You’ve visited colleges and explored majors and you made a decision on where to go. The next step is figuring out how to pay for tuition, books, room and board, and other essential expenses. Scholarships and savings are helpful, but they rarely cover everything. That’s where student loans come in. About 70% of college students rely on loans to fill the financial gap.
The first step for many is filling out the Free Application for Federal Student Aid (FAFSA). This form opens the door to federal financial aid, which usually offers better terms, like lower interest rates and flexible repayment plans. But sometimes, federal aid just isn’t enough, and that’s when private student loans become an option worth exploring.
Private student loans can seem like navigating a maze with so many options, each with its terms and conditions. Trying to figure out which is best can feel like comparing apples to oranges. Interest rates, repayment terms, and loan limits can differ wildly from one lender to another. It can be overwhelming to understand these differences and find the right loan for you. In this article, we’ll dive into the details of one such lender to help you navigate this complex landscape.
CU Student Choice is one of these options.
About CU Student Choice
CU Student Choice was established in 2008 by a group of leading credit unions and credit union service organizations (CUSOs) to address the growing need for affordable student loan options.
Recognizing that traditional private student loans often came with high interest rates and fees, these credit unions collaborated to create a comprehensive and competitive student lending solution. This cooperative effort aimed to leverage the strengths of the credit union industry, offering student loans with better terms and conditions.
From the beginning, CU Student Choice focused on providing value to credit union members by offering student loans with lower rates, no origination fees, and flexible repayment options. Their mission was to make higher education more accessible and affordable.
Over the years, CU Student Choice has expanded its network of participating credit unions and evolved its product offerings to meet the changing needs of students and families, integrating financial education resources to help borrowers make informed decisions about their student loans.
Ranking 10/10 as CU Student Choice is a competitive lender in the student loan sector with a unique perspective on student loans.
Our Process
As with all loans, there are several things to consider. These will be based on where you are attending school, how much you need to borrow, your (and if you have cosigners) credit scores, interest rates of the loan, and repayment terms.
We will outline the features of CU Student Choice and how they compare to other lenders on a scale of 1 to 10 (A few factors we gave more weight to and those will be pointed out below.)
Overall Ranking
After looking at more than 15 factors and comparing the most popular private student loans on the market, we’ve given CU Student Choice a 4.0 out of a possible 5 ranking.
Keep reading to explore the details of applying for and obtaining a loan with CU Student Choice and to understand how we arrived at this ranking. We’ll talk about special features that make them stand out and a general comparison to other private student loans on the market.
Note: While CU Student Choice has several products, we specifically looked at the CU Student Choice Private Student Loan for our analysis.
Who Can Apply?
CU Student Choice works a little differently than other private student loan lenders. You are matched up with a network credit union and each one of these lenders might have slightly different qualifications.
In general, loans are available to students who are enrolled at least health-time in an accredited college or university. Applicants and co-signers typically need to be US citizens or permanent residents. Students must be the age of majority in their state (either 18 or 19), and applicants must meet certain credit requirements.
Those applying on their own must meet minimum credit scores, income requirements, and debt-to-income ratios. You are more likely to qualify for a loan if you have a cosigner, which could be a parent, relative, spouse, friend, or mentor.
If you are not already a member of a credit union, part of the process is signing up to become one.
To qualify for loans in subsequent years of school, students must maintain satisfactory academic progress as defined by their school.
While this did not factor into our rankings, your choice of school is a big deciding factor on whether you can apply for any loan.
What is the maximum loan amount?
The maximum amount you can borrow varies. Once you start the application process and receive lender matches, you will be able to see the minimum and maximum loan amounts.
The lender will look at your school’s certified costs and the amount of other financial aid you have already received. Qualifying expenses may include tuition and fees, food, room and board, books and supplies, transportation, and personal expenses.
You are encouraged to apply for federal aid before applying for a private student loan. Use private student loans to make up the balance.
To ensure you take out enough loans to pay for college, but not too much to have you drowning in debt, you’ll need to do some calculations. One rule of thumb is to not borrow more than what you anticipate you will earn in your first year in the working world.
Are there any fees to apply?
In addition to the cost of the student loan, lenders often add other fees for setting up and maintaining the loan. These costs can accumulate, so it’s wise to find a lender that waives them.
The value of credit unions is that they are not-for-profit organizations that work to serve their members. The focus is on providing a safe place to borrow at reasonable rates. This includes either low or no fees. Check with the particular credit union for a schedule of fees, if any.
This helps borrowers budget their student loan costs more effectively, ensuring that more of the loan amount goes towards actual educational expenses.
This is a definite pro. The lower the fees, the more affordable the loan is over time.
Ranking 10/10 based on the assumption that there are little to no fees throughout the loan process.
Can I pay the loan off early?
With CU Student Choice, your repayment terms are based upon the credit union lender and their terms. In general student loan repayments follow the same patterns.
First, you can start paying on your loan immediately. This gives you a head start on becoming debt-free and results in the lowest-cost loan. Even if you choose to defer payments, you have the option to make payments when you can.
Second, while you are still in school, you can make interest-only payments. Again, this gives you a head start and helps build credit.
Third, you can wait until you graduate to start making payments. Keep in mind that your interest is accumulating while you are not making payments or even when making partial payments, so the cost of your loan will rise during this period.
Once you leave school, there is often a grace period before you start making loan payments.
Some credit unions also offer a graduated repayment program where there is a period of lower principal and interest payments, after which payments increase later in the life of the loan.
Beginning payments as soon as possible will save money and build credit. On the other hand, not having to worry about payments until after graduation allows students to focus on their studies without immediate financial burden.
This is a pro, offering flexibility depending on your financial situation.
Ranking 9/10 because some lenders offer more repayment options.
Many credit union lenders offer a 0.25% interest rate reduction if payments are automatically debited from your payment account.
Ranking 8/15 as the lowest rates require an auto-pay option. Note that we gave more weight to this category because it’s an important factor for borrowers when managing repayments.
CU Student Choice follows a standard 6-month grace period before loan repayments are required.
Ranking is 8/10 for the standard grace period; some lenders offer longer terms.
Are there payment deferment options?
Private loans typically offer fewer deferment options compared to federal loans, making them less flexible if financial difficulties arise.
Private loans also lack federal protections, such as forgiveness programs and extensive deferment options, which can be crucial for some borrowers.
Deferment options vary. Once you are paired with a credit union, you will be given this information.
Ranking 9 out of 10 due to several payment options including deferring payments until you are out of school 6 months. Different credit unions may offer more. As always, read the fine print and ask lots of questions before deciding on a loan.
Do I need a parent to cosign the loan?
While some students can qualify for student loans themselves, they likely will need a cosigner to qualify for a larger loan. This person is generally a parent, relative, or a responsible adult with established good credit.
The cosigner must meet the same eligibility requirements as an independent borrower.
CU Student Choice strongly encourages a cosigner when applying for a loan. Many credit unions offer a cosigner release option based on payment history. Review these terms with the credit union if this is important to you.
We consider this a plus as it offers the cosigner an opportunity to release themselves from the loan, if they choose.
Ranking 15 out of 15 due to the consigner release option after 12 months. Note that we gave more weight to this factor and 12 months is the lowest period of time among all the lenders we looked at. Again, check with the credit union you are matched to.
The better the credit rating of the borrowers or their cosigners will determine interest rates and loan amounts. Good to excellent credit will qualify for the best rates. Establishing a strong credit history or finding a qualified cosigner with excellent credit is essential to accessing competitive loan terms.
This can be a con based on your credit history, but personal circumstances do not affect our ranking.
Ranking 10/15 as the minimum FICO score required for the loan is 650; although the higher the score, the better the chances of approval and the better the rate available. Note that we gave this more weight in the rankings as the ability to obtain the loan at a lower interest rate is very important to most borrowers.
Note that there is no parent only loan option with CU Student Choice. You’ll need to be a cosigner if you want to help them with the loan.
What is the application process?
Gather personal information, income information, school enrollment information, amount needed for the current school term, and your cosigner’s information.
After you input information online, you can view a list of solutions from credit unions you can join. Choose the credit union that fits your needs and join as a member.
The whole process from initial application to disbursement to your school can take between 5 – 45 days, so start the process as soon as you know you need a loan.
Unlike the majority of lenders, CU Student Choice will pull a full credit report before approval. These types of inquiries are typically reported to the credit reporting agencies.
Ranking 5/10 based on the full credit report requirement to move forward in the process. This will likely show up on your credit report.
How competitive are the rates?
Credit unions are not-for-profit and that is often reflected in their rates, which are competitive with other lenders.
At the time of this article, rates on the website show:
Fixed Rate Loans range from 3.94% – 16.25% APR
Variable Rate Loans ranging from 4.99% – 15.50% APR
If you can lock in a fixed-rate loan with an excellent credit score, your loan will be significantly lower than starting with a variable rate and seeing it rise to the upper percentage rates. However; variable rates can be advantageous at times.
The term of your loan can also impact the cost and monthly payment amount. CU Student Choice offers 10, 20, and 25-year loans. The choice of term depends on the loan amount and repayment options.
Ranking 10/10 based on options between variable and fixed rate loans. While CU Student Choice rates are on par with other lenders, we recommend that you shop around to find the rate and payment plan that is right for you. The rate you receive depends on a variety of factors.
Are there other resources available?
CU Student Choice is paired up with over 225 lenders in communities all over the United States. The likelihood that you will find one in your neighborhood that meets your needs is very high.
A learning center is on their website with articles, FAQs, and informational guides where you can learn about the student loan process and your options.
Later on, if you want to refinance your loan, CU Student Choice has options for that as well.
Be sure to explore the Frequently Asked Questions for more details on all services offered.
Ranking 10/10 due to Special Product Features in addition to just the loan.
What else should you consider?
We also investigated the rating provided by the Better Business Bureau (BBB), which gives consumers confidence in a business’s reliability and trustworthiness. The rating is based on factors like customer complaints, transparency, and adherence to BBB standards. A higher BBB rating indicates that a business resolves customer issues effectively and operates ethically. It serves as a measure of transparency and accountability, showing how well a business treats its customers and handles disputes.
CU Student Choice has an A+ rating, which ranked 10 out of 10 on our scale.
Ranking 10/10 based on feedback from borrowers and an overall ranking of A+. We encourage you to look up any lender we review on their website at www.bbb.org.
We also looked at other reviews for our private student loans. If the loan was reviewed on major financial sites, we considered this a plus to the visibility of the loan. While this is a small factor in whether to consider a loan, we recommend careful research when comparing this loan to others.
Ranking 5/10 based solely on the fact that there is no review on NerdWallet.
Does CU Student Choice offer other loans?
We focused on undergraduate private student loans in our analysis, and while they don’t specifically mention graduate loans, they write articles about it.
CU Student Choice keeps its products simple with private student loans and refinancing. There are also savings accounts and certificates of deposit.
Summary
Here’s a summary of the pros and cons of a private student loan with CU Student Choice:
Pros:
- Competitive Interest Rates
- No Fees
- Standard Repayment Terms
- A+ Rating by the BBB
- Deferment Options
- 6-month Grace Period for Repayment
- Cosigner Release Option
- Innovative Option Backed by Credit Unions
Cons:
- Full Credit Report (no Soft Pull)
- Hard to Get a Loan Without a Cosigner
- No Income-Driven Repayment Plans
- Interest Accrual During In-School Deferment Periods
- Lack of Federal Protection
- No Review by NerdWallet
- Minimum FICO score of 650
Overall Ranking
Based on our set of criteria, we rank CU Student Choice at 4.0 out of 5. While this was lowest on our list of lenders, it should not deter you from considering them for a private student loan.
Next Steps
Navigating private student loans can be complex, as we’ve explored in this review. We strongly recommend evaluating multiple options thoroughly before reaching a decision. Visit lender websites, talk with their representatives, and prioritize key features based on your needs.
Your choice of loan will be influenced by various factors, each carrying different levels of importance to your specific situation. Taking these steps ensures you’re well-informed and positioned to select the loan that best fits your financial and educational goals.
To learn more about additional private student loans, explore our other reviews and resources.
Click here to Apply to CU Student Choice Private Student Loans
About the Author
Kim Burton is a versatile content and technical writer residing in the scenic mountains of Colorado. A lifelong learner, Kim enjoys crafting insightful articles on finance, technology, marketing, nutrition, real estate, and self-care. She holds a bachelor’s degree in Marketing and is a certified nutrition coach. As a mother preparing her child for college, Kim has conducted thorough research into the student loan process, equipping herself with a wealth of knowledge to navigate this complex financial landscape. When she’s not writing, Kim enjoys hiking, creating, gardening, and hanging out with her family.
