roofs, new windows, new bathrooms, new kitchens, new HVAC systems constantly need to be installed, and that’s what we’re seeing. And consumers are looking at two options. One is HELOCs, which we know when we’ve seen and you just saw today. Figure went public. First product they originated was he locks. If you look at credit unions, 5300 reports, it’s been the fastest growing product for credit unions. But it’s also unsecured Home Improvement loans. And why would someone take that? Well, because it’s sold to them. Right? The Home Improvement market is starting to look a lot like indirect auto, where whether you’re someone knocks on your door and is selling you new windows you’re looking to repair or replace your roof, the folks that come in, those contractors, they have been trained to self financing the same way the F and I officer in an auto dealership is trained to self financing. And it makes sense, right? The cost of these repairs is expensive, and consumers are looking for a financing option. So if you’re sitting there in someone’s home and you’re the contractor, you can either wait a month to close a HELOC, or you can sell them an unsecured home improvement loan on there’s lots of benefits in doing it, and many of the clients that we work with today are seeing that, seeing that their members choose that. So it’s a really customer great customer acquisition tool, because these loans are actually sold at the point of sale, and getting credit unions to the point of sale has been a challenge, but through our platform now, if you think about embedded finance and how it works, these contractors are walking into the home with credit union financing on their laptops, on their iPads, selling it across the kitchen table, not dissimilar to the way credit unions probably three decades ago right Got into auto lending right through very similar platforms like dealer, track route one and cuddle. So big growth opportunity. It’s good lending, because typically these folks are high income earners. They’re probably well over $100,000 in income. These are dual income households. They are homeowners, and they perform these loans perform not dissimilar to where their HELOCs would perform. So we’ve seen a broad based adoption of it. It’s probably the fastest growing product we have in the credit union space right now, and it’s probably the fastest growing network. It’s grown about 70% originations year over year from last year.
Sarah Cooke
Oh, well. And also, like, I mean, I just moved from a house that was built in 1966 and so we bought a brand new house knowing we didn’t want to make those, you know, continue doing that kind of stuff. But yeah, I don’t have experienced live, have that lived experience of doing all those renos. And so anyway, yeah, I think that, I think you’re dead on the home improvement market is definitely going to be another one that, especially, again, you mentioned to the growth of embedded finance is just tremendous. And hopefully credit unions, even with their some of their Field of Membership restrictions, can take advantage of that as well. So anyway, yeah, I apologize. We’ve run over, but it’s been such great information. I appreciate it. I wanted to ask you for your final thoughts. I always give my guests the final thoughts here. What would you like to close out the interview with the credit union audience today?
Vince Passione
Well, look, I’ll end where we started, right with student lending. I think it’s a strategic opportunity. I think it does drive right long term, multi generational member engagement. I think it is a it’s a profitable product for our credit unions. It’s a way for our clients to get young, and credit unions do need to get young. And also, you know, when we think about. The way we do it today, and we talked about this earlier. You know, we provide our credit unions with options. They can hold 100% of that loan, or they can turn around and participate in any of our network lending programs, so they can originate and then immediately sell up to 90% of it to preserve their capital and mitigate risk that might be that might be associated with the asset itself. So it’s an important time to be talking about this, given the changes with the big, beautiful Bill 2026, is going to be a very confusing time for members. It’s always a struggle, right? I mean, education lending happens within probably less than 90 days. It starts in July, it ends in September, right? And as it was, as families are preparing for their children to go back to school or to attend for the first time in the fall. So we’ve got a window of opportunity to get prepared for it, but it’s coming. It’s not going to change. It’s already happened at this point, and I think it’s a significant opportunity for credit unions to grab hold of for all the right reasons. Absolutely.
Sarah Cooke
Thank you so much. Appreciate your time and your insights to events.
Vince Passione
Thank you, Sarah, It’s great talking to you again. You.