Should You Refinance Your Student Loans With a Credit Union?

 April 30, 2021
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If you’re looking for a low rate on your student loans, it could be worth exploring credit union student loan refinance offers. Unlike banks and other lenders, credit unions are not-for-profit financial institutions. They invest profits back into their services and membership and are also known for their customer service.

To decide if a credit union is right for you, as well as how to find the best credit unions for refinancing your student loans, let’s look at the following:

How to find a credit union to refinance student loans

Credit unions can be a smart option to refinance or consolidate student loans. They often offer competitive interest rates with a member-oriented model of service. Because they’re not-for-profit, credit unions can also be more flexible in their underwriting standards — so you might find it easier to qualify for student loan refinancing with a credit union.

However, credit unions have specific membership requirements, so you can’t join just any credit union. Plus, not every credit union offers student loan refinancing. Here are some places to consider when you’re looking for refinancing:

Getting credit union student loan refinance offers with LendKey

One of the quickest and easiest ways to find a credit union to refinance your student loans is through LendKey. This digital network connects borrowers with hundreds of credit unions and banks that offer student loan refinancing.

With LendKey’s rate check tool, you provide a few pieces of information about yourself and your student loans. LendKey will perform a soft credit check — it won’t affect your credit. Repayment options range from Up to 20 years , depending on the type of student loan refinanced, and there are no origination fees.

Based on the information you provide, LendKey returns a list of personalized student loan refinancing offers from credit unions and other lenders. Having one place to check multiple student loan refinancing offers at once means you can easily compare rates and choose the terms that best fit your needs.

Read our full LendKey review for a rundown on how to use this network to find a deal on loan refinancing.

Exploring national credit unions

Besides turning to LendKey to find a credit union that might work for you, consider checking out these larger credit unions that almost anyone can join and also offer student loan refinancing.

Navy Federal Credit Union

Navy Federal Credit Union offers an online site for comparing and applying for student loan refinancing. Rates start at 1.61% APR for variable-rate loans, and 2.99% APR for fixed-rate loans as of April 26, 2021 (after a 0.25% discount for automatic payments). Navy Federal offers terms of 15 years.

You can join the Navy Federal Credit Union if you or your family or household members are currently serving — or have served — in the U.S. Armed Forces or National Guard, or if you work for the Department of Defense. Visit Navy Federal Credit Union to learn more about joining this credit union.

PenFed Credit Union

Pentagon Federal Credit Union, or PenFed, offers student loan refinancing, as well as an online tool that lets borrowers consolidate loans and compare interest rates and lifetime interest payments. You can apply online without submitting to a detailed profile or credit check.

As of April 26, 2021, this credit union’s student loan refinance rates start at 0.00% APR with a variable rate and 3.29% APR with a fixed rate. You can choose repayment terms 20 years.

PenFed has broad membership eligibility guidelines, and there is no requirement for military service. For example, you can join through an employer like the American Red Cross or U.S. Department of Energy.

Finding a credit union on your own

You may already be eligible to join a credit union that offers a great deal on student loan refinancing. For instance, many college students and alumni may be able to join a college credit union associated with their alma maters. You could also qualify to join a local credit union based on where you live, work or worship.

Check around your community to see if anyone you know has a credit union they love, or you can use this credit union locator from the National Credit Union Administration to find credit unions in your community.

Weighing credit union student loan refinancing

If you choose to refinance with credit union student loans, you’ll have the usual considerations of refinancing. Make sure you’re asking yourself the right questions about refinancing student loans and weighing any benefits against potential downsides.

Sure, you can get a lower interest rate by refinancing, but you’ll also lose out on federal student loan protections. These could include deferment, access to affordable repayment plans and participation in Public Service Loan Forgiveness and similar forgiveness programs. You may not want to refinance at all if you have a federally subsidized student loan with an already low interest rate.

Before refinancing with a credit union, keep in mind the following as you compare credit unions with other lenders.

Am I eligible for membership with this credit union?

As mentioned above, you most likely won’t be able to join just any credit union. Many have specific membership criteria, so make sure you can actually join the credit union before you request a rate estimate.

Can this credit union meet my student loan refinancing needs?

Credit unions are typically smaller lenders, and student loan refinancing is just one of many products they usually offer. Because of this, many credit unions offer student loan refinancing terms that are a little more limited than what big or national lenders provide.

For instance, some credit unions set a limit on how high of a student loan balance they will refinance. Credit unions also might have more limited repayment terms. You’ll also want to check with the credit union if you have specific needs, like the need to refinance with a cosigner.

Is it better to refinance with a credit union?

Lastly, don’t assume that any offer from a credit union is your best deal. Credit unions do offer competitive student loan refinancing rates, but you should shop around and compare offers from other lenders, too.

Most credit unions and lenders can collect preliminary information and run a soft credit check to give you a personalized refinancing offer. This will include the rate you’re likely to be offered, as well as your options for the length of a new loan and other terms.

Complete this process with a few lenders, including LendKey or your credit union of choice. Then, look at each offer and decide which is the best fit for your needs.

Refinancing with credit union student loans: final thoughts

Once you’ve compared your rate offers and chosen your best one, what are your next steps? If you’ve chosen a credit union, the next step is to officially apply to refinance your student loans.

The process of refinancing student loans with a credit union is very similar to what you’d encounter with other lenders. Credit unions will want to perform a full credit check and get proof of income as part of their underwriting process.

There might be one additional step before applying for credit union student loan consolidation: becoming a member. In addition to applying to refinance a student loan, you’ll likely also need to apply for membership. Check with the credit union to find out if you can apply for both at the same time, or if you’ll need to become a member before applying to refinance your student loans.

Still, regardless of whether you choose a bank or credit union to refinance your student loan, it’s always best to comparison shop to make sure you are getting your best deal possible.

Rebecca Safier and Steve Santiago contributed to this report.