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When borrowing for school, you should do your best to exhaust your options for federal student loans and other financial aid first. Once you’ve maxed out your federal loans, however, you may still need more money to pay for school.
If you’re in this situation, you’ll probably need to look into private student loans. Private student loans can come from many different sources, including credit unions.
Credit unions are member-owned nonprofits, unlike for-profit banks. They provide many of the same services as banks, but because they’re nonprofits, rates and terms may be more favorable.
If you’re considering taking out private loans to fund your education, this guide to the pros and cons of credit union student loans will help you decide if borrowing from a credit union may be your best choice.
Jump to a section:
- Credit Union Student Loan Reviews
- Full List of Credit Union Student Loans
- How is a Credit Union Different From a Bank
- Advantages of Credit Union Student Loans
- Disadvantages of Credit Union Student Loans
Compare Credit Union Student Loans
Borrowers looking for credit union student loans have a number of options. Here are a few places you can get credit union student loans from.
LendKey matches borrowers like you with credit unions offering student loans across the nation.
By working with LendKey, you can see which credit unions you are eligible for. This allows you to compare several options in one place. Here are some key things to know about LendKey:
- Variable rates: Start at 2.99% APR (annual percentage rate)
- Fixed rates: Start at 5.35% APR
- Loan amounts: $5,000 – $300,000
- Cosigner release: Available after 12 on-time payments
- Grace period: Up to 6 months
- Fees: There are no application or origination fees
- Discounts: Borrowers who sign up for automated payments are eligible for a rate reduction of 0.25%
Navy Federal Credit Union Student Loans
Navy Federal Credit Union offers private education loans for students still in school, as well as refinance loans for borrowers who want to pay off existing loans.
Some of the key things to know about Navy Federal private student loan offerings include the following:
- Variable rates: Start at 4.97% APR
- Fixed rates: Start at 6.49% APR
- Loan amounts: Up to the school-certified cost of attendance
- Cosigner release: Available after 24 on-time payments
- Grace period: Up to 6 months for loan payments after graduation
- Fees: There are no application or origination fees
- Discounts: Borrowers who sign up for automated payments are eligible for a 0.25% interest rate reduction
Great Lakes Credit Union Student Loans
Great Lakes Credit Union Student Loans are also available to students who want to further their education but need help covering costs.
Key features of Great Lakes Credit Union Student Loans include:
- Interest rates: Students can become eligible for a lower interest rate based on academic history
- Loan amounts: $2,500 up to $25,000 annually. Undergrads can borrow a maximum of $75,000 total and graduate students can borrow a maximum loan amount of $150,000 total.
UW Credit Union Student Loans
UW Credit Union also provides both private student loan options for in-school students as well as refinance loans for borrowers who want more favorable repayment terms.
Things to know about UW Credit Union Student Loans include:
- Variable rates: Start at 4.67% APR while in school
- Fixed Rates: Start as low as 6.43% APR
- Loan amounts: Up to $15,000 annually and up to $50,000 over their lifetime
- Cosigner release: Available after 36 on-time payments
- Fees: There are no application or origination fees
- Discounts: Borrowers can obtain a 0.25% interest rate reduction for automatic payments
- Funding time: The application process can take four to six weeks
- Grace period: 6 months after graduation before loan repayment starts
Full List of Credit Union Student Loan Reviews
- Thrivent Federal Credit Union Student Loans
- Affinity Plus Federal Credit Union Student Loans
- NASA Federal Credit Union Student Loans
- Navy Federal Credit Union Student Loans
- PenFed Student Loan Refinancing Student Loans
- Saratoga Community Federal Credit Union Student Loans
- Credit Union Student Choice (matches you with credit unions)
- LendKey Student Loans (matches you with credit unions and banks)
How is a Credit Union Different From a Bank?
To understand the advantage of credit union student loans over loans from other lenders, it’s important to know how credit unions work and how they’re different from banks.
Credit Unions Are Not-For-Profits
Credit unions are not-for-profits, which means they don’t have shareholders to answer to. Banks, on the other hand, may be publicly or privately owned. The goal of a bank is to make a profit, whereas the goal of a credit union is to provide service to its members. Banks typically charge higher fees and interest rates to achieve their goal, while credit unions can pass savings onto members.
Members Are Involved in How It is Run
Another big difference is that credit unions are owned by members who vote to elect a board. This means people who do their banking and borrowing with the credit union have a direct say in how it is run. Bank customers, on the other hand, have no say who is on the bank’s board. Instead, the bank’s shareholders appoint board members that make day-to-day and big decisions. Board members owe a duty to act in the shareholders’ best interests, even if doing so comes at the expense of customers doing their banking.
One thing credit unions have in common with banks: being subject to regulations. For banks, the Federal Deposit Insurance Corporation (FDIC) establishes regulations, oversees the banking system, and guarantees deposits in case of a bank failure. For credit unions, the National Credit Union Administration (NCUA) serves a similar purpose, including making sure credit unions are financially sound and providing insurance for deposited funds.
Advantages of Credit Union Student Loans
The member-owned, not-for-profit status of these credit unions – as opposed to for-profit banks – can lead to big advantages for student loan borrowers. Here are some of the best advantages.
Lower Interest Rates
Without the need to pay taxes or make a big profit, credit unions can offer financing at lower or more competitive interest rates.
You may be able to obtain a private student loan from a credit union with a lower interest rate than you could obtain from a local bank, national bank, or online lender. For example, rates on credit union student loans through LendKey are currently as low as 2.99%.
The lower your interest rate, the less the loan will cost you over time.
Of course, it’s always important to comparison shop to make certain a particular loan program is the best deal you can get. You should get quotes from several different credit unions as well as other types of lenders. When you compare loans, pay attention to:
- Interest rate
- Origination fees, if any
- Repayment terms
- Monthly payments
Make sure you compare apples-to-apples when you shop around. Some lenders offer both fixed-rate and variable-rate loans. While the interest on a fixed-rate loan will generally be higher initially, the interest and payments don’t change through the life of the loan. A variable-rate loan means the interest rate can change, so your payments could become more expensive.
Easy Qualifying Process
Credit union members usually share some connection. For example, a credit union may be open only to people who work in a particular field or live in a specific locale.
Because credit unions are built around a cooperative model of members with shared interests, the loan application requirements aren’t always as stringent. It may be easier for you to obtain a loan through a credit union even if your credit history is not perfect, or if you don’t have a high income.
This isn’t to say credit unions don’t have qualifying requirements – they absolutely do. But those requirements may be more relaxed than those of a big bank. Of course, if you aren’t able to meet the requirements any lender has imposed for loan approval, it may be easier to qualify with a cosigner.
Improved Customer Experience
Member-owners of credit unions have control over how these financial institutions are operated since members vote on who is on the board. Credit unions tend to be more customer-focused because the customers decide how the credit union is run.
In many cases, this results in credit union members receiving better customer service when borrowing, compared with individuals who borrow from banks.
This isn’t necessarily true of every credit union, though, so be sure to research independent reviews of any credit union you’re considering. The Consumer Financial Protection Bureau (CFPB) has a database of consumer complaints on different credit unions or other private loan lenders.
Disadvantages of Credit Union Student Loans
While there are plenty of pros associated with credit union student loans, there are also some disadvantages as well. Among them:
You Must Be a Member
To be eligible for a student loan from a credit union, you must be a member of that credit union. Membership may require you to fulfill specific requirements, some of which – like having a certain job – might not be easy to fulfill. And, membership usually costs money no matter which credit union you join.
Each credit union has its own unique requirements to join, so check MyCreditUnion to explore different financial institutions you could qualify for. You may be eligible for affordable membership at one that could provide you with credit union student loans.
It Might Be Harder to Find Credit Union Student Loans
Not all credit unions offer student loans. And, since there are thousands of different credit unions across the U.S., it can be difficult to determine which can offer you the best rates on private student loans.
Compared with credit unions, there are more large national banks and well-known online lenders you’re probably familiar with. Many borrowers simply find it more convenient to get quotes from a few of these large institutions, rather than navigating the process of contacting different credit unions to see if private student loans are available.
If you are set on a credit union student loan, however, you can compare multiple options through LendKey after filling out a single application.
Are Credit Union Student Loans Right for You?
Ultimately, you will need to decide what type of private student loans are best for your situation. It’s important to look at the big picture, including interest rate, ability to qualify for a loan, repayment options, and customer experience to find the right lender.
As you shop around, though, there’s ample reason to consider credit unions as one of your funding sources. By comparing what credit unions and private lenders offer, you can decide if credit union student loans are right for you.
Author: Christy Rakoczy