College tuition rates have never been higher. Even if you qualify for financial aid and have federal student loans and scholarships, you may be unable to cover the remaining cost on your own. Many times students have to turn to private student loans to help pay for the cost of college.
Your local credit union may offer private loans at lower rates and better terms than for-profit banks and online lenders. Residents in Michigan should consider a student loan from their local credit union as a student loan option.
T&I Credit Union partners with Student Choice to provide student loans to help fund your education. Student Choice lets you borrow up to $75,000 and offers undergraduate students 20 and 25-year repayment terms.
T&I Credit Union also helps students interested in specific industries. We work with Serenity Health Training Institute and US Truck Driver Training School, Inc. to provide students funding of up to $10,000 for an individual and $20,000 with a co-borrower for their education. You can also find student loans for job training in construction, beauty, and hairdressing.
What are Private Student Loans?
Private student loans are non-federal loans made through lenders like banks and credit unions. The terms and conditions of private student loans are set by the lender instead of the federal government.
The Application Process
To apply for a private student loan, you must be over 18 and have a credit history. If you don’t have a credit history, a parent or guardian with a credit history must co-sign your loan. They’re called a co-borrower.
You must meet eligibility requirements to qualify for the loan. Requirements include being enrolled in an approved school with a degree-granting program and becoming a credit union member once approved for the loan.
You’ll also need to provide income documentation to prove you can make monthly loan payments once your loan has been granted. It may take up to 15 business days to verify your application and documents.
Once you submit your application and your documents have been verified, the credit union will contact your school to certify your loan. This process may take an additional 3 to 15 business days.
After certification, the funds are distributed directly to your school. The entire process can take anywhere from 30 to 42 business days and can be longer near the start of a new school semester when the financial office is busier.
Interest Rates
Private student loans are based on your credit score, meaning the loan amount and your interest rate depend on your credit rating. You’ll receive more favorable terms the better your credit is. Private student loans offer both fixed rates and variable interest rates. Interest rates are based on the Prime Index.
Fixed rates stay the same for the duration of your loan and are a great option when the Prime Index rate is low. Variable rates fluctuate over time based on the prime index rate. A variable rate can increase if the prime index rate goes up. Your lender usually limits how high your rate can get, called the ceiling rate. Under a variable rate, you may pay more interest on your loan over time compared to a fixed rate.
Repayment Schedule
Some private lenders require students to make full monthly payments while attending school. Others give students the option of deferring part or all of the loan payment until after graduation.
Student Choice lets borrowers decide if they want to make interest-only monthly payments, full payments of principal and interest every month, or defer all payments until 6 months after graduation.
The standard repayment schedule is 20 years for borrowing up to $40,000 and 25 years for any amount over that amount. You’ll have a monthly minimum payment to make, based on the amount borrowed and interest accrued. If you can afford it, you can also pay more than your monthly minimum to help pay your loan off quicker.
Why You Should Choose a Credit Union
Credit unions offer students private loans to help pay for college. All credit unions are member-owned nonprofits that provide the same banking products and services as larger, for-profit banks.
Members belong to a board and have a say in how the credit union is run. Federal credit unions are regulated by the National Credit Union Association and must follow national standards for banking.
Better Banking Experience
Credit unions are known for offering their members lower banking and financial fees and better customer service than other big banks. They’re more interested in building a long-term relationship with their customers and work hard to make sure you’re satisfied.
Lower Interest Rates
Since credit unions don’t pay taxes or need to make large profits to appease their stockholders, they can afford to offer their customers better interest rates. Credit unions may offer lower interest rates for private student loans than for-profit banks and other online lenders. The lower your interest rate, the less you pay over time.
Easier to Qualify for Loans
The application requirements at credit unions aren’t always so strict. It might be easier to qualify for a private student loan at a credit union even if your credit history is short or your credit score is average.
What Types of Private Student Loans are Available?
Many credit unions partner with Student Choice to offer private student loans to their members. The rates, approval, and underwriting for Student Choice loans are provided directly through your local credit union. The money for your private student loan comes through your credit union, and Student Choice manages your repayment plan.
When comparing loans, look at its terms, including:
- Interest rates: does it offer a fixed or variable rate, and what is the amount?
- If there are any origination fees.
- What your repayment options and terms are.
- What your monthly payments will be.
Apply for Private Student Loans Through T&I Credit Union
Private student loans are necessary if you still need money for college after receiving federal student loans and financial aid from your school. Private student loans from credit unions help cover the gaps in your funding so you can still attend school.
Credit unions may offer lower interest rates or better repayment terms for your private student loans than other lenders. T&I Credit Union offers banking and financial services, including private student loans, to members in Michigan. Contact us today for all your loan needs.
