Where is a Private Loan Lender for Financial Aid for College?
Your best private loan lender (and one that will even work with you in consolidating student loans) is your credit union.
Credit unions have mainly been unaffected by the economic recession. They (unlike banks) have money to lend and are looking for new ways to expand. While most banks have been eliminating their private loans for college, credit unions have been adding them.
Why are credit unions moving in to the student loan market?
grow their customer base
build member loyalty
add long-term additional income
diversify their assets
College loans for students are also a more secure model for a private loan lender, than car loans or mortgages. The default rate is lower and student loans are almost impossible to discharge in bankruptcy.
In some cases, credit unions have partnered with state governments (as in Connecticut and New York) to reduce their risk.
Why Choose a Credit Union for Private Money to Borrow?
There are no origination fees (although you may have to open an account- minimum is usually $5).
Credit union interest rates are lower than other private lenders. For instance, rates for Sallie Mae college loans are between 4.25% and 12.75%, but most fall towards the upper level. (That 4.25% is mostly to draw borrowers in; very few actually get that rate.) The average credit union rates are 6.0-6.25%.
Better benefits are offered. Credit unions are competing for your business- some benefits that are offered are:
1% rate discount after 10% of the loan is paid
.25% discount for automatic withdrawal
rate discount for higher GPA
30 day no-fee cancellation
a single application for a line-of-credit for all your college years
lower interest rates for repaying interest while in school or immediate repayment on graduation
Any educational expense can be covered- such as tuition, room & board, books, computer, and also past due tuition bills.
It is important to note that credit union interest rates are variable- the same as with any other private loan lender (or most of them).
Credit Union Student Loan Repayment Plans
The college loan repayment program you choose is not as flexible as the ones for federal student loan debt- the government offers a different loan payment formula for each graduate's needs. But there are some choices.
You could:
Defer all payments until 6 months after graduation and then make equal payments for 20 or 25 years (depending on the amount you borrow).
Make interest-only payments while in school and then have the rest spread out over 20 or 25 years.
Start making interest and principal payments while in school.
Use their graduated repayment option- For the first two years of repayment, your payments will either reflect just the interest for that period, or else the monthly payments for those two years will be as though the loan was spread out over forty years.
After the two years, your payments will be higher than the standard repayment.
The features offered by each private loan lender will vary from credit union to credit union. A public employees credit union may differ from a community credit union.
You will have to join a credit union. Membership is easy to qualify for- there are 70 million people who belong to credit unions and it is estimated that another 50 million could join one if they wanted to. It is likely that you would qualify for more than one.
If you have joined one but no longer meet the requirements, you can still keep your membership. If someone in your family or household was a member, that would probably qualify you also.
Here is a list of some credit unions who offer college loans for students:
ABCO Federal Credit Union ABNB Federal Credit Union ACMG Federal Credit Union Addison Avenue Federal Credit Union Advanced Financial Federal Credit Union Affinity Plus Federal Credit Union Alabama Credit Union American Eagle Credit Union Americhoice Federal Credit Union Americu Federal Credit Union Amplify Federal Credit Union Anheuser Busch Employees Credit Union Apple Federal Credit Union Arkansas Federal Credit Union Aspire Federal Credit Union BMI Federal Credit Union Bank-Fund Staff Federal Credit Union Baxter Credit Union Chartway Federal Credit Union CINCO Family Financial Center Credit Union Community First Credit Union of Florida Credit Union of New Jersey CTCE Federal Credit Union CUMCO Federal Credit Union Day Air Credit Union Deepwater Industries Federal Credit Union DEXSTA Federal Credit Union Directions Credit Union Elevations Credit Union Eli Lilly Federal Credit Union Energy Credit Union Erie General Electric Federal Credit Union Evansville Federal Credit Union Everett Credit Union Fairleigh Dickinson University Federal Credit Union First Financial Federal Credit Union First Jersey Credit Union Fremont Federal Credit Union GFA Federal Credit Union Great Lakes Credit Union Grow Financial Federal Credit Union Harborlight Credit Union Hawaii Community Federal Credit Union Hawaii USA Federal Credit Union Hingham Federal Credit Union Holy Rosary Credit Union Interra Credit Union Irving City Employees Federal Credit Union KEMBA Financial Credit Union Kemba Credit Union Liberty Bay Credit Union Medical Area Federal Credit Union Members 1st Federal Credit Union Members Cooperative Credit Union Merck Sharp & Dohme Mid-Atlantic Federal Credit Union MidState Educators Credit Union Midwest Community Federal Credit Union Millbury Credi Union Motorola Employee Credit Union MPO Federal Credit Union NASA Federal Credit Union Net Federal Credit Union NJ Gateway Federal Credit Union NMTW Credit Union North Carolina Community Federal Credit Union North Carolina Community Federal Credit Union Northwest Federal Credit Union Novation Credit Union NU Union Credit Union Ohio Educational Credit Union Pinnacle Federal Credit Union Polish and Slavic Federal Credit Union Public Service Credit Union Quorum Federal Credit Union Raritan Bay Federal Credit Union San Antonio Federal Credit Union Seaport Credit Union Seaport Federal Credit Union Seven Seventeen Credit Union Signal Financial Federal Credit Union SRI Federal Credit Union State Employees Federal Credit Union Suncoast Schools Federal Credit Union Superior Credit Union Tobyhanna Army Depot Federal Credit Union Transit Employees Federal Credit Union Tri-Co Federal Credit Union UMASSFIVe College Federal Credit Union United Federal Credit Union United Poles Federal Credit Union University of Iowa Community Credit Union University of Kentucky Federal Credit Union UNIWYO Federal Credit Union Valley Wide of PA Federal Credit Union Visions Federal Credit Union Worcester Credit Union Workers' Credit Union Wright-Patt Credit Union XCEL Federal Credit Union
The best private loan lender is the one that gives you the best terms and benefits. These days that seems to be a credit union.
The best private loan lender is the one that gives you the best terms and benefits. These days that seems to be a credit union.