Navy Federal Student Loan Review: Funding, Refinancing for Military Families

 August 26, 2021
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Pros of Navy Federal Credit Union student loans: Cons of Navy Federal Credit Union student loans:
● Competitive APRs and no origination fees
● Benefits for parent borrowers
● Solid cosigner release programs
● Lacking prequalification process to check rates without dinging credit
● More repayment flexibility found at competing lenders
● Undeveloped forbearance program

Navy Federal Credit Union (NFCU) has been serving the military community since 1933. It has about 10 million members who can qualify for loan discounts, 100% mortgage financing, military retirement plans and more.

The NFCU also offers student loan and student loan refinancing programs. However, Navy Federal Credit Union has strict membership requirements. Even if its rates and terms are the most favorable in your case, it doesn’t matter if you can’t qualify for them.

To be eligible, you must be a U.S. citizen or permanent resident that is a current or former military member, or member of their family or household. Department of Defense civilian workers are also eligible.

Navy Federal student loan refinancing review Navy Federal student loans review
The basics
What to like
What to keep in mind
What to keep in mind
The basics
What to like
What to keep in mind
What to keep in mind
Frequently asked questions about Navy Federal

Navy Federal Credit Union student loan refinance review

The Navy Federal Credit Union student loan refinance program offers much-needed debt relief for its members. In fact, NFCU claimed on its website that customers who refinanced at least $25,000 worth of education debt in 2020 were slated to save an average of $8,087 on their repayment.

Navy Federal student loan refinancing is a good fit for members of the military community who have a strong credit history (or a cosigner with one). The lender is particularly friendly to parent borrowers and cosigners — the cosigner release program isn’t bested by a single competing lender.

What to like: What to keep in mind:
Benefits for parents borrowers
Competitive PRs and no hidden fees
Fair credit requirements
Speedy route to cosigner release
Career development resources
No prequalification process to check rates
Forbearance program lacks transparency

Navy Federal student loan refinance review: The basics

While some military credit unions allow you to become a member by joining a third-party organization or making a donation, the only way to join NFCU is if you or a family member is affiliated with the military or the Department of Defense.

If you fall into that category, you could refinance student or parent loans borrowed from the federal government or a private lender. You could even consolidate student loan debt accumulated by multiple children.

Here are other perks of the Navy Federal refinance program:

  • Opt for a variable or fixed interest rate
  • Refinance up to $125,000 in undergraduate student debt, $175,000 in graduate debt
  • Score a discounted rate if you enroll in automatic payments
  • Option to add a cosigner to your application
  • Cosigner release available after 12 on-time, monthly payments
  • No application or origination fee
  • Choose a repayment term of 5, 10 or 15 years

What to like about Navy Federal refinance for student loans

Navy Federal refinancing stands out from industry competitors in a few respects, including the following.

Benefits for parents borrowers

Though Navy Federal refinancing could be a good option for ex-students who borrowed for higher education, it might be an even better choice for parents who took out loans on behalf of their kids. For instance, if you borrowed parent loans for multiple children, you could consolidate the debt into one new loan.

Perhaps more notably, NFCU allows you to refinance before your child has even graduated from college. That could be welcomed for families that only just recently borrowed federal Parent PLUS Loans or private loans at high APRs but can score a lower rate with this credit union.

Competitively low APRs and no unnecessary fees

NFCU has historically allowed borrowers to consolidate both federal and private student loans. The credit union offers both variable and fixed rates. Fixed rates stay the same over the length of the loan, while variable rates may fluctuate depending on changes to the loan index used by NFCU.

  • Variable APR: As low as 1.61%
  • Fixed APR: As low as 2.99%

Other features that can also help you save money include the lack of fees you’ll pay. As in, there are no application or origination fees.

Navy Federal reviews its refinancing options during the COVID-19 pandemic
With an federal student loan interest freeze offering borrowers a penalty-free reprieve through Oct. 1, 2021, Navy Federal paused the ability for its customers to refinance federal loans. The credit union was still refinancing private loans during the federal loan repayment suspension, however.

Fair credit requirements, with or without a cosigner

The biggest benefit to NFCU’s student loan refinancing program is that cosigners aren’t stuck with the loan until it’s paid off. Cosigning a loan comes with risks for both the cosigner and primary borrower. NFCU’s policies help curb those risks, as you can be released if the primary borrower can prove they are creditworthy and make on-time payments.

To apply for a Navy Federal refinance loan, you must meet the following requirements:

  • You must have a monthly gross income of at least $2,000 and an established credit history (typically at least 21 months).
  • You must be of legal adult age in your state of residence (typically at least 18 years old).
  • You must be a U.S. citizen or permanent resident.

If you’re unemployed or don’t make enough to qualify by yourself, you can apply with a cosigner who must meet the same income and legal requirements — in this case, you’ll also need to make at least $100 a month to qualify.

Release your cosigner one year into repayment

After 12 months of consecutive on-time payments on a Navy Federal refinanced loan, you may request to have your cosigner taken off the loan. To do so, you may need to fulfill other requirements, such as providing proof of income and passing a credit review.

Career assistance dashboard for borrowers

If you opt for Navy Federal refinance and aren’t set in your career, you could benefit from the credit union’s online career assistance tools. NFCU promises free resources to help find and interview for jobs, track your progress and improve your resume.

What to keep in mind about Navy Federal refinance for student loans

Aside from the strict eligibility requirements noted above, Navy Federal refinancing includes a few potential drawbacks.

Navy Federal-LendKey: No prequalification process to check rates

You can apply for the Navy Federal student refinance loan either online or by calling LendKey at 1-877-304-9302.

Unfortunately, however, Navy Federal-LendKey will run a credit check, which will trigger a hard inquiry on your credit report. The same will happen to a cosigner’s credit report if you’re using one.

Other student loan refinancing companies do soft credit pulls to quote you rates without affecting your credit score. It might be a good idea to get preapproved for a few offers to see what’s out there before deciding to apply for a Navy Federal student refinance loan.

What you need for a NFCU refinancing application What your cosigner (if applicable) would have to supply
● Navy Federal Access Number
● Social Security number
● Government-issued ID
● Permanent address, phone number and email address
● Basic information about your academic standing
● Details about the existing student loans you wish to consolidate, including the lender and balances
● Name, address, phone number and email address
● Social Security number
● Government-issued photo ID number
● Personal reference
● Employer’s name and contact information
● Two most recent pay stubs
● A W-2 form or tax return

Forbearance program lacks transparency

When you refinance student loans, you might prioritize lenders that offer you the ability to pause or postpone your monthly payments in cases where you experience hardship.

NFCU apparently allows borrowers to apply for forbearance, but there’s limited information about this repayment safeguard available online. The length of time you can qualify for may differ, so contact the credit union to speak to a representative about your specific situation.

How Navy Federal student loan refinance compares with competitors

It’s wise to shop around with at least a few lenders to compare your options before signing on the dotted line with NFCU or another financial institution.

Navy Federal Credit Union College Ave SoFi
Products ● Student loan refinancing
● Parent PLUS Loan refinancing*
● Student loan refinancing
● Parent PLUS Loan refinancing
● Student loan refinancing
● Parent PLUS Loan refinancing
● Medical resident refinancing
Eligibility requirements ● 21 months of credit history
● $2,000 minimum monthly income (or $100, if applying with a cosigner)
● Citizenship or permanent residency
● Member of the military community
● 680 credit score
● $65,000 income
● Citizenship or permanent residency
● College degree
● Good or excellent credit score
● No minimum income
● Nonpermanent residents without eligible visas can apply with a permanent resident cosigner
Interest rates Variable starting at 1.61% and fixed starting at 2.99% Variable starting at 2.94% and fixed starting at 2.99% Variable starting at 2.25% and fixed starting at 2.74%
Minimum loan amount $10,000 $5,000 $5,000
Repayment terms available 5, 10 or 15 years 5 to 20 years (16 different options) 5, 7, 10, 15 and 20 years
Apply with a cosigner Yes Yes Yes
*Federal loans were ineligible for NFCU refinancing during the federal loan repayment suspension that was slated to expire Oct. 1, 2021.

Is refinancing student loans with Navy Federal right for you?

If you qualify for membership and have student loans, NFCU’s student refinance loan program is a solid option. NFCU is also an attractive option for parents and borrowers with cosigners.

Overall, NFCU offers competitive interest rates. If you have solid credit, or a cosigner with good credit, you can qualify for rates that compete with the top student loan refinancing banks. However, because Navy Federal doesn’t offer you the ability to check your potential rates without harming your credit score, you might shop with other lenders first.

Before settling on NFCU, you might also prioritize banks, credit unions or online companies that also offer more expansive deferment and forbearance programs, in case you need a safety net while in repayment.

Navy Federal Credit Union student loans review

Navy Federal student loans are private or alternative loans that should only be considered after you’ve exhausted your search for gift aid like scholarships and federal loans that include useful repayment protections. With that said, Navy Federal loans offer competitive rates and terms to industry leaders.

Navy Federal student loans are a good fit for military families whose finances are on firm ground. The lender would seemingly allow you to keep your finances under one roof, but keep in mind that it subcontracts its loan servicing operation and doesn’t provide much clarity on repayment support.

What to like: What to keep in mind:
Competitive APRs and no hidden fees
Borrow one semester or year at a time
Relative fast route to cosigner release
No option to check rates without applying
Application requirements exclude nontraditional students
A single 10-year repayment option
Lack of repayment safeguards

Whether you’re a student (or parent) pursuing an associate’s, bachelor’s or graduate degree, you could find a good student loan option at Navy Federal.

If you can meet those same strict eligibility requirements (mainly, be a member of the military community), you could benefit from NFCU student loans.

Basics ● Borrow as little as $2,000 and as much as your cost of attendance (with aggregate maximums of $120,000 for undergraduates, $160,000 for graduate students)
● Fixed and variable interest rates available
Applying ● Option to apply with a cosigner
● No application, origination or other fees
● Full application takes less than 15 minutes (but prequalification isn’t possible)
Repayment ● Standard six-month grace period
● No prepayment penalties
● Score discounted rates if you enroll in autopay
● Three in-school repayment options, including full deferment
● Repayment term option: 10 years
● Release your cosigner after 24 months of prompt payments
Support ● Option to apply to pause your monthly payments with Navy Federal’s loan servicer, LendKey

What to like about Navy Federal student loans

If you’re a member of the military community, and perhaps have a Navy Federal Credit Union account already, you might like the idea of borrowing NFCU student loans. Here are a few more reasons that this financial institution could be a good option for your borrowing needs.

Competitive APRs and no hidden fees

Navy Federal student loan interest rates are not exactly bargain basement. Many competing private loan lenders advertise lower fixed and variable interest rates. With that said, Navy Federal APRs are in the same ballpark, so it’s conceivable that your best overall loan option could be with them.

NFCU student loans also have few fees, promising to not charge you for applying for a loan, receiving your loan or paying it off early.

Borrow one semester or year at a time

One small but substantial difference about borrowing student loans from Navy Federal is that you can borrow for a specific academic term, not necessarily your entire school year. This added flexibility could be useful if you’re not sure how much funding you might receive from other sources in the near future.

Cosigner release possible after two years of payments

Across the private student loan industry, about 9 in 10 undergraduate borrowers use a cosigner when taking out education debt. After all, teens and 20-somethings have thin credit histories.

At Navy Federal, if you don’t have $15,000 in annual income and three years of credit history, you will be required to find a cosigner for your loan application. This person, which could be a parent or other creditworthy adult, agrees to be held legally responsible for any debt you fail to repay.

On the plus side, Navy Federal’s student loan cosigner release program stipulates that you can release your cosigner from the loan agreement once you’ve made 24 straight, timely monthly payments. Competing lender Sallie Mae offers a 12-month pathway toward cosigner release, but many other financial institutions force borrowers to wait significantly longer, or don’t offer cosigner release at all.

What to keep in mind about Navy Federal student loans

If you borrow student loans from Navy Federal Credit Union, you might think you’re keeping your finances under one roof. Keep in mind, though, that NFCU student loans are serviced by LendKey.

Here are a few other quirks of Navy Federal student loans that you might not know.

No option to check rates without formally applying

The very best private student loan companies allow you to confirm your eligibility and receive a rate quote without submitting to a hard check on your credit report. Navy Federal is among lenders that don’t offer this feature.

Given that you’d have to complete NFCU’s full, 15-minute application and be vulnerable to a potential dip in credit score, it might be smart to shop around with other lenders first. Check eligibility and APRs with competing lenders and then, if you like Navy Federal as a potential lender, complete its application so that you can make an apples-to-apples comparison on rates and terms.

Application requirements exclude nontraditional students

Not all student loan companies cater to all types of borrowers. Besides the fact that Navy Federal loans are limited to members of the military community, you must also be a U.S. citizen or permanent resident who is attending an eligible degree-granting program at least half-time.

Not a citizen or permanent resident? Prodigy Finance is among lenders assisting international student borrowers
Not attending an eligible degree-granting school? Check out options for non-degree-seeking student loans
Not attending classes at least-half time? There are lenders with part-time student loan options

A single 10-year repayment option

Like when borrowing a federal student loan and being assigned the 10-year standard repayment plan, Navy Federal loans are defaulted to the 10-year track. That means you’ll be assigned equal monthly payments spread over a decade, without having the option to choose a five- or 15-year repayment term.
Some competing lenders, such as Earnest, offer their customers a wide array of repayment term options. So, if you prefer a specific term length, you might look beyond NFCU student loans.

Lack of repayment safeguards

Navy Federal student loan forbearance is apparently available if you run into hardship during your loan repayment and need to take a temporary break from your monthly payments. But the details of the LendKey-administered forbearance aren’t publicly available, and there’s no guarantee that your application for it would be granted.

Given that many student loan borrowers experience hiccups in the course of repaying their debt, Student Loan Hero recommends prioritizing lenders that are up front and clear about how they would support you, if necessary, during your repayment. CommonBond is one top-rated online lender that is known to offer up to 12 months of forbearance over the life of your loan.

How NFCU student loans compare with competitors

Seeing how Navy Federal student loans stack up against other banks, credit unions and online companies will help you determine whether it’s a good fit for you.

Navy Federal Credit Union College Ave SoFi
Loans for… ● Undergraduate and graduate students
● Parents
● Undergraduates and graduate students
● Career school students
● Business, law, medical and dental school
● Parents
● Undergraduate and graduate students
● Business and law school
● Parents
Interest rates Variable starting at 4.62% and fixed starting at 5.75% Variable starting at 0.99% and fixed starting at 2.99% Variable starting at 1.12% and fixed starting at 4.13%
Ability to prequalify without affecting credit No Yes Yes
In-school repayment options 3 (deferment, interest-only payments, and fixed $25 payments) 4 4
Repayment terms 10 years 5, 8, 10 or 15 years (and 5 to 15 years for parents) 5, 10 or 15 years
Cosigner release available Yes — after 24 months of payments Yes — after half the repayment term has elapsed Yes — after 24 months of timely payments

You’ll very likely be better off if you shop around beyond a few lenders. Make sure you learn all about the best options for your specific needs.

Borrower Programs Personal situation Lender feature
Adults returning to school Community college Applying without a cosigner Credit unions
Graduate students Trade school Bad or no credit Cosigner release
Parents Nursing school Economic hardship forbearance
Medical school
Law school
Dental school
Business school

Are Navy Federal student loans right for you?

Like other lenders and products, Navy Federal Credit Union student loans have pros and cons.

You could be attracted by NFCU’s specialty in serving members of the military community. You might also appreciate that you can borrow in small amounts (as little as $2,000) and in small time frames (a semester as opposed to a year).

Less attractive traits of Navy Federal student loans do exist, however. Even though it offers three in-school repayment options and the standard six-month grace period, you might be wary of its lack of repayment safeguards, particularly because other lenders are much better about spelling out a safety net for distressed customers.

Whether you’re interested in or skeptical of Navy Federal student loans, shop around to ensure you’re getting the best loan for your situation. Our private student loan marketplace is a good place to start.

Frequently asked questions about Navy Federal Credit Union student loans

If you didn’t find your question answered in our Navy Federal reviews, see the following FAQs:

Are Navy Federal student loans federal or private loans?

Despite its name, Navy Federal Credit Union student loans are private loans, not federal loans. It’s generally recommended to borrow federal student loans before resorting to private or alternative loans because they feature the most repayment protections, including a variety of repayment plans and postponements.

How long does it take to get a Navy Federal student loan?

If you’re considering applying for Navy Federal student loans, applying sooner rather than later is a good idea. The lender estimates a two- to six-week time frame from application to funding, which depends on how fast your school certifies your loan amount.

As for Navy Federal student loan refinancing, the credit union doesn’t provide a specific timeline. NFCU says you can complete your application in 15 minutes or less, though you will need to then supply additional documents. If your application is approved, be sure to keep making your monthly payments on your existing loans, as becoming delinquent could delay or cancel your refinancing application.

Does Navy Federal defer student loan repayment?

Navy Federal loan servicer LendKey reviews requests to postpone payments on a case-by-case basis. Unlike with federal loans and some private lenders, NFCU student loans doesn’t set clear guidelines for when its borrowers can receive a stamp of approval on their deferment or forbearance application.

Ben Luthi and Sarah Li Cain contributed to this report.

Student Loan Hero has independently collected the above information related to Navy Federal student loans, which is current as of July 30, 2021, unless otherwise noted. None of the financial institutions named has either provided or reviewed the information shared in this article.