Schools First Student Loans: Your Key to Affording Higher Education

Schools First Federal Credit Union is a not-for-profit credit union that was founded in 1934 by a group of educators in Orange County, California. Originally called Orange County Teachers Credit Union, it was established to serve school student loans employees in the region. Over the decades, the credit union expanded to serve all school employees in California and their family members.

In 2008, the credit union adopted the name SchoolsFirst Federal Credit Union to reflect its growing membership base beyond Orange County. Today, SchoolsFirst is one of the largest credit unions in the country with over $26 billion in assets and more than 1.8 million members.

As a credit union, SchoolsFirst is owned by its members and operates to serve their financial needs, not make a profit. Membership is open to school employees, their family members, and students attending schools in the districts served by SchoolsFirst. The credit union offers a full range of financial services including savings and checking accounts, auto loans, mortgages, credit cards, and more.

SchoolsFirst has a strong focus on education and community service. The credit union provides scholarships and school grants, partners with schools to offer financial literacy programs, and sponsors educational events. Its mission is to support schools and local communities while helping members achieve financial success.

Types of Student Loans Offered

SchoolsFirst Federal Credit Union offers both federal and private student loans to help members finance their education. Understanding the key differences between these loan types can help borrowers make informed choices.

Federal Student Loans

Federal student loans are funded by the government and come with certain benefits like fixed interest rates, income-driven repayment plans, and deferment options. Common types of federal loans offered through SchoolsFirst include:

• Direct Subsidized Loans – For undergraduate students with financial need. The government pays the interest while the student is in school.

• Direct Unsubsidized Loans – Available to both undergraduate and graduate students regardless of financial need. Interest accrues while in school and the borrower is responsible for paying it.

• PLUS Loans – For graduate students as well as parents of dependent undergraduates. Credit check and debt-to-income ratio required.

• Perkins Loans – Low-interest loans for students with exceptional financial need. Funds are limited.

Federal student loans have fixed interest rates set by Congress each year. Rates are typically lower than private loans.

Private Student Loans

Private student loans are non-federal loans issued by lenders like SchoolsFirst. They help bridge the gap between federal loans and the remaining cost of attendance. Key features include:

• Credit check required and cosigner often needed.

• Variable interest rates based on the market, often higher than federal rates.

• Fewer protections like income-driven repayment and forgiveness options.

• Can cover additional expenses besides tuition like living costs, books, laptops.

Private loans offer less flexibility but can provide access to additional financing. Borrowers should understand the risks of variable rates.

Eligibility Requirements

To qualify for a student loan from SchoolsFirst Federal Credit Union, you must meet certain eligibility criteria. Here are the key requirements:

Credit Score

SchoolsFirst does not have a specific minimum credit score requirement for student loans. However, your credit history will be reviewed as part of the application process. Having little or no credit history will make it more difficult to qualify. The stronger your credit score, the better your chances of approval and lower interest rates.

Income Requirements

You do not need income to qualify for federal student loans, which are available based on financial need. However, private student loans through SchoolsFirst do require you to demonstrate repayment ability.

If you are a student borrower, you will likely need a creditworthy co-signer who can show sufficient income to cover the monthly payments. Parent borrowers can qualify based on their own income and credit profile.

Student Status

To qualify for federal and private student loans, you must be enrolled at least half-time in a degree or certificate program at an eligible college or university. Most loans require enrollment of 6 credits per term for undergraduates and 4.5 credits for graduate students.

You can typically receive loans for up to 150% of your program length. For example, you can get loans for 6 years to complete a 4-year bachelor’s degree. You must make satisfactory academic progress to continue receiving loans.

Interest Rates and Fees

SchoolsFirst Federal Credit Union offers competitive interest rates and fees on their student loans. Here are some key details borrowers should know:

Interest Rates

• Rates are variable and based on the Prime Rate.
• Undergraduate loans currently have rates starting at Prime + 1.5%, or 6.25% as of 2023.
• Graduate student loans currently start at Prime + 2%, or 6.75%.
• Interest rates are capped at 18% maximum.
• Rates are set each quarter based on the Prime Rate.

Origination Fees

• There is no origination fee charged on SchoolsFirst student loans. This differs from federal loans which charge 1-4% upfront fees.

Repayment Fees

• No prepayment penalties apply if you pay off the loan early.
• There are no repayment fees as long as you make on-time monthly payments.
• A late fee of 5% may be charged for overdue payments that are 30+ days late.

Knowing the rates and fees can help borrowers compare options and budget for repayment. SchoolsFirst offers clear terms and competitive options compared to alternatives.

Repayment Options and Deferment

Once you graduate or leave school, you’ll need to start repaying your student loans. SchoolsFirst offers several repayment options to fit your financial situation:

Standard Repayment – You’ll pay a fixed monthly amount over a 10-year repayment term. This option results in the lowest total interest paid.

Graduated Repayment – Your payments start lower and increase every two years. This allows you to ease into higher payments over time. The repayment term is still 10 years.

Income-Driven Repayment – Your monthly payment is based on your income and family size. If your income is low, your payment could be as low as $0 per month. Any remaining balance is forgiven after 20-25 years.

Deferment and Forbearance – If you’re having trouble making payments, you may qualify to temporarily postpone or lower your payments. Deferment pauses payments completely, while forbearance allows lower payments for a time. Interest still accrues in both cases.

These flexible repayment options from SchoolsFirst can help you manage student loan payments after college based on your financial situation. Deferment and forbearance provide a safety net if you’re unable to make full payments right away due to financial hardship. Be sure to understand the costs and terms before choosing a repayment plan.

Application Process

Applying for a student loan through SchoolsFirst FCU is straightforward. Here are the key steps:

• Complete the online student loan application. You’ll need to provide personal information like your name, date of birth, contact details, and Social Security number.

• Submit documentation proving you are enrolled at least half-time at an eligible school. This can include a letter of enrollment or class schedule.

• Provide your cost of attendance information from your school. This verifies tuition, fees, room and board, etc.

• List your expected financial aid package if you have one. This includes grants, scholarships, federal loans, work-study, etc.

• Complete entrance counseling and sign your Master Promissory Note. These ensure you understand your rights and responsibilities as a borrower.

• Allow 1-2 weeks for SchoolsFirst FCU to review your application and documentation. They’ll confirm your eligibility based on credit, income, enrollment status, and more.

• If approved, SchoolsFirst will disburse your loan funds directly to your school. The funds get applied to your student account to pay tuition, fees, room and board, and other authorized expenses.

• You’ll receive notification when your funds have been disbursed. Log into your student account at school to confirm the funds were applied appropriately.

The application process is designed to be as quick and seamless as possible. Having all required documents ready will help ensure efficient processing and disbursement of your student loan.

Loan Limits and Uses

SchoolsFirst offers both federal and private student loans to cover the costs of higher education. The loan limits and eligible expenses depend on the type of loan.

Federal Student Loans

For federal student loans like Direct Subsidized, Unsubsidized, and PLUS loans, the loan amounts are determined by the Department of Education each year. Here are some key points:

• Dependent undergraduates can borrow up to $5,500 to $12,500 per year in Direct Subsidized and Unsubsidized loans, depending on grade level and dependency status.

• Independent undergraduates and graduate students have higher annual loan limits of up to $20,500 in unsubsidized loans.

• Parents and graduate students can qualify for PLUS loans up to the full cost of attendance minus any other financial aid received.

Private Student Loans

Private student loans offered through SchoolsFirst FCU and their lending partners have more flexible loan limits based on creditworthiness. In general:

• Undergraduate students may borrow from $1,000 up to the full cost of attendance per year.

• Graduate students may qualify for up to $100,000 or more per year.

Private student loans can cover the same eligible expenses as federal loans, including tuition, housing, meals, books, computers, and other educational costs. SchoolsFirst loan officers can help students determine responsible loan limits.

Managing and Paying Off Loans

Once you graduate and enter repayment, it’s important to manage your student loans responsibly. SchoolsFirst FCU offers online account access so you can easily monitor your loan details and make payments. Setting up auto-debit for the monthly payments can help avoid missed or late payments.

It’s also wise to develop a repayment strategy. Here are some tips for paying off student loans efficiently:

• Pay more than the minimum each month to pay off the loans faster and reduce interest costs. Even small increases help.
• Make a budget and prioritize student loan payments. Reduce expenses where possible to free up more money for payments.
• Apply any extra funds like bonuses, tax refunds or gifts directly to the principal balance.
• Target loans with the highest interest rates first when making extra payments.
• Consider refinancing or consolidating loans to get a lower interest rate.
• Stay organized with all loan details and communications. Keep records of payments and tax documents.
• Contact your lender immediately if you have trouble making payments to discuss options before defaulting.
• Take advantage of borrower protections and programs if facing financial hardship. Deferments or income-driven plans may provide temporary relief.

Actively managing student loans and consistently making payments will lead to becoming debt-free faster. SchoolsFirst FCU can provide guidance and support for responsible repayment.

Alternatives to SchoolsFirst Loans

When it comes to paying for college, SchoolsFirst Federal Credit Union offers private student loans to members. However, these aren’t your only options for financing your education. Here are some alternatives to consider before taking out a private student loan:

Grants and Scholarships

Look for federal and state grants based on financial need, as well as scholarships offered by your school, community groups, employers, etc. The key is applying early and often to as many potential sources as possible.

Federal Student Loans

Federal student loans should be your first choice over private loans. Options like Direct Subsidized and Unsubsidized Loans have low fixed interest rates, flexible repayment plans, and even offer some loan forgiveness programs. Fill out the FAFSA each year to determine eligibility.

Other Lenders

SchoolsFirst is just one of many credit unions and banks that offer private student loans. Shop around and compare interest rates, fees, eligibility criteria, and repayment terms. Ask about discounts for good grades or having an existing account. See if a co-signer can help you qualify or get better loan terms.

 Make sure you understand the costs and risks involved with any financing option.

Tips for Student Borrowers

When taking out student loans, it’s important to be an informed borrower. Here are some tips:

• Compare loan offers and choose the one with the lowest rates and fees. SchoolsFirst FCU often has competitive rates, but it doesn’t hurt to compare. Look at both federal and private loans.

• Make a plan for repayment. Know when your loans come due, the monthly payments, and how long it will take to pay them off. Budget accordingly.

• Look into income-driven repayment plans if offered. These base your payment on your income and family size.

• Pay off highest interest loans first. Target extra payments to those loans.

• Apply for deferment if you go back to school or meet other criteria. This allows you to temporarily postpone payments.

• Avoid delinquency and default at all costs. This damages credit, leads to fees, and can trigger aggressive collection efforts.

• Communicate with your lender if struggling to make payments. Ask about alternative repayment plans or deferment options.

• Consider loan consolidation or refinancing for simpler payments or better rates. Check if this makes sense for your situation.

• Deduct student loan interest on your taxes if eligible. This can lower your tax bill.

• Take advantage of student loan forgiveness programs if you qualify. Teachers and some other public servants may be eligible.

Being proactive and planning ahead is key to successfully managing student loans and minimizing costs. Borrow only what you need, understand your options, and have a repayment strategy.