How to Get a Credit Union Student Loan

Education 3 min read

23 Aug 2019

There is no doubt about it - third level education doesn’t come cheap. With accommodation costs, travel, food, books and materials, not to mention student registration fees, the costs can quickly add up.

According to our latest survey on third level costs in Ireland, more than two thirds of students find it difficult to cope financially. For many young people, a student loan is necessary to help to make ends meet.

By its nature, a student loan will generally be a young adult’s first time borrowing from a financial institution. It can seem like a daunting process. Who has the lowest student loan interest rate? Who will give me flexibility with student loan repayments if I’m struggling? Who will ensure I don’t go into unnecessary debt? Will I even be approved for my student loan?

The answer is very likely to be your local credit union. 

Here are some insights into the credit union student loan process - and some key considerations for students and parents.

 
The First Step Towards a Credit Union Student Loan

If you are not already a credit union member, you’ll need to open a credit union account in order to apply for your student loan. Don’t worry, it’s a very straightforward process.  You will need the usual documents. These include I.D (usually a passport or driving licence), address verification (e.g. a utility bill or a letter from a Government Dept.) and proof of PPS number.  Check out our blog on for everything you need to know about opening a credit union account. In the majority of cases, the credit union will allow you to apply for a student loan immediately upon opening the account.

If you are already a member, then all you need to do is apply for the student loan! Sometimes, the credit unions may still need to update documents (e.g. updated passport or driving licence, proof of address etc.) in order to comply with regulatory requirements.

Applying for a Credit Union Student Loan

Applying for a credit union student loan is a straightforward process. As it’s likely to be your first loan, you may want to pop in to the credit union to discuss it in more detail. You can chat through all the student loan terms and conditions with a friendly credit union loan officer. They will be happy to take the time to ensure you are comfortable with all aspects of the loan. Check out our blog for the full lowdown on how to get a credit union loan.

If you prefer to apply for the loan online, then fear not. A growing number of credit unions now offer online loan applications. For some, the support documentation can be securely attached to the online application. For others, the support documentation will need to be submitted in hard copy.

Or, you can always enquire about a student loan online to get the process started.

In addition to the standard documents required to apply for a loan (e.g. bank statements), you might be asked for confirmation that you’ve been accepted for a third level course. A good idea is to contact your local credit union to find out exactly what they need.

Guarantors

For any loan, ability to repay is the key consideration in deciding whether or not a loan is approved. As an undergraduate student, we understand that you might not have a regular income, and so a credit union might require a guarantor for the student loan. A guarantor is generally your parent or guardian (although it can be someone else). Your guarantor undertakes to repay the loan in the event that you, for whatever reason, are unable to repay.

For a person is to act as a guarantor, they must themselves demonstrate ability to repay the loan. Guarantors will be required to complete an application form where they will need to disclose their financial information and agree to a credit check being carried out.

Flexibility on Student Loan Repayments

According to our 2019 student survey, three quarters of students are now working during the college year. Many more will work full time during the summer months to save up for the next college term, or to help pay off their existing student loan.

Credit unions are very flexible when it comes to student loans, and indeed to all loans! They can structure loan repayments in a way that best suits your individual circumstances. For example, if you have a summer job and want to make larger loan repayments during the summer months - there’s no penalty or doing so!  If you want to pay off the loan early, the credit union will never charge early repayment penalties.

On the other hand, you might find yourself struggling to meet your student loan repayments. This is not a problem either. The credit union will work with you to figure out a new repayment schedule that will make life easier on you. This is just one of the advantages of a credit union student loan. For a more detailed list on the unique benefits of a credit union, check out our blog on the topic.

Credit History

As a student loan is likely to be your first time borrowing, it is an opportunity to build a positive credit history. All financial institutions must notify the Central Credit Register (CCR) when they issue loans of €500 of more. The CCR is a secure system for collecting information on loans. Lenders often consult the register when deciding whether or not to issue a loan.  In fact, they are obliged to do this on loan applications of €2,000 or more.

By successfully repaying your student loan, you can build a credit history. This can be a positive step for future loan applications. Equally, missed loan repayments may show on your CCR record for five years, so it’s important that both you (and your guarantor) are very comfortable with the repayment plan for the loan.

See the Central Bank of Ireland’s information on the CCR for more.

More Information on Student Loans

Starting out in college can seem overwhelming, but getting a student loan to help pay for college costs doesn’t have to be.

If you are looking for help to pay for third level education, contact your loan credit union today