How to refinance your student loans 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 member-owned, not-for-profit organizations. For this reason, they can offer more reasonable interest rates to their members.

Keep reading for an overview of credit union refinance loans, including the pros and cons.

Credible, it’s easy to compare student loan refinance rates from various lenders, all in one place.

4 credit unions that refinance student loans

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

First Tech Federal Credit Union: Best for Large Loans

When you refinance your student loans with First Tech Federal Credit Union, you won’t have to worry about application or origination fees. You can choose a loan term of five, seven, 10 or 15 years and you can refinance loans up to $500,000.

  • Loan amounts: $5,000 to $500,000
  • Minimum credit rating: don’t divulge
  • Refinancing conditions: Be a member of First Tech or become one when you apply; have federal or private student loans from a qualified 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, if refinancing Parent 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 undergraduate loans; up to $175,000 in graduate loans
  • Minimum credit rating: don’t divulge
  • Refinancing conditions: Be a member of the Navy Federal or become one when you apply; have federal or private student loans; graduate from an eligible school; be a US citizen or permanent resident

PenFed: best for refinancing parent loans

With PenFed, students and parents of students can refinance loans. The credit union does not charge a fee and says its application can be completed in less than 15 minutes.

  • Loan amounts: $7,500 to $300,000
  • Minimum credit rating: 670
  • Refinancing conditions: Be a member of PenFed; have federal or private student loans; be a US citizen; have at least $7,500 in student loans

Credit Union Service: Best for Borrowers Who Attended a Nonprofit School

With Service Credit Union, you can refinance private and federal student loans, including PLUS loans, up to $150,000. The credit union offers five-, 10-, and 15-year repayment terms and has no origination fees or prepayment penalties.

  • Loan amounts: Up to $150,000
  • Minimum credit rating: don’t divulge
  • Refinancing conditions: Be a member of Service Credit Union or become one when you apply; have federal or private student loans in repayment or a grace period; be a US citizen or permanent resident; be a graduate of an approved public or private non-profit school; meet Service Credit Union standard underwriting criteria

With Credible, you can compare student loan refinance rates from multiple lenders in minutes.

How to refinance student loans with a credit union

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

  1. Review your credit score. Before you begin the process of applying to refinance your student loans with a credit union, it’s worth checking your credit score. Your credit score will affect your eligibility for refinancing and the types of rates and terms you will qualify for. Having a higher credit score will help you get a lower credit score interest rate, which can save you a lot of money over the life of the loan. If your score is low, it may be worth spending some time improving your credit score before applying for a refinance.
  2. Pay off other debts. If possible, pay off as much debt as possible (like your credit card balance or a car loan) before applying for refinancing. Lenders consider your debt-to-income ratio (DTI) when deciding whether to approve a loan, as well as the rates and terms they will offer you. Your DTI compares your monthly debt payments to your gross monthly income. The lower this ratio, the stronger your application will be.
  3. Shop around for the best lender. While it’s always a good idea to compare multiple lenders before deciding on one, things can get a little trickier when it comes to credit unions because you need to be a member or become a member. Check with each credit union you are comparing to find out if you need to be an existing member. Then compare rates and terms to find the best refinance loan for your situation.
  4. Organize the required documents. No matter where you apply, you’ll usually need to provide standard documents, such as your government-issued ID, proof of employment or pay stub, or a recent tax return. Having all of these documents ready to go will speed up the application process.
  5. Complete the application process. Once you know where you want to apply and your documents are ready, you can apply to refinance your student loans.

Advantages and disadvantages of refinancing through a credit union

You have several options for refinancing your student loans, and a credit union is just one of them. If you’re considering refinancing through a credit union, keep these pros and cons in mind:

Advantages

  • Better customer service — Because credit unions are non-profit and designed to put members first, they tend to take a more personal approach to customer service than larger private banks.
  • Fewer costs — Since credit unions are owned by their members, 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.

The inconvenients

  • Must be a member — You usually need to be a member of a credit union to apply for loans through it. This can eliminate opportunities, as each credit union has a unique set of membership criteria.
  • The application process can be more difficult — You usually need to apply to be a member (if you aren’t already one) when you want to refinance your student loans with a credit union.
  • Lower limits — Credit unions often have lower rates 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 refinancing 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 on your new loan. You can start by checking local credit unions first, as it may be easier to qualify with a local credit union.

With Credible, you can easily compare student loan refinance rates without affecting your credit score.

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