How to refinance your student loans through a credit union

Credit unions offer student loan refinancing. Learn more about credit union refinance loans and the pros and cons. (Shutterstock)

When you refinance your student loans, a credit union is an option where you might find a lower interest rate and favorable terms. Unlike banks, which are for-profit organizations, credit unions are not-for-profit, member-owned organizations. Because of this, they may offer more reasonable interest rates to their members. 

Keep reading for insight into credit union refinance loans, including the benefits and downsides. 

Credible makes it easy to compare student loan refinance rates from various lenders, all in one place.

• 4 credit unions that refinance student loans
• How to refinance student loans with a credit union
• Pros and cons of refinancing through a credit union
• Compare multiple lenders to get the best student loan refinancing rate

4 credit unions that refinance student loans

The following four credit unions offer student loan refinancing. Of these, only PenFed is a Credible partner lender.

First Tech Federal Credit Union: Best for large loan amounts

When you refinance your student loans with First Tech Federal Credit Union, you won’t have to worry about application or origination fees. You can choose a loan term of five, seven, 10, or 15 years, and you can refinance loans up to $500,000.

• Loan amounts: $5,000 to $500,000
• Minimum credit score: Does not disclose
• Requirements for refinancing: Be a First Tech member or become one when you apply; have federal or private student loans from a qualified Title IV-accredited school; be a U.S. citizen or permanent resident; be at least 18 years old; be the parent of a borrower that meets these criteria, if refinancing Parent PLUS Loans

Navy Federal Credit Union: Best for military service members

Military service members, veterans, and their families can qualify for refinancing through Navy Federal Credit Union. The credit union offers a 0.25% interest rate reduction when you sign up for automatic payments.

• Loan amounts: Up to $125,000 in undergraduate loans; up to $175,000 in graduate loans
• Minimum credit score: Does not disclose
• Requirements for refinancing: Be a Navy Federal member or become one when you apply; have federal or private student loans; have graduated from an eligible school; be a U.S. citizen or permanent resident

PenFed: Best for refinancing parent loans

With PenFed, both students and parents of students can refinance loans. The credit union doesn’t charge fees, and it says its application can be completed in less than 15 minutes. 

• Loan amounts: $7,500 to $300,000
• Minimum credit score: 670
• Requirements for refinancing: Be a PenFed member; have federal or private student loans; be a U.S. citizen; have at least $7,500 in student loans

Service Credit Union: Best for borrowers who attended a not-for-profit school

With Service Credit Union, you can refinance both private and federal student loans, including PLUS Loans, up to $150,000. The credit union offers five-, 10-, and 15-year repayment terms and has no origination fees or prepayment penalties.

• Loan amounts: Up to $150,000
• Minimum credit score: Does not disclose
• Requirements for refinancing: Be a Service Credit Union member or become one when you apply; have federal or private student loans in repayment or a grace period; be a U.S. citizen or permanent resident; have graduated from an approved public or private not-for-profit school; meet Service Credit Union's standard underwriting criteria

With Credible, you can compare student loan refinance rates from multiple lenders in minutes.

How to refinance student loans with a credit union

If you decide that refinancing your student loans is the right move for you, take these steps to complete the process with a credit union: 

1. Review your credit score. Before you begin the process of actually applying to refinance your student loans with a credit union, it’s helpful to check your credit score. Your credit score will affect your eligibility for refinancing and the types of rates and terms you’ll qualify for. Having a higher credit score will help you secure a lower interest rate, which can save you a lot of money over the life of the loan. If your score is on the lower side, it may be worthwhile to spend some time working on improving your credit score before you apply for refinancing.  
2. Pay down other debts. If possible, pay down as much debt as you can (like your credit card balance or an auto loan) before you apply to refinance. Lenders take your debt-to-income (DTI) ratio into account when deciding to approve a loan, and the rates and terms they’ll offer you. Your DTI compares your monthly debt payments to your gross monthly income. The lower this ratio is, the stronger your application will be.
3. Shop for the best lender. While it’s always a good idea to compare multiple lenders before choosing one, things can get a bit trickier when it comes to credit unions, as you need to be a member or become a member. Check with each credit union you’re comparing to find out if you must be an existing member. Then, compare rates and terms to find the best refinance loan for your situation.
4. Organize required documents. No matter where you apply, you’ll typically need to provide some standard documentation, such as your government-issued ID, proof of employment or a pay stub, or a recent tax return. Having all these documents ready to go will make the application process move along faster.
5. Complete the application process. Once you know where you want to apply and have your documentation ready to go, you can apply to refinance your student loans.

Pros and cons of refinancing through a credit union 

You have quite a few options when it comes to refinancing your student loans, and a credit union is just one of them. If you’re considering refinancing through a credit union, keep these advantages and disadvantages in mind: 

Pros

• Better customer service — Because credit unions are not-for-profit and are designed to put members first, they tend to take a more personal approach to customer service than larger private banks do.
• Fewer fees — Since credit unions are member-owned, they tend to charge fewer fees.
• Lower interest rates — Credit unions also typically have lower interest rates, which can save you a lot of money over the life of your new loan.

Cons

• Must be a member — You generally have to be a member of a credit union to apply for loans through them. This can eliminate opportunities, as each credit union has a unique set of membership criteria.
• Application process may be more challenging — You typically have to apply to be a member (if you aren’t one already) when you want to refinance your student loans with a credit union.
• Lower limits — Credit unions often have lower loan amounts compared to other types of lenders. If you have a lot of student loan debt, you may not be able to refinance it all through a credit union.

Compare multiple lenders to get the best student loan refinancing rate

Before you refinance your student loans, it’s important to compare various lenders to get the best rates and terms for your situation. The last thing you want to do is overspend on your new loan. You can start by checking out local credit unions first, as qualifying with a local one may be easier. 

With Credible, you can easily compare student loan refinance rates without affecting your credit score.