We present a measurement of the cross section of the process $e^+e^-\to\pi^+pi^-\psi(2S)$ from threshold up to 8 GeV center-of-mass energy using events containing initial-state radiation, produced at the PEP-II $e^+e^-$ storage rings. The study is based on 298 fb$^{-1}$ of data recorded with the BaBar detector. A structure is observed in the cross-section not far above threshold, near 4.32 GeV. We also investigate the compatibility of this structure with the Y(4260) previously reported by this experiment.