4 credit unions to consider when refinancing student loans

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Refinancing with a credit union might get you a lower interest rate compared to refinancing with a bank, but keep in mind that you’ll have to join the credit union to apply. (iStock)

If you’re thinking about refinancing your student loans, working with a credit union might be a good choice. Because credit unions are nonprofit organizations, they sometimes offer better rates and terms compared to banks or online lenders — which might help you save more money while refinancing.

Here’s what you should know about refinancing student loans with a credit union.

4 credit unions to consider when refinancing student loans

Here are a few credit unions that offer student loan refinancing. Keep in mind that PenFed Credit Union is a Credible partner lender while the other credit unions listed aren’t partnered with Credible.

Also note that unlike with other types of lenders, you must be a member of the credit union to apply for refinancing. To be eligible for membership, you might have to live in a certain area, work in a specific field, join an associated organization, or meet other qualifying criteria.

First Tech Federal Credit Union

First Tech Federal Credit Union offers refinancing for both private and federal student loans ranging from $5,000 to $500,000. Keep in mind that the exact loan limits will depend on the type of loan and repayment term you opt for.

Additionally, if you refinance with First Tech, you’ll be able to choose from three different loan options, including a fixed-rate loan, a balloon loan and an interest-only loan. These options give you more flexibility when it comes to how you want to repay your loan in the future.

  • Min. credit score: Does not disclose
  • Loan amount: $5,000 to $500,000 (depending on loan type and term)
  • Terms: 5 to 15 years
  • Fees: No application fees, origination fees, or prepayment penalties

Navy Federal Credit Union

With Navy Federal Credit Union, you can refinance $7,500 to $175,000. Navy Federal also accepts cosigners and allows borrowers to apply for cosigner release after just 12 months of on-time, consecutive payments — a shorter period than many other lenders.

Keep in mind that if you’re a student, you’ll need to have graduated before you can refinance with Navy Federal. However, if you’re a parent who took out loans to pay for your child’s education, you can refinance while your child is still in school.

  • Min. credit score: Does not disclose
  • Loan amount: $7,500 to $175,000
  • Terms: 5 to 15 years
  • Fees: No application fees, origination fees, or prepayment penalties

PenFed Credit Union

PenFed Credit Union offers refinancing on loans ranging from $7,500 to $300,000. With PenFed, you can refinance any private or federal student loan, including Parent PLUS Loans. In fact, if you’re a student who benefited from Parent PLUS Loans, you can transfer those loans into your name through PenFed.

Additionally, PenFed is the only major lender that allows spouses to consolidate their student loans together.

  • Min. credit score: 670
  • Loan amount: $7,500 to $300,000
  • Terms: 5 to 15 years
  • Fees: None

Service Credit Union

With Service Credit Union, you can refinance $5,000 to $150,000 of both federal and private student loans. Keep in mind that you’ll need to have completed at least a bachelor’s degree to be eligible for refinancing through Service Credit Union.

Like with PenFed, Service Credit Union also provides the option for a parent to transfer Parent PLUS Loans to their child.

  • Min. credit score: Does not disclose
  • Loan amount: $5,000 to $150,000
  • Terms: 5 to 15 years
  • Fees: No origination fees or prepayment penalties

What to consider before choosing a lender

In addition to credit unions, several banks and online lenders offer student loan refinancing. However, while these lenders might seem similar, there are also some important distinctions to be aware of.

Here are a few questions to keep in mind as you consider various lenders:

  • Are they for-profit? Banks and online lenders are for-profit institutions while credit unions are nonprofit organizations. This is why credit unions are sometimes able to offer lower rates and more favorable terms in comparison to other lenders. Credit unions also tend to be more community-focused, which sometimes translates to a better customer experience.
  • Is banking also available? Credit unions and banks offer other banking products while online lenders might not.
  • Are physical branches available? Credit unions and banks typically have physical branches. With an online lender, on the other hand, you won’t be able to visit a brick-and-mortar location.
  • Is online lending available? While online lenders perform all their business online, you might have to visit a local branch to refinance with a bank or credit union.

Before you refinance, it’s important to compare as many lenders as you can to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from our partner lenders below in two minutes.

How to refinance student loans with any lender

Follow these four steps to learn how to refinance student loans:

  1. Compare lenders. Be sure to do your research and compare as many student loan refinance companies as possible to find a loan that suits your needs. Consider not only rates, but also repayment terms and any fees charged by the lender.
  2. Pick a loan option. After comparing refinancing lenders, choose the loan option that works best for you.
  3. Complete an application. Once you’ve chosen a lender, you’ll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs.
  4. Manage your payments. If you’re approved, be sure to keep making payments on your old loans while the refinance is processed. Afterward, consider signing up for autopay so you won’t miss any payments in the future — opting for automatic payments might even qualify you for a rate discount, depending on the lender.

Refinancing your student loans might help you save money and even pay off your student loans early. You can use Credible’s student loan repayment calculator to see how long it will take to pay off your student loans.

Frequently asked questions about student loan refinancing

Here are the answers to a few commonly asked questions regarding student loan refinancing:

Do credit unions refinance student loans?

Not every credit union offers student loan refinancing, but many do. You might be able to work with a local credit union in your area or with a credit union that’s available nationwide.

Additionally, because credit unions are nonprofit organizations, you might get a better rate on a credit union refinanced loan compared to what you’d get from a bank or online lender. They also tend to charge fewer fees compared to for-profit companies.

Is it smart to refinance student loans?

This will ultimately depend on your individual circumstances and financial goals. For example, if you can get approved for a lower interest rate, then you might be able to save money and potentially get out of debt faster through refinancing. You can use Credible’s student loan refinancing calculator to see how much you might be able to save by refinancing your student loans — this could help you decide whether refinancing is a good idea. However, if you can’t qualify for a better rate or term, then refinancing might not be a good idea.

Also keep in mind that federal student loan payments and interest accrual have been paused until Sept. 30, 2021 by the CARES Act. While you can refinance your federal student loans, doing so will cost you access to these benefits. You’ll also lose other federal benefits, such as the ability to sign up for income-driven repayment plans or pursue student loan forgiveness programs. Because of this, it might be a good idea to focus on refinancing just your private student loans for now.

What is the downside of refinancing student loans?

If you’re trying to decide whether to refinance as well as when to refinance student loans, it’s important to keep the downsides in mind. One of the major drawbacks comes into play if you have federal student loans — while you can refinance federal student loans, you’ll lose your federal benefits and protections.

Additionally, if you have bad credit or unstable income, then private student loan consolidation might not get you a better rate or more favorable terms than you already have. If this is the case, consider working to improve your credit score or applying with a cosigner to potentially qualify for more favorable terms.

If you’ve decided to refinance, remember to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.