When paying for college, there are many different options available to people who are struggling. There are scholarships, student loans, grant, work-study employment, and loans and lines of credit from credit unions. Credit unions are not always the first thing that pops to a borrower mind, but they are good sources of financial aid never the less. Private student loans from Credit unions are becoming increasingly more popular since students are receiving less financial aid and the cost of attending college has skyrocketed.
What is a Credit Union?
A credit union is very similar to a bank, but it does have a few key differences. These difference are a credit union is run by its members rather than by a for profit company. Members of the credit union can volunteer to serve on a board that decides on interest rates on loans and lines of credit, among other important decisions for the other members.
How Can A Credit Union Help Me Pay For College?
A credit union can offer a loan with a low interest rate, especially when comparing interest rates at a bank. These loans usually do not have any fees attached to them, can be fully deferred while the borrower is still in school, and offers the student a personal line-of-credit.
What are benefits to borrowing from a Credit Union?
- Credit unions are considered non-profits. Therefore, they are not depending on the interest from your loan to make money. This results in significantly lower interest rates on the borrowed money. Lower interest rates will obviously save you money in the long run while you are repaying the loan to the credit union.
- Credit unions are run by their members, and because of this, customers of credit unions tend to be much happier with the service they receive at a credit union compared to the service they receive at a bank. Anyone who has taken out a private student loan from a large bank knows that sometimes it can be very hard to receive personalized customer support.
*Disclaimer: It is important to exhaust all your scholarships, grants, student employment options, and federal student loans before turning to a private lender for assistance paying for your education. This is because private student loans are usually not eligible for forgiveness or payment programs, and they are not eligible for bankruptcy either. This means that when a borrower signs their credit agreement, they are locked into the interest rate and term of loan unless unusual circumstances or refinancing allows them to change the terms of their loan or use it to declare bankruptcy.