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Private Student Loans from Credit Unions

A great option to meet your college financing needs.

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The cost of college continues to rise and financial aid often doesn’t cover the entire cost of attending school. After exhausting all your options for grants, scholarships, and federal loans, then private student loans can be the lifeline you need.

Fortunately, you have financing options available such as credit unions that offer private student loans. In fact, credit unions are a great alternative because of their not-for-profit status and financial cooperative mission.

In this article, we’re going to focus on credit union student loans.

Private student loans offered by credit unions are often overlooked. But they can be as competitive or an even better option compared with financing companies like SoFi.

Let’s answer two common questions first: what’s a private loan? what’s a credit union?

What is a private student loan?

Private student loans are nonfederal loans made by a private lender such as a bank, credit union, financing company, a state agency, or a school. The rates and terms of private loans are set by the lender. In order to qualify, you must meet their income and credit criteria. Additionally, private loans do not have the same benefits as federal loans but may offer other features specific to the lender.

What is a credit union?

Credit unions are not-for-profit, member-owned financial institutions that exist to serve the financial needs of their customers also referred to as member-owners. They are focused on serving their membership by offering highly competitive rates and outstanding service. There are over 100 million members in over 5,000+ credit unions in the United States. Many of these credit unions offer private student loans and student loan refinancing to their members.

4 Benefits of credit union private student loans

When it comes to private student loans, credit unions offer many of the features as private lenders. For example, credit unions offer both fixed and variable interest rates as well as in-school deferment benefits. Some other benefits include:

1. Membership perks

Although some may consider becoming a member an extra step in the process, membership does come with perks. Members get access to additional financial products and services.

2. Better customer service

Credit unions differ themselves from banks because of their focus on serving members, not customers. The benefit of a credit union student loan is getting to work with people who pride themselves in helping people. In fact, the whole mantra of credit unions is about “people helping people.”

3. Interest rates may be lower

Since credit unions operate specifically for member benefit, not profit, they compete with better rates and terms. Credit union operations tend to be less bureaucratic compared with big banks. This allows them to pass the savings to members through lower rates and fewer fees.

4. Member focused underwriting

Similar to private lenders, credit unions also use credit, income, and other financial factors to make a decision. However, a credit union will also take into consideration your membership history. They’ll consider things like how long you’ve been a member, existing products and loans repaid within the credit union, and may even set up a call to get to know you better.

A disadvantage with credit union student loans

There’s one potential disadvantage with credit union student loans. It relates to some benefits offered by financing companies. For instance, SoFi offers employment assistance. In the event you lose your job, their team is equipped in helping you find a new one. That in of itself may not be a deal-breaker as credit union student loans may offer more highly praised benefits.

Find a credit union with private student loans

So, you’re now convinced of getting a student loan through a credit union. That’s great news. If you’re an existing member, contact your credit union and inquire about their private student loans. In the event they do not offer private loans, they’ll most likely refer you to another credit union that does. Now, that’s the cooperative spirit.

LendKey Private Student Loans with Credit Unions

The best place to find a credit union offering student loans is to use a marketplace. My preferred marketplace is LendKey. They work with hundreds of credit unions and make the application process easy. Through LendKey, you can apply, get offers from credit unions (and community banks too) and complete the entire process in one platform. Once you select a private loan offer with a credit union, you will be required to become a member of that credit union. The loan is funded by the credit union but serviced through LendKey.

Learn more about LendKey’s Credit Union Student Loan options.

Frequently Asked Questions

Do I need to be a credit union member to apply?

Generally, you do not need to be a member to apply for a credit union student loan. You can start the loan process and once approved become a member. With LendKey, you can complete the application, get offers, choose the best option, submit your documents, and then join the credit union prior to the loan being disbursed. Get started with LendKey.

What will my interest rate be?

Credit unions set the interest rate which is determined by your and/or your cosigner’s creditworthiness. You may be able to choose between a fixed and variable rate options.

Can I repay my credit union student loan early?

Most credit union private loans do not asses a prepayment penalty. This means you can prepay your loan early or pay off the entire amount at any given time. Review your loan terms to verify or contact the loan servicer for confirmation of no prepayment penalty.

Where can I find a credit union to join?

The vast majority of people are eligible to join many credit unions. To find a credit union, ask your parents, siblings or other family members if they are a member of one. Also, inquire with your employer, school, church or other groups you belong to if credit union membership is offered. Learn more about how to find a credit union to join.

What’s the difference between a bank and a credit union?

Credit unions are member-owned financial cooperatives. In contrast, banks are owned by an individual(s) or shareholders. Credit unions are not-for-profit organizations whereas banks are built and run with a strong profit motive. Learn more about how credit unions differ from banks.

Are credit unions all the same?

Every credit union was founded with the same principle of people helping people. But not every credit union operates the same. Each credit union has a unique backstory and serves specific groups of people that share a common bond. Credit unions do support one another but also cooperatively compete in some ways. The key to your success is finding the right credit union that shares in your values, understand your needs, and provides the products and services you want.

Can I be a member of more than one credit union?

Yes. You can be a member of many credit unions. In fact, you may need to become a member of another credit union, if your current credit union doesn’t offer student loans. Meeting the membership eligibility is required for every credit union you decide to join.

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Jason Vitug

Jason is the founder of phroogal, creator of the award winning project Road to Financial Wellness, and author of the bestseller and New York Times reviewed book, You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life.

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