Best if:
- You want to take over parent PLUS loans
- You and your spouse want to refinance your loans together
- You need a cosigner to be approved
Pentagon Federal Credit Union (PenFed) has made a name for itself in student loan refinancing by not only offering competitive rates, but providing some creative options not offered by every lender.
PenFed is willing to let graduates refinance PLUS loans taken by their parents, for example, and spouses can combine their loans when refinancing. And if you need a cosigner to qualify for student loan refinancing, PenFed will consider releasing them from their obligation after you’ve made just 12 payments.
In this post:
- PenFed interest rates and loan details
- PenFed student loan refinancing review
- How PenFed compares to other lenders
- How to refinance student loans with PenFed
PenFed interest rates and loan details
PenFed offers fixed- and variable-rate options to borrowers refinancing up to $300,000 in private or federal student loan debt, with a choice of repayment terms ranging from five to 15 years.
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| Rates from (APR) | Fixed: 3.48%+ Variable: 2.32%+ |
| Loan amounts | $7,500 to $300,000 |
| Loan terms | 5, 8, 12, or 15 years |
| Loan types | Any private or federal student loan (including parent PLUS loans) |
| Min. credit score | 670 |
| Min. income | $42,000 to $50,000 (depending on loan amount) |
| Residency | Must be U.S. citizen |
| Transfer parent loan to child? | Yes; spouses may also refinance their loans together |
| Cosigner release | Applications accepted after 12 months of consecutive on-time payments |
| Fees | No application, origination, or disbursement fees |
| Prepayment penalty | None |
| Key benefits | Interest on variable-rate loans capped |
| Education | Bachelor’s degree or higher required |
| Loan servicer | PenFed |
| Best if |
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All APRs reflect autopay and loyalty discounts where available |
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PenFed student loan refinancing review
PenFed is a credit union that was founded to provide services to Department of Defense employees, as well as active-duty military servicemembers and veterans. But today, anyone can join PenFed by opening up a savings account with a $5 initial deposit.
PenFed offers student loan refinancing powered by Purefy Inc., a fintech firm specializing in student loan programs. Unlike some lenders who sell your loan to investors, PenFed provides the funding and collects the payments on your loan.
How to qualify
To qualify for PenFed student loan refinancing, you’ll need to have earned at least a bachelor’s degree, and be a U.S. citizen — legal residents aren’t eligible.
Whether you’ll qualify for PenFed refinancing also depends a lot on your credit score, income, and the amount of debt you want to refinance. To qualify on your own, you’ll need a credit score of at least 700, and annual income of no less than $42,000. If you want to refinance more than $150,000 in debt without a cosigner, you’ll need a credit score of at least 725, and at least $50,000 in income.
If you can’t qualify on your own, you may be approved if you apply with a cosigner. With a cosigner, you can qualify for PenFed refinancing with a credit score as low as 670 and minimum annual income of $25,000. Your cosigner has to have a credit score of 720 or higher and earn at least $42,000.
When you apply with a cosigner or refinance with your spouse, PenFed uses the higher credit score to calculate your interest rate.
Repayment
When you refinance student loans with PenFed, you can choose to pay off your new loan over five, eight, 12, or 15 years. The lack of a 20-year option could make it hard for some borrowers with larger debt to refinance into a loan with affordable monthly payments.
If you’ve selected a variable-rate loan, the maximum rate is capped. The cap depends on the loan term you’ve selected. If you have:
- A 5- or 8-year loan: the rate will never go higher than 9%
- A 12- or 15-year repayment term: the variable rate is capped at 10%
Like most lenders who refinance student loans, PenFed doesn’t guarantee you’ll be granted deferment or forbearance if you have unexpected financial difficulties.
However, if you lose your job or become so ill you can’t work, PenFed says it would work with a borrower on a case-by-case basis.
How PenFed compares to other lenders
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| Rates from (APR) | Fixed: 3.48%+ Variable: 2.32%+ | Fixed: 3.54%+2 Variable: 2.37%+2 | Fixed: 3.45%+¹ Variable: 2.19%+¹ |
| Loan repayment terms (Years) | 5, 8, 12, 15 | 5 to 20 years | 5, 7, 10, 15, 20 |
| Loan amount | $7,500 to $300,000 | $5,000 to $300,000 | $10,000 to $500,000 (depending on level of education) |
| Cosigner release? | Applications accepted after 12 months of consecutive on-time payments | Not offered for refinancing | Yes, applications accepted after 36 months of consecutive payments |
| Transfer parent loan to child? | Yes | No | No |
| Loan servicer | PenFed | University Account Service (UAS) | Firstmark Services |
| Best for | Refinancing student loans taken out by parent or spouse | Graduates seeking flexible loan terms | Refinancing large loan balances |
All APRs reflect autopay and loyalty discounts where available | 1Citizens Bank Disclosures | 2College Ave Disclosures | 3 ELFI Disclosures | 4SoFi Disclosures |
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Citizens Bank Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate ("LIBOR") published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2019, the one-month LIBOR rate is 1.70%. Variable interest rates range from 2.19%-8.92% (2.19%-8.92% APR) and will fluctuate over the term of the borrower's loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 3.45%-9.02% (3.45%-9.02% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan. |
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How to refinance student loans with PenFed
PenFed has proven itself to be a great option for many borrowers seeking to lower the interest rate on their student loans. But before refinancing student loans with any company, it’s wise to shop around.
Credible lets you compare rates from many of the best student loan refinancing companies, without affecting your credit score or putting your personal information at risk.
See Your Refinancing Options
Credible is 100% free!
How PenFed can improve
PenFed offers some creative options for refinancing student loans at competitive rates. The credit union could improve by:
- Providing refinancing to borrowers who didn’t earn a degree
- Serving permanent U.S. residents who aren’t citizens
- Offering a 20-year repayment option to borrowers who want to lower their monthly payment
The company above is one of Credible’s approved partner lenders. Because they compete for your business through Credible, you can request rates from them by filling out a single form. Then, you can compare your available options side-by-side. Requesting rates is free, doesn’t affect your credit score, and your personal information is not shared with our partner lenders unless you see an option you like. Credible receives compensation if you close a loan with one of our partner lenders. The rates you receive and the fees you pay (if any) are not impacted by this compensation.
