USAA Student Loans Alternatives

The United Services Automobile Association, or USAA, is a company that offers financial services to past and present members of the military and their families. In 1922, 25 officers from the Army started USAA because they could not get auto insurance. They essentially insured each other’s vehicle and eventually expanded to an array of other amenities.

USAA is a 57^th in net worth among all Fortune 500 companies, coming in around $25 billion for 2014. In addition, they have over 10 million members, over 40 million products, and over 25,000 employees. USAA has received countless awards including “100 Best Companies to Work For”, “World’s Most Admired Company”, and “No. 1 Military-Friendly Employer”. USAA has been around for a long time and is one of the most trustworthy of all companies affiliated with private student loans. Here is our USAA Student Loans review.

Who is Eligible for USAA?

Based out of Texas, USAA now offers a range of services to its members including insuUrance, banking, travel, and student loans! Because membership is limited to a specific set of people, USAA is able to offer considerable discounts on their products and they also offer many free resources.

To be eligible for USAA, you must meet one of the following requirements:

• Former member of any branch of the U.S. Military who retired or received an honorable discharge
• ​Children of former or current USAA members who have/had car or property insurance
• ​Current member any branch of the U.S. Military
• ​Cadets or Midshipmen at a service academy or students in a ROTC program
• Former, un-remarried spouses of USAA members who had car or property insurance

What are USAA Student Loans?

USAA partnered with Wells Fargo to provide student loans for their members. Like most of their other services, only those in USAA are eligible for the benefits. The loan that USAA offers through Wells Fargo is the Wells Fargo Collegiate private student loan. Because the loan is private, interest rates are dependent on the borrowers’ and, if applicable, their parents’ credit. Undergraduate students, grad students, and health professionals are all eligible for the Wells Far

These loans go up to $120,000 and can be used to cover the entire cost of obtaining an education. Some, but not all, of the things you can use the loan for include tuition, books, a laptop, housing, and meal plans. It is the borrowers’ decisions on what they use the money for. For this reason, it is crucial that they know how to spend responsibly when in college and that they only spend the money on vital things.

Variable interest rates range from 4.10% – 9.67% APR and fixed rates range from 6.17% – 11.26% APR. These rates includes the discount that USAA members receive. Variable, or “floating”, interest rates fluctuate as the market changes.

Lenders typically offer lower rates on loans that have variable interest rates as opposed to fixed rates. This is because fixed rates are guaranteed to stay the same over the life of the loan. Variable rates are therefore seen as more safe for lenders. One benefit is, however, that rates may also go down.

The standard repayment length of a USAA student loan through Wells Fargo is 15 years.​

What are the Benefits?

Aside from their competitive interest rates, there are some benefits from the USAA/Wells Fargo student loan. First off, students don’t have to make any payments until 6 months after graduation. This is important as many students won’t be able to work while attending college.

Another benefit of being a USAA member is that they automatically receive a 0.25% interest rate discount. This discount is also doubled when borrowers signup for automatic payments. Not only does automatic payments make the borrower’s life easier, it can save you money! With automatic payments the charge automatically withdraws from your account each month. No sending in mail, no phone calls, and no work is required!

Do I Need a Cosigner for USAA Student Loans?

A cosigner is someone that signs onto the loan in addition to the student. A cosigner can be a parent, guardian, another relative, or a close friend—anyone with a steady income and a decent credit history. Both the student and cosigner share the responsibility of repaying the student loan.

A cosigner isn’t always necessary for the Wells Fargo Collegiate loan but it is extremely beneficial to use one. Because it is a private student loan, it is based on credit. Chances are, most students have little credit history and, therefore, may not be trusted as much. If a student is able to get a student loan without a cosigner, they will most likely have a much higher interest rate.

Can I Consolidate My USAA Student Loan?

USAA and Wells Fargo do offer student loan consolidation. Consolidation is the process of condensing multiple loans into one. One of the best parts about consolidation is that it makes the repayment of loans much easier. Instead of worrying about making multiple payments on different loans, borrowers can simply just make one.

In addition, students may be able to refinance their student loans when they consolidate. This means that they can change the terms of their loan. They can make their monthly payments larger, lowering their interest rate or they can make their payments less, therefore increasing their interest rate and length of repayment. It is important to keep in mind, however, that a lower monthly payments always equals a greater sum on the total amount a borrower will spend over the life of their loan.

What Are My Other Options Besides USAA?

There are a number of lenders out there who offer student loans. Right here on LendEDU’s website you can read other lender reviews such as Discover Student Loans, PNC Student Loans, Sallie Mae, and SunTrust Student Loans.

As with anything, it is crucial to shop around to find the best interest rate and terms. In addition, students should try to obtain scholarships and grants to pay for their education before they look into student loans. Federal loans also typically offer more favorable interest rates as opposed to private student loans.

Final Thoughts

If you or your parents are USAA members it is a great idea to look into their student loan program. Both USAA and Wells Fargo are reputable companies and can be trusted to fund your education.