Should You Tap Credit Unions for College Loans?

Thanks to the ongoing credit crunch, nabbing a student loan from a bank is increasingly difficult. Since July 2007, 50 banks have suspended private student loans and only about a dozen still underwrite them, according to FinAid.org, which tracks college financing.
One alternative: your local credit union. More commonly associated with serving groups of teachers or employees, credit unions are stepping into the student loan business, hoping to pick up the slack – and profits – that banks are leaving behind. The unions are poised to do so because they never got into mortgages the way traditional banks did, and are now flush with cash. It is “a perfect way for them to get fairly significant return on an asset class,” says Jim Briggs, a financial aid advisor at WiseChoice, which provides students with personalized online college counseling.
This month, at least three credit unions are slated to start offering private student loans, including Southern Lakes Credit Union in Wisconsin, West Branch Valley Federal Credit Union and Merck, Sharp & Dohme Federal Credit Union, which are both in Pennsylvania. In November, New York State’s Higher Education Services Corporation, which offers private education loans to students, added the credit union SEFCU to its roster of choices. (It joined Discover Student Loans and PNC Bank.) The following month, it also added Fynanz, a company that originates, services and underwrites private student loans for credit unions. In total, since May 2008 at least 20 credit unions have entered the marketplace through Fynanz's network and at least 82 have entered through Credit Union Student Choice, which processes credit unions’ loans and provides regulatory compliance.
But beware of pitfalls. For the most part, interest rates on private student loans offered by credit unions are higher than subsidized federal-student-loan rates. What’s more, borrowers’ credit scores often impact the loan’s terms and there’s little leniency with repayment. In some cases, just to apply for the loan, you have to show a letter of acceptance from the college or university, so the timing isn’t always ideal.
Still interested? Here are five issues to consider before signing up for a credit union’s private student loan.


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Student Loan Consolidation is the best option to reduce debt

As schools opened for new semester, College students are burdened with more student debt and become cumbersome to manage all loans at one time.

The best option for students to ease on the multiple students is to consolidate students loans. Consolidation of student loans can be either be done with Government lender and private lender. All loans will be rolled in to one payment and one interest will be given to deal with instead of multiple payments and loan if loan consolidation option is taken.

Also when consolidating the loan, it is vital to hunt for lower interest rate and ultimately help to keep lower cost of you debt.  There are countless institutions who frequently target consumers like you for loan debt consolidation, but be careful, no all institution are reputable that offer low interest rate. You don’t need to hang on to same interest rate or some fashion in higher interest even after consolidating your loan. Research is important to look for institution and big financial institutions should be preferred.

Consolidating your students loan will help you to make payments  affordably and it also allow you to better budget your income and most importantly get yourself out of debt if you look for best consolidation option with lower rates and affordable payment plan.


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