Private student loans have suffered a black eye in recent years as “bad actors” inundated students with marketing messages for high-dollar, high-interest loans.

“Loans were given freely and if finances dried up, bankruptcy was an easy option,” reports “Demystifying Student Loans”—a white paper from Credit Union Campus Resources and Credit Union Student Choice. “Funds financed more than a few motorcycles and trips to Europe.”

But these excesses have largely been corrected, and student loans offer opportunities for income and provide an affordable way for members to send their children to college.

UW Credit Union in Madison, Wis., for instance, has made 10,438 private student loans and will likely disburse nearly $20 million in 2012.

Credit union staff have made it a priority to develop good working relationships with the financial aid offices on each University of Wisconsin campus, says Sherry Nelson, educational lending product manager.

“During the past couple of years, other loans have been running off [the books] almost faster than we can originate them,” she says. “But student loans are different. Every six months we’re seeing more loans go into repayment as the portfolio becomes more seasoned.”

Yields have averaged 4.32%, Nelson says, with a 0.64% delinquency rate and a 0.18% charge-off rate.

“We manage credit risk on these loans the same as we do all of our loans,” says Mike Long, UW Credit Union’s executive vice president/chief credit officer.

“This is a real opportunity for credit unions to help members meet their financial objectives,” he says.