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 deals based on your needs and eligibility.
As of January 2018, its lender partners offer loans with variable and fixed interest rates as low as 4.19% APR and 5.36% APR, respectively. Those 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.
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.
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 January 2018, the credit union offers variable interest rates as low as 3.96% APR and repayment terms up to 12 years.
Here are some other details to know:
- 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.
Here are a couple of other highlights that could make it worth becoming an Alliant member:
- As of February 2018, the credit union offers 1.45% APY on its high-rate savings account. Compare that to the national average of 0.07% 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.
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 4.09% APR and 5.58% 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.
Need a student loan?Here are our top student loan lenders of 2018!
1 = Citizens Disclaimer.
2 = CollegeAve Autopay Disclaimer: All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
* 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.
3 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
|4.12% – 11.85%*3||Undergraduate and Graduate||Visit SallieMae|
|3.69% – 12.07%2||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|4.07% – 12.19%1||Undergraduate, Graduate, and Parents||Visit Citizens|
|3.83% – 12.11%||Undergraduate and Graduate||Visit Ascent|
|4.63% – 9.71%||Undergraduate and Graduate||Visit LendKey|
|3.62% – 9.79%||Undergraduate, Graduate, and Parents||Visit CommonBond|