Can You Refinance a Student Loan at a Credit Union
Yes, you can refinance a student loan at a credit union. However, not all credit unions offer a private student loan refinance loan option , so it’s important to research the credit union beforehand. In general, credit unions are not as large a financial institution as some banks and as such have limited resources with which to fund student loans.
Due to the way credit unions are structured, they use the deposits of their members to fund loans for other members. The availability to process loans is dependent upon the size of the membership of the credit union and the amount of money on deposit at a given credit union. That said, if you find a credit union that does offer refinancing for student loans, and your balance is within the limits available at the credit union, then yes, you can absolutely refinance a student loan at a credit union.
Credit Unions versus Banks for Student Loan Refinance
What is the difference between a bank and a credit union? Well, credit unions differ from banks in that they are owned by the membership they serve. While anyone can walk into a bank and open an account or take out a loan (assuming they have good credit), credit unions require membership to access their products and services.
To become a member of a credit union, specific criteria must be met. This usually includes being affiliated with a particular employer, group, or union. Sometimes, simply living, working, worshipping, or attending school in a specific area can make you eligible for membership. And if you don't qualify on your own, but have an immediate family member who does, you can join through your family ties.
These strict membership criteria serve an important purpose. They help credit unions establish a strong sense of community among their members. This unique community is more likely to work together to serve one another and offer benefits that may not be available at traditional banks.
Why You Should Refinance a Student Loan at a Credit Union
There are many reasons to consider refinancing a student loan. You might be looking to reduce your current interest rate. You might be looking to bundle several loans together into one for more convenient payment management. You might be dissatisfied with your current lender and want to change or at least change the terms of your loan. These are all valid reasons to refinance a student loan, however, why should you refinance your student loan(s) with a credit union.
Credit unions, because they are non-profit, member owned financial institutions, are able to offer lower interest rates to their membership than can be found at some banks. Additionally, credit unions seek to minimize or eliminate (where possible) fees for processing loans. The lower interest rate and the reduction in fees can amount to desirable savings, especially over the length of the loan.
Another perk to borrowing from a credit union, is the excellent customer service provided to its members. If you are looking to refinance and want to ensure you are being well taken care of, a credit union is the right place for you.
Important Considerations when Refinancing Student Loans with a Credit Union
As was mentioned earlier credit unions are different from banks and there are some important considerations that must be addressed before choosing to refinance your student loans at a credit union:
Membership is required
Credit unions require people to join and become members to gain access to their products and services. Membership criteria will vary but usually requires affiliation with a specific group, union, or employer. The employer might be quite large like the armed forces or U.S. government or could be a small local company. If you find that on your own you cannot become a member, it’s possible you have a family member that qualifies; and if they join, you may be able to join as well.
It might be difficult to find a credit union that offers student loan refinance
Not all credit unions offer refinancing for student loans. Take some time and do some research, checking to see if the credit unions where you or a family member may qualify for membership, offer this service. If they do, make sure that the interest rates and fees are desirable to you.
The credit union you choose may have loan limits that exceed your student loan debt
Depending upon the total amount of your student loan debt that you are seeking to refinance, you may or may not be able to borrow the whole amount or bundle all your separate loans together. Credit unions rely on the deposits of their membership to fund loans. Smaller credit unions will have less resources and a limited ability to fund large loans. Check to see what (if any) loan limits a credit union may have to ensure they will be able to fund the full amount you are looking to refinance.
Apply for a University Credit Union Private Student Lending Solution
- Variable rate line of credit option allows you to apply once and secure funding for your entire college career.*
- Variable rates as low as 1.99% APR1; Fixed rates as low as 3.49% APR2
- Personalized 1:1 support at every step of the lending process.
- In-school deferment option
- 15-, 20-, and 25-year repayment terms available◊
- Cover any school-certified costs including tuition, housing, and books.
*Subject to credit qualification and annual review. Must continue to meet school’s Satisfactory Academic Progress (SAP) requirements. Credit union membership and minimum share deposit required.
**Approved schools subject to change without notice.
^The APR will not fall below the floor rate as stated in the account opening disclosure regardless of the index or any additional rate discount.
◊ Variable Rate Line of Credit Option: the repayment term is 20 years if your principal balance at repayment is $40,000 or less, and 25 years if your principal balance at repayment is more than $40,000.
Fixed Rate Loan Option: The loan term is a total of 15 years including a combined maximum of 4.5 years of in-school or grace period, and a repayment term of up to 10.5 years. Full repayment begins at the end of the grace period unless full repayment is selected during enrollment.
1Variable Rate Disclosures
The Annual Percentage Rate (APR) for our undergraduate private education line of credit is variable and is based on the Prime index plus a margin. The current offered rate will be between 1.99% and 10.49% APR. The Annual Percentage Rate is subject to increase after consummation. The interest rate will be adjusted quarterly, based on changes to the Index. The APR will not exceed 18.00% or fall below the floor rate regardless of the Index or any additional rate discount. Any increase in the Index may increase the APR and the amount of your monthly payment. The "Index" for the quarter beginning July 1st, 2021, is 3.25%, which was the Prime index published in the Wall Street Journal on the first business day of June 2021. Current offered rate(s) are calculated by using the index, margin and floor value(s) in effect. Your specific interest rate, margin, floor, and/or credit approval depends upon the credit qualifications of the student borrower and co-borrower (if applicable). Margin will be disclosed at account opening. Student borrowers may apply with a creditworthy co-borrower which may result in a better chance of approval and/or lower interest rate.
2Fixed Rate Disclosures
The Annual Percentage Rate (APR) for our undergraduate private education loan is fixed for the life of the loan. The current offered rate will be between 3.49% and 11.49% APR. Your interest rate is fixed and your rate and/or credit approval depends upon the credit qualifications of the student borrower or cosigner (if applicable). Your actual rate within the range stated will be disclosed upon approval.
Student borrowers may apply with a creditworthy coborrower which may result in a better chance of approval and/or lower interest rate.
All loans subject to approval and restrictions may apply. We reserve the right to change rates for new applications at any time and without notice. Credit union membership and a minimum share deposit is required.