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Frequently Asked Questions

Student Loan Refinance

General Questions

Which loan option should I choose?

Well, that would depend upon what is most important to you. Would you rather have a lower monthly payment or pay less for what you borrow overall? The table below shows you the differences each option provides to help you make a more informed decision. The shortest term will cost the least in the end, but you would pay the most each month. The opposite goes for the longest term. Variable interest rate loans look great now because our economy allows for low rates, but they have the potential to increase more than the fixed rates. Fixed rate loans give you the peace of mind that your monthly payment will always be the same no matter what direction the economy goes. If you have a short term repayment strategy, you can benefit most by taking the 15 year variable rate loan and voluntarily make monthly payments that match the 5 years fixed rate payments. Because there is no pre-payment penalty, you can save on the overall cost and not be obligated to the higher monthly payment associated with the 5 year loan. See the chart below for an example of what you can expect with each loan option.

What documents should I get before beginning my application?

You should collect your most recent monthly statement from your current loan servicer. Navient, AES, Great Lakes, Sallie Mae, and Nelnet are a few of the common student loan servicers out there. You will need this document to list the total amount you owe and the payment address that we will send a check to pay off your loan. Your monthly statement is also known as a payoff document and you can upload this document electronically through our online loan application.

Why would I want to refinance my loan(s)?

Refinancing can help you save money, simplify your payments, and lower your monthly payment each month.

You can save money by refinancing your loan(s) to a lower interest rate. For example, your federal loans come with fixed interest rates, which must weather the ups and downs of the financial markets and still make the lender a profit. Therefore, the fixed rate is usually high… at the very least, higher than a variable rate. Refinancing your loan to a lower variable rate can shave off a significant amount from your monthly payments, but also exposes you to the market fluctuations. You may be getting a low rate today but may be subject to a different rate next month or next year.

In general, rates have not changed very much since 2009. If you have a short-term repayment strategy, refinancing may allow you to take advantage of this low interest rate environment and save quite a bit of money. Your private student loan likely has a variable rate already. But, as your credit union, we specialize in low rates. We invite you to compare your existing interest rate with ours. If your rate beats ours, then by all means, don’t refinance it with this product. We will be happy to help you with any other high-rate student loans you may have.

Who can benefit from refinancing?

Refinancing is a great choice for you if…

  • You have multiple loans from multiple lenders and all of them are being serviced by different lenders. Do you send out more than two payments to different places each month? Refinancing your loans will consolidate your payments to one loan and one lender.
  • You have high interest rate loans and need a lower rate. Refinancing will likely save you money.
  • Your monthly student loan payment is too high. Refinancing could extend your repayment term and lower your monthly payment.
  • You do not qualify for Federal Student Loan Forgiveness programs.
Is refinancing right for me?

We want to be transparent with you, and let you know that refinancing is not for everyone. Refinancing is probably NOT the best choice for those who participate in federal loan forgiveness programs, income-based repayment programs, income contingent programs, or those that have a long-term repayment strategy and enjoy the comfort of knowing that their monthly payment will remain constant until paid in full.

Can I refinance previously consolidated loans with USC Credit Union?

Yes. Whether you previously consolidated federal loans through the government’s Direct or FFEL consolidation programs or you did a “consolidation loan” with a private lender, you can still apply to refinance the consolidated loan through USC Credit Union just the way you could with any other federal or private loan.

When is the best time to refinance?

There is no specific time of the year that gives an advantage. However, the earlier you refinance to a lower loan rate, the more money you will save overall.

Who should refinance?

Refinancing is a great solution for working graduates who have high-interest, unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans. Federal loans do carry some special benefits, for example, public service forgiveness and economic hardship programs, that may not be accessible to you after you refinance.

What is the Auto Pay discount?

Auto Pay is a program that automatically draws your monthly payment from a checking account of your choice. The amount of your monthly payment can range from the minimum amount due to the entire loan balance. The transaction is done electronically, removing the need to write checks, buy stamps, and place payments in the mail. By agreeing to participate in this program, the credit union is willing to reduce your interest rate by a quarter of a percent or 0.25%. To enroll in the program, speak with a credit union representative and let them know you would like to use Auto Pay for your loan. The interest rate discount remains in place as long as you are enrolled and ends anytime you discontinue enrollment. You may also lose the discount if you make late payments for two (2) consecutive months. However, you may re-enroll in Auto Pay after you demonstrate six (6) consecutive months of on-time payments.

Am I eligible for a Student Loan Refinance by USC Credit Union?

To be eligible for a Student Loan Refinance, you must be (or become) a member of USC Credit Union, be a U.S. citizen or permanent resident, and be the age of majority in the state you have permanent residence. Loan eligibility also depends on a number of additional factors, such as your credit score, your income and employment status. Please review our Membership Eligibility Criteria or call us for further details.

Can my spouse and I refinance and consolidate all of our loans into one?

No. A Student Loan Refinance can only contain loans that were previously in one person’s name. The borrower’s name and social security number must match on all loan documentation. However, you and your spouse can apply separately for refinancing.

Is it possible to refinance both federal and private student loans?

Yes, USC Credit Union will refinance all qualified student loans.

Which loans do I have?

There are two types of student loans: Federal and private

  • Federal loans are issued the Department of Education and, in the case of some older Federal loans, by banks and credit unions. The Federal programs have names like Stafford, PLUS, Graduate PLUS, Perkins, LDS, and HPSL among others. Other names associated with Federal loans are the Direct Loan Program and the FFEL (Federal Family Education Loan) Program. These loans provide certain benefits that will be lost if refinanced with this product. We want to ensure you are making an informed decision. Read more about Federal loan benefits here.
  • Private loans are issued by banks and credit unions and not by the Department of Education. Familiar lenders are Navient, Sallie Mae, Discover, Wells Fargo, and Citibank. Typical program names are SmartOption, Signature, Collegiate, and CitiAssist. Your private student loan likely has a variable interest rate and payments can fluctuate with the market. In some cases, fixed interest rates are offered on private student loans.
Does USC Credit Union offer a grace period?

No. Repayment begins immediately (within 30 – 45 days of loan funding).

What is the difference between interest rate and APR?

The interest rate is the percentage of the loan amount that is charged for borrowing money. The APR includes not only the interest rate, but also certain other fees charged by the lender, and represents the total cost of borrowing.

What is the minimum and maximum amount I can borrow?

The minimum loan amount is $5,000 and the maximum loan amount is $75,000.

Why was my application to refinance my student loans rejected?

While USC Credit Union aims to improve financial services for all of our members, today we're able to offer student loan refinancing to highly qualified applicants who meet a number of criteria. We determine eligibility on a number of factors that include, but are not limited to:

  1. A US citizen or permanent resident
  2. Hold a degree 4-year undergraduate or graduate degree from a Title IV accredited institution
  3. Good employment history. Currently employed or hold a confirmed offer of employment
  4. In good standing on current student loans
  5. Strong monthly cash flow
  6. An excellent FICO score

If one of the above factors changes, such as your employment or monthly cash flow, we encourage you to apply again in the future.

Are there origination of pre-payment fees for the Student Loan Refinance?

No, there are no origination or pre-payment fees on this product.

Do you require or accept cosigners?

A cosigner may be solicited if you do not meet the qualification criteria. In most cases, including a cosigner will allow for a lower interest rate. Please call our helpline at (855) 382-2160 to discuss your specific situation.

Is the Student Loan Refinance considered a “student loan” for tax purposes?

The Student Loan Refinance by USC Credit Union is considered a student loan for federal and state tax consideration. Note that you may or may not be eligible for interest deduction depending on your individual tax situation. You should consult your tax advisor for more information.

Who is Cology?

Cology is a loan origination partner of USC Credit Union. You may contact them at (213) 821-7100, M-F 9am to 5pm PST to discuss your loan refinancing needs.


What does each option look like if I borrow $10,000?

Slide Table »
Product Option 5 Year (Fixed)* 5 Year (Variable)* 10 Year (Fixed) 10 Year (Variable) 15 Year (Fixed) 15 Year (Variable)
Best Interest Rate*
(Rates include 0.25% AutoPay enrollment discount*)
3.35% 2.24% 4.20% 2.66% 4.95% 2.94%
Estimated Monthly Payment $182.36 $177.43 $102.21 $96.15 $80.14 $69.98
Total Interest Paid $874.32 $579.47 $2,263.67 $1,399.86 $4,189.02 $2,378.88
Total Cost of Loan $10,874.32 $10,579.47 $12,263.67 $11,399.86 $14,189.02 $12,378.88

Case Studies: Why refinancing is the smart choice.

Meet Tommy.

Tommy has four federal loans for money that he borrowed during his two years of graduate school. Two of his federal loans are Stafford loans totaling $37,000 with a fixed interest rate of 6.21%. His other two loans are Graduate PLUS loans totaling $27,000 with a fixed rate of 7.21%. Together he has a minimum monthly payment of $731.17 for the next 10 years. Over that period, he will pay $23,737.72 in interest above the original $64,000 he originally borrowed.

If Tommy combined his loans into our Student Loan Refinance product and received our best fixed rate of 4.95%, his monthly payment would be $504.52 for 15 years and he would pay a total of $26,813.50 in interest. Spreading his payments over a longer period of time will lower his monthly payments and gives him more disposable income when he needs it… right now. And, since there is no pre-payment penalty, he can increase his payments later on when he generates more income later in his career. That’s a savings of over $2,700 per year in monthly payments! This could be put towards more groceries on the table or a more reliable car to take him to and from his job.

If Tommy were to get our best variable rate of 3.36%, then his monthly payments for the next 15 years could be $453.20 and the total interest paid would be less than $17,600 (this scenario assumes no changes in the market), leaving him a whopping savings of almost $300 per monthly payment or $3,335 annually. The overall cost savings on the loan is now increased to over $6,000.

Meet Helen.

Helen has both federal and private student loans. She borrowed $10,500 in federal loans from the Department of Education at a rate of 6.80% and $18,500 in private loans from XYZ Bank at a variable rate of Prime (currently 3.50%) plus 1.74%, giving her a rate of 5.24%. Both loans have a repayment term of 10 years. Helen mails two payments each month: one for $120.85 to her federal loan servicer and one for $198.42, the minimum monthly payment to XYZ Bank. Helen writes two checks each month for a total of $319.27, and will do so for the next 10 years (XYZ Bank payment assumes no changes in the market). For the original $29,000 that she borrowed, she will pay a total of $9,311.57 in interest, which makes her total cost of the loans $38,311.57.

If Helen combined her loans into our Student Loan Refinance product and received our best fixed rate of 4.95%, her monthly payment would be $232.40 a month over 15 years and she would pay a total of $12,148.99 in interest. Due to the longer term, the total interest paid is higher than if she had not refinanced, but she will pay less each month. In fact, she will save more than $85 each month, or $1,040 each year. If she is truly motivated to reduce the principal amount quickly, she can always redirect that savings and pay more than the minimum to reduce the overall cost of the loan because our program has NO pre-payment penalty.


Still have questions?
Talk to a USC Credit Union representative today to determine if refinancing is right for you.
Call our Student Loan helpline at (213) 821-7100, M-F 9am to 5pm PST.

Ready to Start Saving?

Four easy steps is all it takes to learn how much you could save by refinancing your student loans. Determine your savings! Apply today!

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*Please read below for USC Credit Union's full disclosures, rate details, terms and conditions.

Terms and Conditions:
For both loans, you will be required to review the Application Truth in Lending Disclosure prior to submitting an application. The minimum loan amount is $5,000. Your interest rate will be determined by your credit score or your cosigner's, whichever is greater. Membership is required. Must qualify for USCCU membership and membership fee may apply; please call (877-670-5860) or visit www.USCCreditUnion.org to confirm eligibility. Must be 18 years old or older. Must pass Chexsystem. All accounts are subject to approval process. Terms and Conditions Apply. USC CREDIT UNION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident and meet USC Credit Union's underwriting requirements. This information is current as of January 27, 2017 and is subject to change.

Variable Rate: 2.24% annual percentage rate (APR) effective 1/27/2017 – 3/31/2017. 60 monthly payments of $17.75 per $1,000 borrowed. Borrowing $20,000 at 2.24% accrues $1,159.00 in interest during the 5-year repayment term. These monthly payments and accrued interests are for illustration purposes only. If approved for a loan, the variable interest rate offered will depend on your credit history and the Credit Union’s underwriting standards. Variable rates from 2.24% APR to 5.99% (with AutoPay). Rate is variable and subject to change. Interest rates on variable rate loans are capped at 19.15%. Lowest variable rate of 2.24% APR assumes current 3-month LIBOR rate of 0.94% plus 1.55% margin and subtracting the 0.25% AutoPay discount. AutoPay is a voluntary repayment benefit managed by USC Credit Union that awards a 0.25% interest rate reduction to borrowers that elect to have their monthly payments electronically deducted from a designated checking account. The AutoPay benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a checking account. Ask a USC Credit Union representative for more details or how to enroll in AutoPay. For the USC Credit Union variable rate loan, the 3-month LIBOR index will adjust quarterly and the loan payment will be re-amortized and may change quarterly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The above figures assume no changes in the LIBOR index, no pre-payments, no additions to the loan principal, and all payments made in a timely manner over the life of the loan. For further information on rates and costs for the Variable Rate Student Loan Refinance, see the Application Truth in Lending Disclosure.

Fixed Rate: 3.35% annual percentage rate (APR) effective 1/27/2017 - 3/31/2017. 60 monthly payments of $18.24 per $1,000 borrowed. Borrowing $20,000 at 3.35% accrues $1,748.73 in interest during the 5 year repayment term. These monthly payments and accrued interests are for illustration purposes only. Lowest fixed rate of 3.35% assumes enrollment in AutoPay. AutoPay is a voluntary repayment benefit managed by USC Credit Union that awards a 0.25% interest rate reduction to borrowers that elect to have their monthly payments electronically deducted from a designated checking account. The AutoPay benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a checking account. Ask a USC Credit Union representative for more details or how to enroll in AutoPay. If approved for a loan, the fixed interest rate offered will depend on your credit history and the Credit Union’s underwriting standards. For further information on rates and costs for the Fixed Rate Student Loan Consolidation and Refinance, see the Application Truth in Lending Disclosure.

To be eligible for the interest rate reduction for automatic payments, you must be signed up for automatic payments through USC Credit Union. In order to take advantage of the interest rate discount you may enroll by visiting one of our branches or by giving us a call at (877) 670-5860. The USC Credit Union 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a USC Credit Union checking account. If at any time automatic payments are stopped or the loan is not in good standing, the rate discount will not be applied.

USC Credit Union reserves the right to modify or discontinue benefits at its discretion and without notice.