Credit unions entered the private student loan consolidation market in late 2010. cuStudentLoans, a network of over 130 credit unions offering one loan with common underwriting and pricing, launched its offering nationwide February of last year. This may be a saving grace for those students who need to refinance their existing student loans for better rates, lower payments, and shorter terms.
Credit unions are not-for-profit financial institutions. This means you will probably get better rates. You will be able to refinance your private student loans at lower rates, possibly saving thousands of dollars per year in total interest and payment expenses. The suggestion is to leave whatever federal loans you have alone; check it out, but the rate will probably be lower than what even a credit union may offer.
Private student loans from traditional banks, especially between 2008 and 2012, left some borrowers holding interest rates of up to 14% because of variable rate loans offered by private loan companies on student loans. Compare that to rates currently offered on consolidation in the cuStudentLoans program – 4.75% to 7.25%.
What a difference. A graduate student in a private school got a 4.75% consolidation loan for student loans over $100,000. His interest rates went up to 14.13%. By refinancing, he’s saving $8,400 a year in payments and is no doubt sleeping a bit better at night.
There’s another big plus when it comes to credit unions. If you have a co-signer, not only may you get a lower interest rate, credit union loans often allow the cosigner to kiss their obligation goodbye if the borrower has been on point in making payments for 12 straight months. Another good reason to keep your credit in good shape.
Credit unions require you to become a member. Every credit union has a different filed of membership that determines member eligibility, like teachers, military, auto workers, etc., but a lot of them will work with students, especially in college towns. Do your research and figure out who can help you best. Membership is generally free, but may vary depending on the credit union. It’s easy to research and find a credit union close in your community that will help you consolidate your student loans.
Here are a few questions to ask when consolidating your loans, no matter who you use:
- Is the interest rate fixed or variable? (You want fixed only.)
- Are there any fees? (And are they added onto the loan.)
- Are there pre-payment penalties? (You want the answer to be no.)
- Do you have discounts for auto-payment? (You want the answer to be yes.)
- Do you have discounts for on-time payments? (Absolutely!)
If your credit union will only refinance a part of your debts, take it. Their interest rates are worth the transition, and you will establish a financial relationship with will serve you well.
For all those drowning in student debt, a credit union is a good way to go. Go here for more article https://www.paymystudentloans.com