Student Loan Options: Smart Ways to Finance Your Education This Fall
A new school year means new classes, new schedules and a fresh set of opportunities. It can also mean big questions about how you are going to pay for tuition, books, housing and everything else that comes with it.
Maybe you are gearing up for the semester ahead. Maybe you are already paying down student debt. Either way, understanding your options can help you move forward with more confidence. Private student loans and student loan refinancing solve different problems, so it helps to know which one actually fits what you are dealing with right now.
Here are five things worth thinking through as you weigh your options this fall.
Know the Difference Between In-School Loans and Refinancing
An in-school private student loan helps eligible undergrad and grad students cover qualified education expenses. Depending on your loan terms, that can include tuition, room and board, books and even a computer.
Before you apply for a private loan, take a look at what else is available first: grants, scholarships, savings, work-study and federal student aid. Federal loans come with some real advantages private loans do not, like income-driven repayment, deferment and certain forgiveness options.
Refinancing is a different tool altogether. It replaces one or more existing student loans with a new private loan, which can help you get a better interest rate, change your repayment term, combine multiple loans into one payment, or simply adjust what you pay each month.
It can make sense once you have graduated, built up your credit and settled into repayment. Just keep in mind that refinancing federal loans into a private loan means giving up federal protections and programs, so it is worth reviewing those benefits carefully before you decide.
Community Resource Federal Credit Union offers both in-school private student loans and student loan refinancing, with applications powered by LendKey.
Look Beyond the Advertised Interest Rate
The interest rate matters, but it is not the only number that determines what a loan actually costs you. Look at the APR, or annual percentage rate, too, along with the repayment term and your estimated monthly payment.
Private student loans may offer fixed or variable rates:
- Fixed interest rates stay the same for the life of the loan, so your monthly payment stays predictable.
- Variable interest rates can change over time based on the market. They often start lower, but your rate and payment could climb later.
It is also worth checking:
- Whether an automatic payment discount is available
- Whether the lender charges application, origination or prepayment fees
- When your repayment actually begins
- Whether interest builds up while you are still in school
- What repayment terms are available
- Whether a cosigner is required
- Whether the loan includes a cosigner release option
A lower rate helps, but the full picture of your loan terms determines what you actually pay back. Check the current rates, eligibility requirements and terms before you apply for a CRFCU student loan option.
Understand How Refinancing Can Affect Your Monthly Payment
Refinancing can lower your monthly payment by reducing your interest rate, stretching out your repayment term, or both. It can also simplify things by rolling multiple eligible loans into one new loan with a single monthly payment.
But a lower payment each month does not always mean you are paying less overall.
Stretching out your repayment period frees up room in your monthly budget, but you will likely pay interest for longer. Go with a shorter term instead, and your monthly payment goes up, though you could pay less interest overall.
For example, a borrower may have two refinancing offers:
- One with a shorter term, higher monthly payment and lower total interest cost
- One with a longer term, lower monthly payment and higher total interest cost
Neither option is automatically the better choice. It really comes down to your income, other financial obligations, your emergency savings and where you want to be long-term.
Treat the estimated monthly payment as one piece of the puzzle, not the whole decision. CRFCU’s student loan refinancing option lets eligible borrowers check rates and terms through an online application powered by LendKey.
Ask Questions Before You Sign
A student loan can shape your budget for years, so take the time to actually read the loan agreement before you accept an offer. Do not rely on the promotional rate or the estimated payment alone.
Before you sign, ask:
- Is the interest rate fixed or variable?
- What APR do I actually qualify for?
- How much will I repay over the full loan term?
- When will my first payment be due?
- Will interest build up while I am in school?
- Are there application, origination, late payment or prepayment fees?
- What happens if I run into financial hardship?
- Is a cosigner required?
- Can my cosigner be released later?
- Can I make extra payments without a penalty?
- Which loans are eligible for refinancing?
- Am I giving up any federal student loan benefits?
If you are applying with a cosigner, make sure you are both clear on what that means. Your cosigner is generally on the hook for the debt if you do not make the required payments.
The right loan fits both what you need now and what you can realistically repay later. Visit the applicable CRFCU student loan website for current rates, terms, eligibility requirements and additional information before you move forward.
Consider the Value of a Credit Union Option
When people start comparing student loan products, they often go straight to the big national lenders. But if you are eligible, it is worth looking at what your credit union offers too.
Credit unions are member-owned, which means they are built around serving their members and communities rather than shareholders. If you are already a member, starting with a place you know can make it easier to see how a new loan fits into your bigger financial picture.
CRFCU members can explore education financing right through the credit union, with the application handled online through LendKey. That means a fully digital process, backed by a relationship you already trust.
Either way, comparison is still the most important step. Look at the interest rate, APR, repayment term, total projected cost and borrower protections for every option on your list. A familiar name should not replace real research, but your local credit union is a great place to start.
Make an Informed Education Financing Decision
Education can open the door to new opportunities, but how you finance it matters.
Before you borrow, figure out how much you actually need after scholarships, grants, savings and federal aid are accounted for. Already repaying student loans? Compare your current rates and terms against any refinancing offer, and think carefully about what you would be giving up by refinancing federal loans.
Community Resource Federal Credit Union offers options for students who need help covering qualified education expenses, and for graduates ready to explore refinancing existing student debt. Whichever stage you are at, we are here to help you find something that fits.
Explore CRFCU’s student loan options to learn more.
Disclosure
Private Student Loans & Student Loan Refinancing
Subject to credit approval and Community Resource Federal Credit Union membership eligibility. Applications are powered by LendKey. Visit the website for current rates, terms, eligibility requirements and additional information.