Credit unions are nonprofit, member-owned institutions, and they occasionally offer lower rates and better terms than traditional banks and online lenders. As a result, a credit union could be a good option if you’re considering taking out a student loan.
But you should understand some of the potential disadvantages when working with a credit unionꦗ, like membership requirements and limited options.
- Best credit unions for student loans
- Are credit union loans different from other loans?
- How do credit unions compare to banks, online lenders?
- Alternatives to credit union student loans
Best credit unions for student loans
Like student loans from banks and online lenders, credit union student loan rates and terms vary. To find one that best matches your needs, it’s a good idea to shop around.
Below are some credജit uജnions that offer student loans to jumpstart your search.
| Lender | Loan term | Allows cosigners? | Discounts |
|---|---|---|---|
| BECU | 10 years | Yes | 0.25 percentage points |
| Navy Federal Credit Union | 5 or 10 years | Yes | 0.25 percentage points |
| University Credit Union | 5,10, and 15 years | Yes | 0.25 percentage points |
| Thrivent | Up to 15 years | Yes | 0.25 percentage points |
BECU
BECU offers 10-year fixed-rate student loans through its partner lender LendKey. You can borrow for either private or refinanced student loans at amounts up to $100,000. Plus, you can get an interest rate deduction of 0.25 percentage points for enrolling ⛦in autopay.
BECU also provides you with free financ🐟ial tools to help improve your financial literacy in forms of financial health checks, articles, webinars, and self-paced courses.
- Cosigners allowed: Yes
- Rates: Fixed
- Repayment terms: 10 years
- Loan amounts: $2,000 to $100,000
- Discounts: 0.25 percentage points
Navy Federal Credit Union
Navy Federal Credit Union offers student loans up to the cost of your school’s attendance if you or a family member served in the armed forces — the Army, Navy, Air Force, Coast Guard, or National Guard — or was a Department of Defense civilian employee. You can choose a five- or 10-year loan (new or refinanced) with variable or fixed rates. Also, you can get a 0.25% interest rate reduction for enrolling in autopay.
Other perks include:
- The ability for your cosigner (if any) to be released from responsibility after you have made 12 (for refinanced loans) or 24 (for new loans) consecutive on-time payments
- Access to a career assistance program full of interview and job search tips, a resume building tool, a job-tracking dashboard, and more
- Cosigners allowed: Yes
- Rates: Fixed and variable
- Repayment terms: 5 or 10 years
- Loan amounts: Up to the cost of attendance
- Discounts: 0.25 percentage points
University Credit Union
University Credit Unioꦡn offers fixed and variable-rate loans. You can borrow up to $75,000. In addition, you can qualify for an interest rate deduction of 0.25% for enrol💛ling in autopay.
- Cosigners allowed: Yes
- Rates: Fixed and variable
- Repayment terms: 5, 10, and 15 years
- Loan amounts: Up to $75,000
- Discounts: 0.25 percentage points
Thrivent Credit Union
Thrivent Credit Union offers fixed-rate student loans with up to 15-yeꦡar repayment terms. You can borrow up to $80,000. You can also get a 0.25 percentage discou🧸nt for signing up for autopay.
You’ll need to have an associate or benefit membership to get a student loan from Thrivent. Otherwise, you’ll pay a $19.9🀅5 membership fee. Once a member, you can also access an interactive money management tool to help track and plan your budgeti♔ng.
- Cosigners allowed: Yes
- Rates: Fixed
- Repayment terms: Up to 15 years
- Loan amounts: Up to $80,000
- Discounts: 0.25 percentage points
Before you take out a private student loan, youꦑ should understand how much it’ll cost — especially b𝕴y paying attention to the student loan’s interest.
| For example: If you take out a $50,000 student loan with BECU — with a 5.99% fixed interest rate and a loan term of 10 years — you’ll end up paying an additional interest total of $16,582. This interest would bring your overall loan total to $66,582 and a monthly payment of $555. |
Are credit union student loans different from other student loans?
Credit union student loans may offer lower rates and more favorable terms than traditional banks and online lenders. But like other private student loans, they don’t come with some of the benefits that are unique to federal student loans.
Private student loans
Private student loans are o🐈ffered by a variety of private financial institutions, such as banks, credit unions, and online lenders.꧟ Private lenders offer fixed- or variable-rate loans. Repayment terms and interest rates benefits vary by lender.
| For example: While many lenders will allow you to sign up for a forbearance plan while you’re unemployed, some others won’t. What’s more, the interest rate you’ll receive on a private loan — if you qualify for one — will most likely depend on your credit score and income. |
Federal student loans
Federal student loans are funded by the U.S. Department 🌠of Education. These loans come with fixed interes🎃t rates that are determined by federal law.
Unlike private student loans, most federal student loans don’t require a credit check. Also, federal loans come w♔ith standard benefits, such as access to income-driven repayment (IDR) plans, and student loan forgiveness programs.
| Tip: You should exhaust your federal student loan options first before considering a private loan from a bank, credit union, or online lender. |
How do credit union student loans compare to banks and other online lenders?
Credit unio🔜ns offer similar student loans and other finan👍cial products to banks and online lenders, but they operate differently.
Traditional banks and online lenders are for-profit organizations, so they may charge higher rates to maximize t🎀heir profits. Credit unions, on the other hand, are member-owned, nonprofit organizations that return profit to their members in the form of lower rates, minimal fees, and higher saving rates.
As a result, when researching credit uniಌon student loans, you may come across options that come with lower rates compared to online lenders and traditional banks.
Advantages of using a credit union for student loans
Some potential pros, outside of lower rates and better terms, include🃏:
- Less-stringent eligibility requirements: Credit unions sometimes have less-strict eligibility requirements than traditional banks. So, if you’re a member of one and have bad credit, you might find that they’re more willing to overlook imperfections on your credit report.
- Community-based service perks: Credit unions may offer unique services and programs, such as financial education, budgeting tools, or tailored demographic services to help their members move forward.
Disadvantages of using a credit union for student loans
Although credit union student loa💜ns may have lower rates, some potential drawbacks should be considered.
- Membership required: Before you can take out a loan from a credit union, you must become a member. Although eligibility requirements vary, some credit unions will require that you work for a particular organization or belong to a certain club.
- Limited options: While some national credit unions offer student loans, you may find it difficult to find a local credit union that offers them. In addition, some credit unions only offer to refinance student loans or have lower borrowing amounts.
What alternatives are there to credit union student loans?
Taking out a private or federal student loan isn’t your only option when it comes to paying for school. Here are a few alternatives to consider.
Apply for scholarships
One way you can minimize your need to take out student debt is to apply for scholarships. Scholarships are a form of gift aid — unlike student loans, you don’t have to repay them.
Some ways you can f♎ind scholarships include using a scholarship search eng🐼ine, contacting your financial aid office, or contacting local organizations in your area.
| Tip: To qualify for federal and state scholarships — and some scholarships offered by private organizations — you’ll need to complete the (FAFSA). |
Apply for grants
Another way to receive gift aid to pay for your education is to apply for college grants. 🌠Many grants are based on your financial need.
You can apply for grants f❀rom several places, including the , state governments, and private organizations.
See into work-study programs
If your income is below a certain threshold, you might qualify for the Federal Work-Study Program. This program helps undergraduates and graduates find pa🗹rt-time work-study jobs on and off campus.
If yo𝔉u qualify, you can use some or all of your earnings to pay🐻 for school-related expenses.