3 Places to Apply For Credit Union Student Loan Refinance

Thinking about refinancing your student loans? Many student loan refinance companies claim to have the best rates and terms, but it’s important to find one you trust and feel good about.

A community-minded lender, like a credit union, might offer the intimate lending experience you’re looking for. Learn more about credit union student loan refinance and how to choose the right lender.

Credit union student loan refinance

When refinancing student loans, you work with a financial institution to get a refinance loan to pay off your current loans. Some credit unions provide this option like other financial institutions, but credit unions have some important differences.

Credit unions are a type of financial institution, similar to a bank, that is member-owned. Because credit unions share with their members, they can offer competitive rates.

Having a focus on members and offering great rates make credit unions appealing, especially if you’re looking to refinance. When you refinance student loans, you want the best rate possible to get the most savings. A credit union can help you do that.

“As member-owned and community-based financial institutions, credit unions see their mission as helping people realize their dreams — and education finance is a major part of that mission,” explained Devin Hughes VP, Business Development at LendKey. “Many credit unions offer cost-effective solutions for refinancing student loan debt and often provide benefits such as interest rate reductions for customers who are in good standing.”

The good news is that it doesn’t have to be hard to find a credit union you can work with to refinance your student loans.

3 Lenders for credit union student loan refinance

When financing through a credit union — or any financial institution, really — make sure you comparison shop for the best rate. Our student loan refinancing survey found 40% of student loan borrowers only shopped at one place. To score the best rate, check out all of your options, credit union or not. But since credit unions typically offer better rates, here’s a good place to start:

1. LendKey

LendKey is an online platform that connects borrowers with credit unions and community banks. One of its product offerings is student loan refinancing. Using their site, you can check your rate by providing some personal information and submitting your income and the amount you want to borrow for a refinancing loan.

The good news is that when you check your rate, it only does a “soft pull” on your credit, so your credit score won’t be affected. It's only when you proceed with a full application will there be a “hard pull,” which may lower your score temporarily by a few points.

Working with LendKey can help simplify your search as they aggregate credit union and local bank lenders to provide more options. There are also no origination fees, and loan terms of five to 20 years are available.

2. PenFed Credit Union

PenFed Credit Union, short for Pentagon Federal Credit Union, offers student loan refinancing to their members. Currently, they have rates as low as 3.12% — depending on your credit, of course.

Refinancing your loans with PenFed can simplify your repayment process and save you money on interest. To qualify, you need to be a member of PenFed, but it’s not hard to apply.

For example, if you’re a member of one of their partners — like the American Red Cross, U.S. Department State of Energy, or others — you could qualify for membership. There are other ways to become a member as well. If you’d like to pursue membership but aren’t sure you qualify, get in touch with them for more details.

Applying for student loan refinancing with PenFed means no fees, an online application, and the possibility of having a cosigner for a lower rate. Just be aware that a cosigner is legally liable for the loan as well, so tread carefully.

3. Your local credit union

Depending on where you live, you may qualify for various credit unions in your areas. There can be credit unions based on where you live or your profession. Check to see credit unions in your area to see which ones you qualify for and if they offer credit union student loan refinance products. Find your local credit unions to see which one makes sense for you.

What to know about credit union student loan refinance

Regardless of which financial institution or credit union you use, it’s important to know the risks of refinancing student loans. Although you can save money on interest, you’ll give up federal loan benefits.

That means no income-driven repayment or student loan forgiveness through Public Service Loan Forgiveness. You can also refinance multiple times, but remember refinancing is irreversible— you can’t go back to federal student loans or those special repayment options. You can't just cancel and go back. You'll now have private student loans as part of the student loan consolidation (hopefully with competitive interest rates!).

Also, research the eligibility requirements for membership at the credit union as well as repayment terms, and make sure it works with your finances and lifestyle.

You want a lower interest rate and check out your monthly payment. Compare a variable rate and fixed rate Annual Percentage Rate (APR) to see which is better. Additionally, see if there is a discount with automatic payments like an interest rate deduction and see what repayment plans are offered.

If there are perks like deferment and forbearance, even better. Also, be aware that there will be a credit check and you'll have a new loan. If you don't have good credit, you may need a co-signer. Check to see if the lender offers a cosigner release.

If the pros outweigh the cons, look at offers from credit unions and other student loan refinancing companies to see which lender offers the most financial support. A manageable loan is one you can make on time payments with and feel good about.

Ultimately, you want to take control of your student loan repayment and find the best student loan for you while getting the maximum borrower benefits.