How to refinance your student loan through a credit union

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Credit unions offer student loan refinancing. Learn more about credit union refinance loans and the pros and cons. (Shutterstock)

When you refinance your student loans, a credit union is an option where you may find a lower interest rate and favorable terms. Unlike banks, which are for-profit organizations, credit unions are nonprofit, member-owned organizations. Because of this, they are able to offer their members cheaper interest rates.

Read on for an insight into credit union loan refinancing, including the pros and cons.

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4 credit unions that refinance student loans

The following four credit unions offer student loan refinance. Of these, only PenFed is a credible lender partner.

First Tech Federal Credit Union: Best for large loan amounts

When you refinance your student loans With First Tech Federal Credit Union, you don’t have to worry about application or creation fees. You can choose a repayment term of five, seven, 10 or 15 years and refinance loans up to USD 500,000.

  • Loan Amounts: $5,000 to $500,000
  • Minimum creditworthiness: Doesn’t reveal
  • Requirements for refinancing: Be a First Tech member or become one by applying; Have federal or private student loans from a qualifying Title IV accredited school; be a US citizen or permanent resident; be at least 18 years old; Be the parent of a borrower who meets these criteria when refinancing Parents PLUS Loans

Navy Federal Credit Union: Best for military service members

Military service members, veterans and their families may qualify for refinancing through the Navy Federal Credit Union. The credit union offers a 0.25% interest rate reduction when you sign up for automatic payments.

  • Loan Amounts: Up to $125,000 in student loans; up to $175,000 in graduate loans
  • Minimum creditworthiness: Doesn’t reveal
  • Requirements for refinancing: Be or become a member of the Navy Federal by applying; have federal or private student loans; have a qualified school leaving certificate; be a US citizen or permanent resident

PenFed: Best for parent loan refinance

Both students and parents of students can use PenFed to refinance loans. The credit union charges no fees and says their application can be completed in under 15 minutes.

  • Loan Amounts: $7,500 to $300,000
  • Minimum creditworthiness: 670
  • Requirements for refinancing: Be a PenFed member; have federal or private student loans; be a US citizen; Have student loans of at least $7,500

Service Credit Union: Best suited for borrowers who attended a non-profit school

With Service Credit Union, you can refinance both private and government student loans, including PLUS loans, up to $150,000. The credit union offers repayment terms of five, 10, and 15 years and has no setup fees or prepayment penalties.

  • Loan Amounts: Up to $150,000
  • Minimum creditworthiness: Doesn’t reveal
  • Requirements for refinancing: Be or become a member of the Service Credit Union if you apply; have federal or private student loan in repayment or a grace period; be a US citizen or permanent resident; have a degree from an accredited public or private non-profit school; meet standard Service Credit Union criteria

With Credible it is possible Compare student loan refinance rates from multiple lenders in minutes.

How to refinance student loans at a credit union

If you decide refinancing your student loans is the right move for you, follow these steps to complete the process with a credit union:

  1. Check your credit score. Before you begin the actual application process for your student loan refinance with a credit union, it’s helpful to check your credit history. Your credit rating affects your eligibility for refinance and the types of interest rates and terms you qualify for. With a higher credit rating, you can secure a lower one interest rate, thanks to which you can save a lot of money during the term of the loan. If your score is on the lower side, it may be worth spending some time improving your credit before applying for refinance.
  2. Pay off other debts. If possible, pay off as much debt as you can (like your credit card balance or a car loan) before applying for refinance. Lenders consider your debt-to-income (DTI) ratio and the interest rates and terms they offer you when deciding to approve a loan. Your DTI compares your monthly debt payments to your gross monthly income. The lower this ratio, the stronger your application will be.
  3. Look for the best lender. While it’s always a good idea to compare multiple lenders before deciding on one, credit unions can make things a bit more difficult since you have to be a member or become a member. Check with each credit union you’re comparing to find out if you need to be an existing member. Then compare interest rates and terms to find the best refinance loan for your situation.
  4. Organize necessary documents. Regardless of where you apply, you will usually need to provide some standard documents such as: B. Your official ID, proof of employment or payslip or a recent tax return. Having all of these documents handy will speed up the application process.
  5. Complete the application process. Once you know where to apply and have your paperwork ready, you can apply for a student loan refinance.

Pros and cons of refinancing through a credit union

When it comes to refinancing your student loan, you have a few options, and a credit union is just one of them. If you are considering refinancing through a credit union, keep these pros and cons in mind:

advantages

  • Better Customer Service — Because credit unions are nonprofit and designed to put their members first, they tend to take a more personal approach to customer service than larger private banks.
  • Fewer Fees — Because credit unions are member-owned, they tend to charge fewer fees.
  • Lower interest rates — Credit unions also typically have lower interest rates, which can save you a lot of money over the life of your new loan.

Disadvantages

  • Must be a member — As a rule, you must be a member of a cooperative bank in order to be able to apply for a loan there. This can eliminate opportunities since each credit union has a unique set of membership criteria.
  • Application process can be more difficult — Typically, you must apply for membership (if you aren’t already) if you want to refinance your student loans with a credit union.
  • Lower Limits — Credit unions often have lower ones loan amounts compared to other types of lenders. If you have a lot of student loan debt, you may not be able to refinance everything through a credit union.

Compare multiple lenders to get the best student loan refinance rate

Before you refinance your student loans, it’s important to compare different lenders to get the best rates and terms for your situation. The last thing you want to do is spend too much money on your new loan. You can start by looking at local credit unions first, as it may be easier to qualify with a local credit union.

It’s easy with Credible Compare student loan refinance rates without affecting your creditworthiness.

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