Credit Unions Challenge Big Banks for Private Student Loans

Big banks that offer private-label college loans are facing new competition from credit unions that are looking to issue their own private student loans.

Credit unions, in increasing numbers, are developing partnerships with private student loan companies like Sallie Mae and Credit Union Student Choice to deliver private student loan products to credit union members. In one such agreement, Southeast Corporate Federal Credit Union, which itself has more than 400member credit unions, will offer private student loans through Sallie Mae.

Private student loans, non-federal education loans issued by banks and private lenders, are designed to assist students who have exhausted their federal student loan options. Private student loans can be used to cover up to 100percent of a student's approved educational expenses.

Credit Unions Offering Flexibility in Student Loan Programs
Some credit union private loan programs are being structured to appeal to families with more than one student in college by enabling parents to make multiple withdrawals on a single line of credit worth as much as $75,000. In addition, credit union backed student loans are eliminating loan origination fees and offer both in-school student loan repayment and deferred, post-graduation repayment plans.