Editors Note: This article applies to the cuScholar Private Student Loan. If you are a graduate interested in consolidation, check out our cuGrad Student Loan Consolidation review.
cuStudent loans is a slightly different lender with a slightly different approach to student loans. This results in some very unique pros and cons to these particular loans.
Because cuStudent Loans is run by a collection of not for profit credit unions their expectations of borrowers are different than most lenders. The loan terms offered can be a bit tedious, but are extremely effective in encouraging responsible borrowing. In theory, doing so puts students in the best possible position to succeed.
Interest rates on the cuScholar loan start at a fairly low 3.47%. However, depending on the credit of the borrower, or the cosigner, rates can be as high as 9.47%.
Students can borrow as little as $2,000 and the maximum total loan is $120,000 for undergraduates and $160,000 for graduate students.
Funds from the cuStudent Loan can be used for any qualified education expenses. Such expenses would include: tuition, room and board, books, transportation to school, and a computer.
Co-signers can be released from their obligations if the borrower makes 24 on time payments after graduation and is able to pass an independent credit review. Some lenders don’t have a cosigner release program, but for those that do, 24 months seems to be about the industry standard, though we have seen releases offered in as little as 12 months by some companies.
cuStudent Loans does not charge any fees associated with taking out a loan. These loans also have no prepayment penalty and can be cancelled within 30 days of the funds being disbursed. This is an ideal situation for students concerned about whether or not they actually need a loan. If the borrower determines that the loan isn’t actually necessary, they can return the funds at no cost.
One unique feature to these loans is the interest rate reduction offered to borrowers who enter full repayment and pay off 10% of their loans.
A term of the loan that borrowers may hate, but cosigners will love, is the in school requirements for students. Each month students are required to either pay the interest on the loan or a monthly $25 payment towards their loan. This monthly payment isn’t a huge financial burden. However, it is a great reminder to students that the loans are not monopoly money, but they are in fact real bills that will have to be paid. This in school requirement helps create good habits and awareness of growing student loan debt. It can be a pain for borrowers but certainly lowers the risk to cosigners.
The biggest problem with these loans applies to all private student loans… they simply are not as good as the loans offered by the federal government. Therefore, borrowers should first investigate scholarship, grant, and federal loan opportunities before resorting to any private loan.
Another negative of these loans is that they are variable interest rate only. The variable rate can be a good thing as it is often much lower than the fixed rate loan, however the variable rate loans lack the stability and predictability of a fixed rate loan.
Borrowers will also need to be a member of a credit union in order to get one of these loans. cuStudent Loans will automatically match them up with a credit union, and while being a credit union member may be a good thing, it does add an extra requirement to these loans.
The Bottom Line
cuStudent Loans offers some very low rates, with terms that parents and other co-signers will appreciate. To find out exactly which rate you qualify for, apply here.