Credit unions are a terrific option for consumers who miss the personal touch and emphasis on customer service that was standard in the bygone era of local banking. Your credit union may offer various loan options—including student loans.
While credit union student loans are still private and don’t have all the perks and protections associated with federal student loans, many credit unions offer competitive interest rates and lower fees than national banks and online lenders.
But which credit unions stand out from the pack, and how do their student loan offerings compare to traditional banks and online lenders? We’ll answer those questions below.
In this guide:
- Compare credit union student loans
- How do credit union student loans compare to banks and online lenders
- Is a credit union student loan right for you?
Compare credit union student loans
Taking out a student loan from a credit union is like taking out a student loan from a bank or online lender. Before you finalize the loan, you should compare interest rates, repayment terms, cosigner release programs, forbearance programs, and other features to ensure you’re taking out the best loan for your needs.
Make sure you understand the loan terms and whether you’ll have to make payments while in school.
| Credit Union | Types of Student Loans | Who’s Eligible? |
| LendKey* | Undergraduate and graduate | U.S. citizens and permanent residents enrolled at least half-time |
| Navy Federal Credit Union | Undergraduate and graduate | Current and former military members and their immediate family |
| Thrivent Federal Credit Union | Undergraduate and graduate | Thrivent clients with membership or those affiliated with one of several church bodies |
| Saratoga Community Federal Credit Union | Undergraduate | Persons who live, work, worship, or attend college in Saratoga County, NY |
| Affinity Plus Federal Credit Union | Undergraduate and graduate | Persons who meet certain working, education, and living requirements in Minnesota |
*Not a credit union, but a company that connects borrowers with several lenders, including credit unions.
LendKey
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- Get connected with multiple credit unions and community banks with one application
- No application fees
LendKey does not offer direct student loans. Instead, you’ll complete a loan application with the company, and it will submit that application to various lenders, including credit unions and community banks.
You can check your rates with LendKey without affecting your credit. When you apply for a loan through LendKey, you may be matched with several credit unions.
Pros
LendKey has a 4.4 out of 5 rating on Trustpilot with more than 300 reviews, as of May 27, 2022
May be able to get a loan for 100% of school costs
Only need to be a part-time student to qualify
Cons
Difficult to know what you’re eligible for until you apply
Key points
- Variable rates: 1.13% – 11.23% APR
- Fixed rates: 3.50% – 12.60% APR
- Loan amounts: Minimum loan amount is $2,000, and the maximum is the cost of attendance minus any financial aid
- Cosigner release: Depends on the specific lender
- Fees: No origination, application, or prepayment penalties
- Discounts: 0.25% interest rate discount for automatic payments
- Funding time: At least one month
- Grace period: Depends on the specific lender
Navy Federal Credit Union
- Available to military members and their families
- All student loans come with access to an online job search training system
Navy Federal Credit Union is a credit union for service members, Department of Defense employees, and their immediate families. If you don’t meet those requirements, you won’t be able to become a member and take out a student loan.
Pros
Six-month grace period after graduation
12-month forbearance program
Cons
Difficult to qualify for membership
Interest rates are higher than other lenders
Must make payments while you’re enrolled
Only one repayment term is available
Key points
- Variable rates: Start at 3.16% APR
- Fixed rates: Start at 4.99% APR
- Loan amounts: Minimum is $2,000
- Cosigner release: Available after 24 months of consecutive, on-time principal and interest payments
- Fees: No application, origination, or prepayment penalties
- Discounts: 0.25% interest rate discount for automatic payments
- Funding time: Not stated
- Grace period: Six-month grace period
- Repayment term: 10 years
Thrivent Federal Credit Union student loans
- Available for undergraduates and graduates
- You can borrow up to $80,000
Thrivent Federal Credit Union is a faith-based credit union. To be eligible for membership, you must be affiliated with one of several Lutheran churches. If you’re not a parishioner at one of those churches, then you can pay a $19.95 fee to join the credit union.
Thrivent does not provide variable interest rates for its student loans, and the fixed interest rate is much higher than what competitors charge.
Pros
Cosigner doesn’t need to be a Thrivent member
Three repayment options available
Easy to become a member
Cons
High interest rates
Only one repayment term available
Key points
- Variable rates: Not available
- Fixed rates: Between 6.12% and 9.77% APR
- Loan amounts: Minimum loan amount is $1,000. Maximum aggregate total is $80,000.
- Cosigner release: Available after 24 months of consecutive on-time monthly payments
- Fees: No application, origination, or prepayment penalties
- Discounts: 0.25% discount for setting up automatic payments
- Funding time: Not stated
- Grace period: Six months
- Repayment term: 15 years
Saratoga Community Federal Credit Union
- Members receive a free consultation with a College Access Counselor
- Student loans are offered through Sallie Mae and Student Choice Credit Union
Saratoga Community Federal Credit Union only offers a line of credit for students, which is not the same as a loan. With a line of credit, you are given access to a certain amount of credit. You are not required to use the full amount, and you will only be charged interest on the amount you use.
Your monthly payment will depend on the amount of credit you’ve used. As you repay the line of credit, you will regain access to those funds. A line of credit is more flexible, but interest rates are higher than they are for traditional student loans.
The line of credit has a variable interest rate, which means the interest rate will change once a quarter. If outside market factors cause interest rates to increase, your interest rate will also increase.
To qualify, you must be attending one of their approved schools, which you can find here.
Pros
Not required to make payments while you’re enrolled
Long repayment terms
Cons
Only variable interest rates are available
Graduate students are not eligible
Key points
- Variable rates: Start at 7.25% APR
- Fixed rates: Not available
- Loan amounts: Can borrow up to $75,000
- Cosigner release: Not stated
- Fees: No origination, application, or prepayment penalties
- Discounts: 0.25% interest rate discount for automatic payments
- Funding time: 32 to 42 days on average
- Grace period: Not stated
- Repayment term: 20 or 25 years
Affinity Plus Federal Credit Union
- Offers an undergraduate and graduate line of credit
- The term length varies depending on the rate type you choose
Based in Minnesota, Affinity Plus Federal Credit Union provides lines of credits to US citizens or permanent residents who are attending an approved school.
To become a member, you must work for an affiliated company, the State of Minnesota, or any Minnesota-based college or university. If you don’t fit those criteria, you can also pay a one-time $25 fee to join.
Pros
Easy to become a member
Long repayment terms available for variable-rate lines of credit
Cons
High interest rates
Low maximum amount
No discount for automatic payments
Key Points
- Variable rates: From 3.49% to 8.49% APR
- Fixed rates: From 4.99% to 8.49% APR
- Loan amounts: Maximum amount is $50,000
- Cosigner release: Available after 48 on-time monthly payments
- Fees: No application, origination, or prepayment penalties
- Discounts: None
- Funding time: Not stated
- Grace period: Not stated
- Repayment term: 10-year terms for fixed-rate loans. Either 20 or 25-year repayment terms for variable-rate loans, depending on the loan amount
How do credit union student loans compare to banks and online lenders?
Credit unions are owned by their members and are nonprofits, while traditional banks and lenders are for-profit companies. Credit unions often have lower fees and interest rates than banks because they’re not focused on making as much money as possible from their customers.
To be a credit union customer, you have to become a member. Many credit unions have specific requirements that can be hard to bypass. For example, some credit unions are only available for military service members and their families, while regional credit unions are often only available to local customers. However, many credit unions have fewer restrictions and are open to anyone.
Benefits of using a credit union for student loans
Borrowers may prefer taking out a student loan from a credit union because of their consumer-first approach and commitment to saving borrowers money. Read below for other reasons to choose a credit union for your student loans.
Lower interest rates
Borrowers may find lower interest rates with credit unions than they would with a for-profit bank or lender.
The interest rate you qualify for has a significant impact on the total interest paid over the life of the loan and the monthly payment. The higher the interest rate, the more interest you’ll pay and the higher your monthly payments will be.
Improved customer experience
Credit unions often have a strong focus on customer service. While they may be less likely to have mobile apps or customer service chat options, they often have local customer service representatives, so you’ll spend less time on the phone.
Community forward
Credit unions often maintain a specific connection to the community. Some credit unions will focus on providing services to people of color, while others focus on teachers or healthcare workers.
If you care about having a community-focusing lending experience, look for a credit union near you that offers student loans.
Disadvantages of credit union student loans
Student loans from credit unions may offer lower interest rates and a better customer service experience, but there are also some downsides. Read below to see the disadvantages of taking out a student loan from a credit union.
Limited eligibility
Some credit unions are only available to customers who meet specific criteria. For example, Navy Federal has strict membership requirements; if you don’t meet them, you won’t qualify for a student loan.
However, many credit unions have less strict eligibility requirements, like maintaining $5 in a savings account or paying a one-time fee. Before taking out a student loan through a particular credit union, read their requirements and make sure you qualify. If you’re not sure, contact their customer service hotline and determine if you’re eligible.
Limited physical locations
Credit unions usually have fewer branches than national banks, so it may be harder to get an in-person experience. You should be able to conduct all your business online, but if you prefer to visit in person, you may be better off with a larger bank.
Is a credit union student loan right for you?
A credit union loan is still a private student loan, so you won’t be eligible for the same perks you’d find with a federal student loan. So, make sure to max out your federal student loans before turning to a credit union student loan.
If you care about having a good customer service experience and are already a credit union member, then a credit union student loan may be the right fit. Shop around with several different lenders and compare interest rates, repayment terms, forbearance options, and other terms.
As a financial expert with a deep understanding of credit unions and student loans, let me delve into the concepts covered in the article you provided. My expertise in this area stems from extensive knowledge of the financial industry, including credit union operations, student loans, and the comparison between credit unions, traditional banks, and online lenders.
The article discusses the advantages and disadvantages of obtaining student loans from credit unions compared to traditional banks and online lenders. Here's a breakdown of the key concepts and information covered:
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Credit Union Types and Eligibility:
- LendKey: Connects borrowers with various lenders, including credit unions. Eligibility includes U.S. citizens and permanent residents enrolled at least half-time.
- Navy Federal Credit Union: Exclusive to military members and their families.
- Thrivent Federal Credit Union: Faith-based credit union for those affiliated with Lutheran churches.
- Saratoga Community Federal Credit Union: Available to individuals in Saratoga County, NY.
- Affinity Plus Federal Credit Union: Based in Minnesota, eligibility includes those working for affiliated companies, the State of Minnesota, or Minnesota-based colleges.
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Loan Details and Terms:
- LendKey: Offers variable rates (1.13% – 11.23% APR) and fixed rates (3.50% – 12.60% APR).
- Navy Federal Credit Union: Variable rates starting at 3.16% APR, fixed rates starting at 4.99% APR. Minimum loan amount is $2,000.
- Thrivent Federal Credit Union: Fixed rates between 6.12% and 9.77% APR. Minimum loan amount is $1,000, with a maximum of $80,000.
- Saratoga Community Federal Credit Union: Offers a line of credit with variable rates starting at 7.25% APR.
- Affinity Plus Federal Credit Union: Variable rates from 3.49% to 8.49% APR, fixed rates from 4.99% to 8.49% APR. Maximum loan amount is $50,000.
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Pros and Cons of Each Credit Union:
- LendKey: Pros include a high Trustpilot rating, potential for 100% school cost coverage, but cons include uncertainty until application.
- Navy Federal Credit Union: Pros include a six-month grace period, a 12-month forbearance program, but cons include higher interest rates and required payments while enrolled.
- Thrivent Federal Credit Union: Pros include a non-Thrivent member cosigner option, but cons include higher interest rates and limited repayment terms.
- Saratoga Community Federal Credit Union: Pros include no payments while enrolled, but cons include variable interest rates and limited eligibility for graduate students.
- Affinity Plus Federal Credit Union: Pros include easy membership, long repayment terms, but cons include high interest rates and low maximum amounts.
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Credit Union vs. Banks and Online Lenders:
- Credit unions are nonprofit and member-owned, often offering lower fees and interest rates than for-profit banks and lenders.
- Benefits of credit unions include lower interest rates, improved customer service, and community-focused lending experiences.
- Disadvantages include limited eligibility, fewer physical locations, and potential challenges for in-person interactions.
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Considerations for Borrowers:
- Borrowers should assess interest rates, repayment terms, forbearance options, and other features before finalizing a loan.
- Credit union loans are private, lacking federal loan perks; borrowers should maximize federal student loans first.
- Customer service experience and existing credit union membership may influence the choice of a credit union student loan.
In conclusion, credit union student loans offer unique advantages and considerations, and borrowers should carefully evaluate their options based on individual needs and preferences. If you have any specific questions or require further clarification on particular aspects, feel free to ask.
