As a Premier Partner of NACUSO, Evergreen Financial Technology Group (EFTG) invests in mission-critical software businesses that operate independently but share a common belief that credit unions are vital to the fabric of our society. Our portfolio companies combine innovation with purpose, helping credit unions modernize operations, strengthen member relationships, and grow sustainably.
Lodestar, an EFTG company, exemplifies that mission. For over 17 years, Lodestar has empowered financial institutions to turn data into actionable insight.
Download Lodestar’s free 2026 Data Strategy Guide to learn how to:
Identify and close data gaps across your organization
Build a roadmap for accessible, reliable reporting
Empower teams with dashboards that drive decisions
Strengthen member relationships through analytics that matter
Whether you’re just beginning your data journey or refining your strategy, this guide helps you take the next step toward data independence.
EFTG acquires and supports software businesses serving credit unions and community banks. By providing a long-term, mission-aligned home for these companies, EFTG helps preserve the culture, customers, and innovation that drive community financial institutions forward.
For years, Vehicle Service Contracts (VSCs) have been a reliable product for protecting members—and a profitable one for the providers behind them. But there’s a problem: in most cases, the credit union doesn’t see the profit. Traditional VSC programs funnel underwriting gains and claims control to third parties, leaving credit unions with only a modest markup and little transparency into how member claims are handled.
At Credit Unions First, we saw that imbalance and asked a simple question: Why should others profit from a product your members buy and your reputation supports?
That lack of control and transparency is precisely what Credit Unions First set out to change.
A Smarter Model: The Credit Union–Owned Vehicle Service Contract
We developed the Credit Union–Owned Vehicle Service Contract (CU-Owned VSC) program to give credit unions the same advantages that auto dealerships have long leveraged —ownership, control, and profit retention.
With a CU-Owned VSC, credit unions gain the ability to:
Control premium funds and claims decisions
Retain 100% of underwriting profit
Reinvest those earnings into member value and institutional strength
Our model’s superior coverages are built with members in mind – fewer exclusions, faster claims turnaround, and transparent processes that strengthen trust rather than erode it.
Results That Speak for Themselves Credit unions implementing this model typically see:
Increase non-interest income by 10% or more
Faster, fairer claim resolutions for members
Stronger member relationships as loan officers can confidently offer coverage that truly protects
Reduced charge-offs due to denied or delayed claims
Greater institutional profitability that funds dividends, community programs, and long-term stability
Side-by-side comparisons show it clearly: Traditional VSCs deliver profit to the provider. Our CU-Owned VSC returns it to the credit union and its members.
On the left, this is a traditional VSC program. The right shows the Credit Unions First model.
Both show a cost to the member of $1700 ($1,100 premium to pay claims + $400 CU markup + $200 Admin Fee) * this is an example as premium, markup and admin fee are all variable
These charts highlight the opportunity for underwriting profit for the credit union.
TRADITIONAL CHART
OUR CHART
Returning Value Where It Belongs
This concept isn’t new, it’s proven. Auto dealers have built entire revenue strategies around owning their VSC programs. If dealerships can do it to increase profit and customer retention, why shouldn’t credit unions, whose very mission is to return value to members, do the same?
With Credit Unions First, credit unions finally can.
Dan Daggett has been a Change Agent for his entire 30-year Credit Union career. Having been a Credit Union CEO, CUSO CEO and owner of Daggett Enterprises USA he knows the issues Credit Union and CUSO’s face daily, and he has the knowledge to help address those issues. One of Dan’s strongest qualities is his ability to listen and ask questions to determine a path to find solutions to his client’s needs. At Credit Union’s First Dan will not stop creating Disruptive products and programs that give control back to the Credit Unions he and the CU 1st Team serve.
Against a backdrop of decreasing interest rates, emerging competitors, and federal reforms that upend old certainties, the stakes for credit unions heading into their 2026 planning sessions are as high as they have been in years. These pressures have revealed both vulnerabilities and strengths within the movement, rewarding those ready to test new models and rethink what it means to deliver real value for their members.
Loan Participations: Unlocking Scale and Flexibility
Loan participations have emerged as a frontline growth engine at a time when traditional lending faces mounting challenges. Credit unions using participation strategies are forging alliances, reaching new borrower demographics, and better managing their balance sheets to mitigate risk while expanding capacity.
Recent data underscores the urgency.
Credit union loan growth slowed to just 2.8% in 2024, well below the historical 7% average, due to high interest rates and liquidity constraints. However, institutions actively engaged in loan participations are weathering these headwinds more effectively.
The participation model tackles two main challenges. First, it helps credit unions manage liquidity issues, which have been especially tough in recent years. Credit unions now hold 14.2% of the consumer loan market, down from a record 15.0%. Second, participations let institutions share risk at a time when it costs $442 to gain each new member, and nearly one in four new members leave within the first year.2
As regulations shift and economic uncertainty persists, sharing exposure through multi-institutional loan pools enables credit unions to meet borrower needs without taking excessive individual or concentration risk. This collaborative approach is proving essential for institutions seeking to maintain ample lending capacity while staying competitive in volatile market conditions.
Education Lending: Meeting Demand Where Federal Programs Fall Short
Education lending is undergoing seismic shifts at the Federal level, creating significant opportunities for forward-thinking credit unions. Federal cuts in the “Big, Beautiful Bill” to student loan programs beginning in 2026 will push families into uncharted territory.
The numbers tell a compelling story.
Private student loan originations surged 70% between 2010 and 2018, while new federal loans fell 25% during the same period, outpacing mortgages, credit cards, and auto loans. This trend is set to accelerate even more as federal aid retracts even further in covering rising education costs, particularly for graduate and professional programs (the most attractive borrower profiles within education lending).3
Current market conditions reveal both opportunity and urgency. Credit union members hold approximately $430 billion in outstanding student loan debt from other lenders, representing 26% of the national total. Yet credit unions hold less than 1% of student loans in their portfolios, suggesting massive untapped potential.
Credit unions stepping into this market are targeting a smart demographic: borrowers pursuing professional and graduate degrees who typically have strong credit profiles, reliable co-signers, and solid future earning potential. With flexible federal repayment programs disappearing, credit unions can offer cost-effective alternatives like fixed-rate plans, and deferment programs tailored for people launching their careers.
The most successful institutions in this space aren’t just offering loans, they’re building comprehensive education lending ecosystems. Some credit unions are rolling out scholarships, financial education resources, and strategic partnerships with universities, transforming themselves from transactional lenders into trusted financial partners. For credit unions looking to enter quickly without building infrastructure from scratch, partnering with established fintech platforms can provide immediate access to competitive products and streamlined origination processes. This approach builds member loyalty at pivotal life moments when families are making critical financial decisions that can last decades.
And the competitive urgency is real because other lenders are actively recruiting your members right now.
Why direct them to competitors for education financing when you could deepen those relationships instead? With millions of students enrolled in higher education programs and costs continuing to climb, credit unions that move decisively on education lending will capture significant market share as federal options shrink. The window of opportunity is wide open, but it won’t stay that way indefinitely.
This is a defining time.
As credit unions look ahead to 2026, they are preparing for more than just another fiscal year. Growth will depend on adaptability, collaboration, and innovation with a clear purpose. Loan participations, education lending, and digital transformation focused on members are not just new opportunities, they show how powerful and flexible the cooperative model can be when used well.
Data shows the gap is growing between credit unions that simply react and those that take the lead. Planning now will shape that outcome.
The real challenge is to make planning sessions into action plans that build momentum. With rates changing quickly, competition increasing, and members wanting more personal financial advice, the strongest credit unions will use partnerships, data, and technology to make a bigger difference. This is more than a chance to protect stability; it is an opportunity to show new leadership in the credit union movement.
The coming year will reward those who act quickly, take bold steps, and keep their strategies focused on the mission that makes the cooperative system unique
To learn more or connect with LendKey Technologies, Inc, visit their website.
About the Author:
Devin Hughes SVP Lender Partnerships LendKey
A ten+ year veteran of LendKey, Devin leads direction and growth for ALIRO, the company’s innovative loan trading network that seamlessly enables financial institutions and Fintechs to buy, sell and broker loans. Devin is dedicated to creating sustainable and scalable networked lending programs across all asset classes by leveraging best in class technology and winning partnerships between hundreds of financial institutions and marketplace lenders. Devin also leads LendKey’s lender partnerships team, where he helps clients to execute profitable digital lending and capital distribution strategies. A seasoned business development leader, Devin previously drove partnerships and growth for an education technology company and currently acts as advisor to several Fintechs. Devin holds a degree in Finance with a focus in Entrepreneurship from the Foster School of Business at the University of Washington.
