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Pros and cons of Navy Federal student loans

Regular APR

Variable: 3.16% – 9.48%, Fixed: 4.99% – 12.84%

  • Pros & Cons
  • Details

  • Pros
    • Low maximum interest rate
    • Automatic payment discount
    • 24/7 customer support
    • Small loan minimum
    • No origination fees or prepayment penalties
    Cons
    • High minimum interest rate
    • Credit check required
    • One repayment term length
    • Must begin repayment while in school
    • Late fees
    • Need to be a member to qualify
    • Customer service available 24/7 over the phone, and is also available in person, via a secure messaging service, and by mail
    • Loan minimum is $2,000, maximum is $120,000
    • 10-year repayment term
    • Late fee is $20
    • Discount of .25% when you sign up for automated payments
    • Loans are originated by Navy Federal Credit Union

    Navy Federal’s undergraduate student loans only have a singular repayment term, and starting rates on those loans are higher than with many competitors. That said, if you need only a small amount of money, you can get as little as $2,000 from Navy Federal, which is lower than with many companies.

    Customer service is also available 24/7 for Navy Federal student loans, a perk unmatched by many similar companies in the industry.

    Regular APR

    Variable: 3.16% – 9.48%, Fixed: 4.99% – 12.84%

  • Pros & Cons
  • Details

  • Pros
    • Low maximum interest rate
    • Automatic payment discount
    • 24/7 customer support
    • Small loan minimum
    • No origination fees or prepayment penalties
    Cons
    • High minimum interest rate
    • Credit check required
    • One repayment term length
    • Must begin repayment while in school
    • Late fees
    • Need to be a member to qualify
    • Customer service available 24/7 over the phone, and is also available in person, via a secure messaging service, and by mail
    • Loan minimum is $2,000, maximum is $160,000
    • 10-year repayment term
    • Late fee is $20
    • Discount of .25% when you sign up for automated payments
    • Loans are originated by Navy Federal Credit Union

    The biggest difference between Navy Federal’s graduate and undergraduate student loans is the maximum amount you can borrow. As a graduate student, you’re allowed to take out up to $160,000, which is $40,000 more than the undergraduate limit. Otherwise, the terms are the same. 

    How Navy Federal student loans compare 

    Discover doesn’t have any prepayment penalties, origination fees, or late charges. Navy Federal has a late fee of $20, and Sallie Mae has a late payment fee of 5% of the amount due, capped at $25.

    Both Discover and Navy Federal only have one repayment term length available for borrowers. Sallie Mae has three repayment term lengths, but it sets the term for the borrower. 

    Discover’s unique feature is that it has a one-time 1% cash reward on its student loans for borrowers who have a GPA of 3.0 or higher for any academic term covered by the loan. Sallie Mae offers four months of the study service Chegg for free. Chegg offers expert Q&A, and students can submit up to 20 questions per month.

    How Navy Federal student loans work

    Navy Federal offers both fixed-rate and variable-rate undergraduate and graduate loans. Navy Federal also has options to refinance federal, private, and parent loans. Refinanced loans may be eligible for better rates than new loans. New loans have only a 10-year repayment term length, while refinanced loans offer a choice between five, 10, and 15 years.

    Navy Federal has a list of eligible schools that are compatible with its student loans on the first page of its loan application. 

    You need to be a member of Navy Federal to qualify for a loan, though you can apply for membership during the loan application process. You’ll also need to be a US citizen or permanent resident and a legal adult in the state you live in.   

    Navy Federal accepts borrowers with cosigners, which may reduce your interest rate and the overall cost of your loan. You can request to release the cosigner after two years of consecutive, on-time payments. 

    You won’t pay any origination fees, application fees, or prepayment penalties with Navy Federal, however, late payment charges of $20 may apply. You’ll get a 0.25% rate discount if you choose to make automatic payments from a checking or savings account. 

    To contact Navy Federal’s customer support, call the lender 24 hours a day, seven days a week. You can also send a secure message through your customer support portal, meet a representative in person, or reach them via physical mail. 

    You won’t be able to prequalify for a loan with Navy Federal, meaning the lender will perform a hard credit inquiry before giving you your rates. A hard inquiry gives a lender a full view of your credit history, but may ding your credit score in the process.

    What options do I have to repay my Navy Federal student loans?

    Navy Federal only offers two repayment options while you’re in school and during a six month grace period after you graduate:

    You don’t have the option to defer your payments until after you graduate with Navy Federal; you’ll have to start paying your loans off as soon as they’re disbursed. 

    Flat payments will be more expensive than interest-only payments in the long run, because interest will accrue while you’re in school and during your grace period. This interest will then capitalize, meaning it will be added onto your loan balance after periods of nonpayment, including forbearance, deferment, and after your grace period. This will up your total loan balance, and you’ll later pay interest on that higher amount, increasing the overall cost of your loan. 

    Is Navy Federal trustworthy?

    Navy Federal Credit Union has an unrated profile from the Better Business Bureau as the credit union responds to previously closed complaints. The credit union used to have an A+ rating from the BBB. The BBB measures its score by evaluating a company’s response to consumer complaints, truthfulness in advertising, and openness about business practices. 

    Navy Federal has been involved in a recent controversy. A Navy Federal employee alleged that the lender pressured mortgage underwriters to approve loans even without believing applicants could pay them back. She then filed a lawsuit and said Navy Federal retaliated against her whistleblowing by changing her job duties. She dropped the case in late 2020.

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