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Many institutions offer student loans, but some may offer more options or lend at better rates than others. When searching online banks and lenders for private student loans, don’t forget about credit unions.
Credit unions often offer very competitive rates to their members compared to other lenders. So you might have more, and sometimes better, options by broadening your search. Here’s how to find the best student credit union lenders.
How credit unions differ from banks
Banks and credit unions offer many of the same products, including checking and savings accounts, credit cards, loans and mortgages. However, they differ in some important points.
Banks are for-profit businesses that are either private or publicly traded. Because banks have to make a profit, they can charge more fees and higher interest rates than a credit union, which is a non-profit organization. Banks are also less strict about who they allow to open an account, and most people are eligible to use the services of a bank.
By contrast, credit unions are owned by their members. And because members of credit unions share ownership of the organization, there are often requirements to join. You may need to work for a specific employer, live in a certain area, or be a member of another group, such as a union, church, or school. If a family member qualifies, you may also be eligible to join.
And because credit unions are non-profit, they are able to return their income to their members. To do this, credit unions typically offer lower fees, lower interest rates on loans, and higher rates on savings accounts. That’s why getting a student loan from a credit union can be beneficial: you can find options that can beat those offered by traditional banks or online lenders.
Find Loans From Credit Unions In Your Area
Since many credit unions require that you meet certain membership criteria, it makes sense to begin your research in your community. A simple online search for “credit unions near me” will show you local credit unions. You can also use the National Credit Union Administration’s credit union locator to find a complete list.
Much like banks and online lenders, it is important to review each credit union before committing to anything. Look for things like:
- Student loan products: Some credit unions do not offer student loans and may limit themselves to certain products and services.
- Membership conditions: Make sure you are eligible for membership in each credit union you review. Some may require you to join and be a member of the credit union for a period of time before you apply for a student loan. Others may allow you to become a member and apply for a student loan at the same time.
- Interest rate and fees: Examine and compare the interest rates between local credit unions to see which ones offer the lowest interest and fees.
- Loan Eligibility: See what is needed to qualify for a student loan. For example, you might need a minimum credit score or meet a certain income threshold to qualify. Since these are private student loans, not federal government student loans, your credit history is a major consideration.
Find nationally available credit unions
While credit unions thrive in local communities, some are available nationwide. Here are a few that you may want to consider for your student loans.
1. Loan key
LendKey partners with credit unions and community banks across the country and connects them with potential borrowers. You can apply for a private student loan or a refinanced student loan, among other options. Students enrolled at least part-time can apply for a loan, and you can add a co-signer if you need help getting the lowest rates. Applicants may be eligible to borrow up to the cost of attending their school.
2. PenFed Credit Union
Anyone is eligible to join PenFed Credit Union, which offers new student loans to undergraduate and graduate students, as well as scholarship opportunities. You can borrow up to your school’s tuition fees, and refinancing options are also available if you’ve already graduated. Membership in PenFed also provides access to other savings opportunities, with discounts on things like auto insurance, tax services, and home security systems.
3. Federal Navy Credit Union
Navy Federal Credit Union offers new student loans or refinancing options. To become a member, you or a member of your family must have served in the armed forces, including the military, navy, air force, coast guard or national guard. You can apply for membership at the same time as you submit your loan application. Borrowers also have automatic access to the Navy Federal Career Assistance Program, which provides interview tips, a resume creation tool, and other helpful tools.
What makes student loans different from credit unions?
While lending institutions typically offer similar products, credit unions, banks, and private lenders handle student loans a little differently. Here’s what to expect from a student loan from a credit union.
More attentive to the needs of members
If you’re struggling to qualify for a private student loan from a bank or online lender, you might find more opportunities and less stringent loan requirements at a credit union. You may have an easier time qualifying for a student loan with a credit union if you already belong to a co-op located in your community.
If you take out a loan from a national bank or an online lender, you usually have access to it whenever you want. In addition to a mobile app and website, you can probably call or talk to someone via live chat whenever you want.
If you take out a loan from a credit union, you may have more limitations. Online services may be less robust and you may need to visit a branch or call during business hours for assistance. Finally, there may be fewer locations when using a credit union. This means that if you are traveling or moving out of the area, managing your loan could be more complicated.
Since credit unions are generally community-based, they often have a smaller customer base than domestic banks or lenders, so you get more personalized service. And since credit unions are owned and operated by their members, you can vote on certain business decisions, including the selection of their board members.
Of course, not all credit unions are created equal. If you’re unsure of a credit union’s reputation, read reviews online or ask your network for personal recommendations.
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