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Credit Union Student Loan Refinancing: Why and How-to

A student loan refinance with credit unions may give the low rates and better terms you're seeking.

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Credit Union Student Loan RefinancingIs refinancing student loans with a credit union a good option? We’ll explore that question thoroughly in this article.

If you weren’t aware, many credit unions offer private student loans as well as refinancing options. In some ways, credit unions have an edge over financing companies. Because of their not-for-profit structure, credit unions can be quite competitive with their rates and service.

When considering a student loan refinance, credit unions may give the low rates and better terms you’re seeking. Here are ways to determine if a credit union student loan refinancing is best for you.

Prepare for student loan refinancing

When you refinance your student loan, you pay off the original loan(s) and get a new loan with a different rate, terms, and benefits. Prepare by doing the following:

  1. Gather your student loan documents. Know whether they are federal or private student loans, calculate the monthly payments and total amount owed, interest rates, terms, and benefits. Learn how to find your student loans.
  2. Know your credit score. Credit unions will take a look at your credit report and a stronger credit score will increase the likelihood you’ll be approved. See if your credit is good or bad.
  3. Are you an existing member of a credit union? If this is the case, contact your credit union and inquire about refinancing your student loans with them.

Advantage of credit union student loan refinancing

Choosing a credit union to refinance your student loans involves much of the same underwriting process you’d go through with other financing companies. A key advantage is membership benefits in the form of better rates, fewer fees, and access to an array of financial products and services that can also save you money. Learn about the credit union values-based approach.

Considerations when refinancing through a credit union

Credit unions that offer refinancing will do so for your federal and private student loans. But there are still considerations when consolidating your federal loans out of the Direct Loan Program. Doing so will cause you to lose federal benefits associated with your federal loans such as income-driven repayment plans and loan forgiveness.

However, you can choose to only refinance your private loans and keep your federal loans with the Direct Loan program.

Find a credit union to refinance student loans

You must be a member of a credit union to receive any of its benefits. That includes student loan refinancing. However, you can start the application process before joining a credit union. There are over 5,000 credit unions in the United States, but not all of them offer student loan refinancing.

The best place to start is with your credit union. If you’re not a member of a credit union, use a marketplace to find one that offers student loan refinancing.

LendKey marketplace

LendKey is my preferred resource when refinancing student loans with credit unions and community banks. With LendKey, they’ve streamlined the process using one platform. Additionally, LendKey retains all servicing of your student loans that are refinanced with their credit union partners.

The process with LendKey is simple and includes:

  1. Check your rate. It does not impact your credit score.
  2. Get offers to review.
  3. Select an offer.
  4. Complete the application.
  5. Join the credit union (if necessary).
  6. Loans are disbursed.

Keep in mind you might need a cosigner to get approved for a loan or get the best rates. LendKey makes this process simple too.

Get started with LendKey and find your credit union refinancing options. Or you can read my LendKey review for more information.

What happens during credit union student loan refinancing

After checking your rate, you’ll be required to choose the best option before moving forward. If you select a credit union offer, the next step is to complete the application to refinance your student loans. The process of refinancing with a credit union is similar to other financing companies. For instance, a full credit check will be required and proof of income to finalize the loan.

The only main difference you’ll encounter with refinancing using a credit union is the membership requirement. Once you progress through the loan process, you’ll be asked to join the credit union that is refinancing your student loans.

Frequently Asked Questions

Is it really better to refinance with a credit union?

It can be, but it all depends on your specific situation. Credit unions can be highly competitive when it comes to rates but may not offer you the loan benefits you need. Consider what rates and offers you’ll get with other lenders. You can do this by using another student loan marketplace like Credible. Before refinancing with any financial institution, do your work and compare the offers, rates, terms and ask questions until you feel comfortable.

Can I join any credit union?

While most people can join a credit union or many credit unions, you’ll still need to meet their eligibility requirements. I’ve found most credit unions that participate in student loan marketplaces to have a wide field of membership. This means there are many ways to be eligible.  Learn more about how to join a credit union.

Do I need to use LendKey to do a credit union student loan refinance?

No. It’s not necessary to use LendKey but can make it easier. There are thousands of credit unions and not all of them offer student loan refinancing. The benefit of using a marketplace is to save you time and make the process of finding a credit union easier. Now, keep in mind, offers through LendKey will also include community banks.

Do I need a cosigner to get approved for student loan refinancing?

This depends on your personal financial situation. Credit unions will take into account your credit history, score, employment, income, and other factors. In fact, you may qualify without a cosigner, but may want a cosigner with a stronger credit history to qualify for the best rates. In the event, you need a cosigner, choose an offer that extends a cosigner release–the ability to remove a cosigner without having to refinance the loan.

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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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