Questions members frequently ask about Credit Union Student Choice loans

What is a Credit Union Student Choice Loan?
Lake Trust Credit Union, along with over 90 other leading credit unions from across the country, partnered to create a new student loan product that offers students and their families a way to fill the gap that federal aid may not cover. With the cost of college continuing to rise, we're committed to helping students find the best funding for their education. 

What type of loan is offered by Credit Union Student Choice?
A certified private student loan from Student Choice Loan is a Line of Credit (LOC) for undergraduate education. Providing incredible convenience, a line of credit allows you to apply just once and then make multiple draws over the course of your undergraduate college career. 

How is the amount of my private student loan determined?
The amount of your Student Choice Loan is based on the Cost of Attendance (COA) less other financial assistance and aid (federal loans, scholarships, grants, etc.) received. The minimum amount per year is $1,000 and the maximum amount throughout your college career is $75,000.

How does the Line of Credit (LOC) work?
You will be underwritten for the cost of the remainder of your education and will be allowed regular disbursement draws up to the school certified amount. Each year you will request a draw for the amount you wish to be disbursed from the line of credit. You will not need to reapply each year assuming there are no significant changes to the borrower or co-borrower credit scores. An annual credit review will be performed in order to authorize future draw requests.

What expenses are covered by this line of credit?
Like a federal student loan, a Student Choice Loan is meant to cover costs included in your school's Cost of Attendance estimates. Typically these may include:

• Tuition
• Fees
• Books
• Room and Board
• Other Related Expenses 

How is the amount of my private student loan determined?
The amount of your Student Choice Loan is based on the Cost of Attendance (COA) minus the other financial aid (federal loans, scholarships, grants, etc.) you have already received. The minimum amount per year is $1,000 and the maximum throughout your college career is $75,000.

What schools are eligible?
You're eligible for a Student Choice Loan if you're attending almost any four-year public or private non-profit school that offers a degree-granting program (Title IV). Students attending Lansing Community College are also eligible. Complete list of nearly 2,000 participating schools°.

What schools are NOT eligible?
If you're attending most Community Colleges (except Lansing Community College) or a For-Profit school, you're not eligible.

Do I have to be a member of Lake Trust Credit Union to be eligible for a Student Choice Loan?
Yes, the borrower and co-signer/co-borrower (if applicable) must be a member of Lake Trust Credit Union in order to fund the loan. If you're not already a member, you can stop by one of our branches or locations or complete the online application. You can proceed with applying for a Student Choice Loan while your Lake Trust membership is being processed.

What other requirements are needed to apply?
Students must be enrolled at least half-time in a degree or certificate program. Student and co-signer/co-borrower must be U.S. citizens or permanent residents.

How do I apply for a Student Choice Loan?
You can quickly and easily apply online. If you have questions, you can call our representatives 24 hours a day, seven days a week at 800.758.9830.

What happens after I've been approved?
After you've been approved for a Student Choice Loan, you must download an application kit or request that it be mailed to you. Upon receipt of this kit, you'll need to review the materials and then return all required documentation via mail or fax. The submitted documents will be reviewed for accuracy. If there are any issues, you'll be contacted by our processing department. Once the documents have been approved, your Student Choice Loan request will be sent to your school for certification. Upon certification, the funds will be disbursed as directed by your school.

What exactly is the certification process and how does it affect me?
All requested draw amounts are certified by your school. During the certification process, your school will:

• Verify your enrollment.
• Ensure the amount you have requested meets your financial need based on the school's Cost of Attendance and the other financial aid you've received.
• Indicate when the funds should be dispersed.

How quickly can I get the funds?
With our online application, downloadable credit agreement, and fax-back option, you could have the funds in as little as seven business days after your conditional approval. However, the exact timeline for disbursing funds will be set by your school in coordination with Student Choice.

How are funds disbursed?
After your loan has been certified, the funds will be disbursed directly to your school. If funding is sent by check, the check will be made co-payable to the school and student. The student will be asked to endorse the check for deposit into their student account. Deposits for funds sent electronically are handled directly to you by your school. If there are excess funds after your direct school-related costs are paid, the school will issue a refund to you so you may buy books or pay for other education expenses (such as off-campus room and board).

Are there any fees?
The only fees associated with a Student Choice Loan are a non-sufficient fund fee of $20 and late payment fee of $15, both of which are substantially lower than most others. Unlike almost all other private student loans which feature origination fees of 4% to 6%, a Student Choice Loan has no origination fee, saving you hundreds of dollars.

Do I need a co-signer/co-borrower?
No, but it may be required.

Can the co-signer/co-borrower ever be released?
Yes, with automated payment and 48 consecutive monthly on-time payments, the co-signer/co-borrower may request to be released. However, the primary borrower must be credit-worthy and meet the following criteria:

• 680 minimum FICO (Fair Isaac Credit O - credit score)
• $18,000 minimum annual salary
• 45% debt-to-income ratio maximum
• No bankruptcies, judgments, or student loan defaults

What is the interest rate and how is it determined?
The interest rate on your Student Choice Loan will be extremely competitive. If the student is applying without a co-signer/co-borrower, the interest rate will be determined based on the credit score of the student. If the student is applying with a co-signer/co-borrower, the interest rate will be determined based on the credit score of the co-signer/co-borrower. Similar to most private student loans, the rate is indexed on the 1-Month LIBOR (London Interbank Offer Rate) and is variable, meaning it can adjust quarterly depending on the LIBOR.

Is there any way to reduce the interest rate?
Yes, by choosing automated payment during your repayment period, you'll receive a 0.25% discount on your interest rate.

What are the repayment terms?
While you're in school, you have several options, including:

• Full deferment of principal and interest*
• Interest-only monthly payments
• Principal and interest monthly payments

*Note: During deferment, interest on the line of credit will accrue. Mandatory repayment begins six months after the student graduates or separates from the school. Monthly payment is based on final line of credit balance and repayment choices.

As repayment begins, you'll have two options:

• Straight repayment over 20 or 25 years. If the line of credit balance is under $40,000, the repayment period is 20 years. If the line of credit balance is above $40,000, the repayment period is 25 years.
  or
• Graduated repayment for two years. The graduated repayment option temporarily lowers monthly payments by amortizing the first two repayment years over a 40 year period and then over either 18 or 23 years for the remainder of the line of credit, depending on the line of credit balance as described above.

Is there a pre-payment penalty?
No, you can pay off your Student Choice Loan at any time, even if you're still in school.
 

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