The Benefits and Drawbacks of Consolidating Student Loans through a Credit Union

Getting a credit union student loan can be a great way to consolidate several other student loans into one location. Credit unions are cooperative financial institutions that allow their members to borrow money from the deposited funds. With this type of arrangement, you could take advantage of several benefits. However, there are a few drawbacks as well. 


  • Lower interest rates- Credit unions are non-profit organizations and as a result, they do not pay taxes. Since they get such a drastic savings when compared to other lending institutions, they can pass those savings on to their customers in the form of lower interest rates. Getting a lower interest rate for your student loans could provide you with a smaller monthly payment and a smaller amount of money that you have to pay over the life of the loan.
  • Member input- The board of directors at a credit union is determined by those that hold accounts at the credit union. If you have an account with them, you get to vote on who sits on the board. Therefore, if you do not like how things are being run, you can actually do something about it. With other lenders, you just have to work with what they give you. As a result of this accountability, credit unions are much more likely to be helpful and do what is in your best interests overall.
  • Lower fees- Charging fees for many different things is how banks and other lenders make their money. Everything that you try to do has some sort of a fee involved. With credit unions, this is not usually the case. They put an emphasis on helping the customer and therefore, do not charge fees for all of the things that other lenders do.
  • One loan- Consolidating your student loans with a credit union can provide you with one location for your student loans. Making one payment each month is going to be quite a bit more convenient than making several payments on multiple loans. 


  • Limited locations- Most credit unions do not have the wealth of locations that other lenders do. When you need to stop in and conduct some business or ask a question, you may have to go out of your way to get to the nearest location. Credit unions are typically small, local businesses and therefore have only a few locations.
  • Limited eligibility- Unlike a bank or other lender, not everyone can do business with every credit union. Some credit unions are like a club for certain people to join. For example, certain businesses have their own credit unions for their employees. If you are not an employee of that company, you can not do business with the credit union. Therefore, the credit union that you would like to use, may or may not be available to you. With other lenders, as long as you meet their credit requirements for a loan, they will do business with you. This is not necessarily the case with credit unions. 

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