Pay Your College Tuition with Loans from Credit Unions

When you are trying to attend college, securing tuition loans is usually one of the first steps involved. Two of the most popular places to get tuition loans are banks and credit unions. Many people never consider using a credit union for their lending needs. Here are a few things you may want to consider about using a credit union for your college tuition.

Lower Interest Rates

When trying to secure any type of loan, one of the most important factors is the interest rate of the loan. Therefore, the interest rate will often be the deciding factor when you are shopping around. Credit unions typically have lower interest rates than anyone else in the marketplace. This is because the government has granted credit unions nonprofit status, which saves them from having to pay taxes on the money they bring in. Therefore, they have a significant advantage over traditional banks that have to pay taxes. Credit unions can then pass on the savings to their customers in the form of lower interest rates. While it might not look like a significant savings, even a fraction of a percentage of interest can amount to a lot over time. Most people pay on their student loans over many years. Therefore, securing the lowest interest rate that you can should be of prime importance.

Lower Fees

As a result of the nonprofit status, credit unions can also offer other lower fees. While the fees might not seem like a big issue, they can add up quickly. When applying for a loan, there may be closing costs involved. As a student, you most likely do not have a lot of money to spend on fees. Therefore, utilizing a credit union could be in your best interest.

Opening an Account

Credit unions are set up differently than traditional banks. The Board of Directors is voted on by those that hold accounts in the credit union. Everyone that has an account at the credit union receives part of the profit from the operations of the credit union into their account regularly in the form of interest. Therefore, if you combine a checking account with a student loan, this could result in even more savings overall. Many credit unions will even give you a lower interest rate as a result of opening a checking account with them and having your payment drafted out of the account. This gives them a level of control over the payment and increases the likelihood that it will be made every month. Therefore, they are willing to reward you in the form of a lower interest rate.

As an account holder, you also have some say over how the credit union is ran. You get to vote on the Board of Directors and your voice will be heard. This is simply not an option with a traditional bank.

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