As you enter graduate school, the cost of college could grow beyond what you paid for your undergraduate degree, so it’s crucial to know where to look to finance your education.
For most borrowers, federal student loans offer the best interest rates and terms. But if federal loans fall short of your cost of attendance, private student loans might be the next best option.
If you find yourself in this situation and need to bridge the gap, consider credit union student loans in addition to loans offered by big banks and online lenders. Not only do credit union student loans offer competitive terms, but they also might offer a better overall experience.
The difference between credit unions and banks
For the most part, credit unions and banks offer the same services. But their motives set them apart.
Banks are for-profit businesses. So, for all intents and purposes, their No. 1 goal is to maximize their profits.
On the flip side, credit unions are not-for-profit businesses that return their profits to their members in the form of higher savings yields, lower loan interest rates, and better service.
Credit unions often serve a specific community, either regional or organizational. They can better understand the needs of their members because they’re more deeply rooted in the community. That doesn’t mean they’re always the best option, but they’re worth considering.
Keep in mind, however, that credit unions require you to become a member before you can apply for student loans or other financial products. In some cases, you might not qualify based on a credit union’s eligibility requirements.
Where to find competitive credit union student loans
To help you find the right student loan option for you, we’ll discuss a couple of marketplaces where you can find local credit unions and a couple of national credit unions that offer private student loans directly.
LendKey works with hundreds of banks and credit unions to give you the best student loan and refinancing deals based on your needs and eligibility.
As of July 2018, its lender partners offer student loans with variable and fixed interest rates as low as 4.70% APR and 5.36% APR, respectively. Its refinancing partners offer variable rates starting at 2.49% APR and fixed rates starting at 3.15% APR. All these rates include an interest rate reduction of 0.25% for setting up autopay.
Loan limits and repayment terms can vary by credit union, but here are some other features LendKey’s lender partners offer:
- You can qualify for cosigner release after you’ve met the lender’s payment and credit criteria.
- You’ll experience a fast application and approval process.
- You don’t have to pay application or origination fees.
To get offers for credit union student loans, you apply once with LendKey. Then, you’ll get offers from credit unions and other lenders that are interested.
2. Credit Union Student Choice
Like LendKey, Credit Union Student Choice works with hundreds of credit unions to give you the best offers in your area.
It doesn’t provide specifics on interest rates and other terms, though. Instead, it asks for your zip code or school and points you to one or more credit unions that can help you.
Check Credit Union Student Choice’s list of approved schools to see if you’re eligible.
3. Alliant Credit Union
Based in Chicago, Alliant Credit Union offers student loans for undergraduate and graduate students as well as consolidation loans if you want to refinance after you graduate.
As of July 2018, the credit union offers variable interest rates as low as 4.56% and repayment terms up to 12 years on its undergraduate and graduate student loans.
Here are some other details to know about borrowing from Alliant:
- You can borrow up to $15,000 per year or $60,000 total.
- You can choose to defer your payments until up to six months after you graduate.
- The credit union charges no application or origination fees and doesn’t have a prepayment penalty if you want to pay off your loans early.
The main drawback to Alliant Credit Union student loans is the funding time frame. According to its website, it can take up to two months from the time you apply to get your loan funds. But the credit union clarifies that the process can go faster if you’re applying at the last minute.
Alliant also offers student loan refinancing, which lets you consolidate private or federal student loans. As of July 2018, you could qualify for variable rates as low as 3.50% and fixed rates starting at 4.00%. You can also choose terms of 5, 10, 15, or 20 years.
Here’s some more important information about Alliant’s student loan refinancing program.
- You can refinance up to $100,000 in undergraduate or graduate student loans.
- To qualify, you must have been employed for 6 months or more with your current employer and you or your cosigner must make at least $40,000 per year.
Beyond lending student loans, Alliant is a full service banking institution. Here are a couple of other highlights that could make it worth becoming an Alliant member:
- As of July 2018, the credit union offers 1.70% APY on its high-rate savings account. Compare that to the national average of 0.08% APY, according to the Federal Deposit Insurance Corporation (FDIC).
- The Alliant Visa Signature card offers 3% cash back on every purchase you make the first year and then 2.5% cash back after that. As of January 2018, that’s the highest ongoing rewards rate of any credit card we know of.
To get approved for membership, you must meet one of the credit union’s eligibility requirements, which include:
- Living or working in a qualifying Chicagoland community
- Working for a qualifying employer
- Being a member of a participating organization
- Being immediately related to a current member
- Donating to become a member of Foster Care to Success
Note that there’s no need to prove your donation to Foster Care to Success. It does that on the back end for you.
4. Navy Federal Credit Union
If you’re a military service member, a veteran, a Department of Defense employee, or a family member of a current member or someone who’s eligible, Navy Federal Credit Union student loans might be a good option for you.
Like Alliant, Navy Federal offers both private student loans and consolidation loans. The credit union offers variable and fixed interest rates on its private student loans that start at 4.96% APR and 6.49% APR, respectively.
Here are some other highlights:
- You can borrow up to your school’s certified cost of attendance.
- Repayment terms go up to 15 years, including a grace period of up five years while you’re in school and a 10-year repayment period.
- If you have a cosigner, you can submit a cosigner release request after 24 consecutive, on-time payments.
- You’ll pay no application or origination fees or prepayment penalties.
- You can qualify for a 0.25% interest rate reduction if you set up autopay.
Navy Federal doesn’t have any other financial products that stand out compared to the competition. But the credit union does offer some special discounts and deals to its members, including:
- Up to 20% off Hertz rental cars
- A special discount on GEICO auto insurance
- Up to $5,050 cash back when you buy or sell your home with RealtyPlus
- Extra loan interest rate discounts if you’re an active-duty or retired military member
Navy Federal has some strict eligibility requirements, so you might not qualify. But if you do, the discounts that come with membership and the credit union’s dedication to the military community might make it worth it.
Should you opt for credit union student loans?
There’s no one right answer to this question. The biggest consideration with credit unions is determining whether you qualify for membership. If you do, you’ll need to compare the credit union’s interest rates, fees, and other features to those of other top private student loan companies.
As you do your due diligence, you’ll have a better chance of picking the lender that offers you the best combination of features for your needs.
Rebecca Safier contributed to this article.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.23% – 13.23%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 10.11%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|