By AnnaMaria Andriotis 

The nation's largest credit union by assets is venturing into private student loans for the first time. The move comes as competition heats up in a market that many lenders had fled amid a spike in loan losses during the financial crisis.

Navy Federal Credit Union is accepting applications for new private student loans. It also is offering to refinance loans made by other private lenders and the federal government.

Lenders are turning to the private student-loan market in part to find new, young customers to whom they can sell other more-lucrative loans and services. The business became less risky for lenders in recent years as they tightened requirements. Citizens Financial Group Inc. and Social Finance Inc., better known as SoFi, also have recently expanded their presence in this market.

Unlike federal student loans, which are available to all students and have high default rates, losses on private student loans are low and declining. Gross charge-off rates--the percentage of dollars in outstanding loans that lenders have written off as a loss because they don't expect repayment--fell to 2.42% in the third quarter of 2014 from 3.11% a year earlier, according to the latest data from MeasureOne, a San Francisco-based firm that tracks student loans, based on data from major lenders. That was the lowest level since at least the third quarter of 2008, the furthest back the firm tracks the data.

The entrance of Vienna, Va.-based Navy Federal, with nearly $67 billion in assets, adds a significant new player to the market.

Almost one million of its more than 5.5 million members have federal or private student loans from other sources, based on information in their credit reports, said Aaron Aggerwal, assistant vice president of education lending.

Navy Federal also expects many of its existing members will need new student loans for themselves or their children in the future.

Wells Fargo & Co., the second-largest private student lender by origination volume behind SLM Corp., has also been moving to increase originations. The lender rolled out loan modifications last year to offer repayment options to some borrowers who were having a hard time keeping up with payments, a rarity in the private-student-loan industry and a move Wells said it hoped would foster customer loyalty.

New private student loans for undergraduates and graduates attending college totaled just over $7 billion for the 2013-14 academic year, the third consecutive increase since the market bottomed out in 2010-11, according to MeasureOne.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

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