PenFed Student Loan Refinancing Review: Is It Right for You?

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With the PenFed student loan refinance program, you may be able to get a lower interest rate or monthly payment on your education debt.

PenFed is a good fit for bachelor’s degree-holders with multiple student loan types who have solid-to-stellar credit and income (or access to a cosigner who does). It’s especially useful when attempting to consolidate spousal or parental student loan debt.

Let’s review the basics of PenFed student loan refinance, plus the credit union’s application process.

What to like:What to keep in mind:
Competitive interest rates
Consolidate spousal debt
Refinance Parent PLUS Loans
Add (and release) a co-signer
In-house loan servicing
Credit union membership required
Stiff income, credit score requirements
Few deferment, forbearance options
No autopay discount available

Established in 1935, Pentagon Federal Credit Union serves about 2 million members nationwide. PenFed primarily serves government employees and military personnel, but you don’t have to belong to either group to join.

Here’s what you need to know about the PenFed student loan refinancing program, which has been powered by Purefy since 2016:

  • Refinance $7,500 to $300,000 in student loans
  • Private and federal loans are eligible, including parent PLUS loans
  • Consolidate your significant other’s loans into a PenFed couple loan
  • Refinance parent PLUS loans into your child’s name
  • Fixed and variable APRs available
  • Estimate your rate using the lender’s Find My Rate Tool (without submitting to a credit check)
  • No application, origination fees or prepayment fees
  • Choose from four repayment terms: five, eight, 12 or 15 years
  • Option to apply with a cosigner

Keep in mind, however, that to reap the rewards of PenFed student loan refinancing, you must be a bachelor’s degree-holding U.S. citizen. Also, your creditworthiness will be put under the microscope.

  • Credit score: PenFed requires solo applicants to have a 700, or a 670 when applying with a spouse or cosigner
  • Income: PenFed requires lone applicants to prove earnings of $42,000, or $25,000 when applying alongside a cosigner

With all that said, if you’re interested in the PenFed student loan refinancing program, there are some key benefits and drawbacks to consider.

See Student Loan Refinance Rates - No hard credit check

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What to like about PenFed student loan refinance

Competitive fixed and variable interest rates

PenFed advertises both fixed and variable interest rates, and they’re competitive with APRs promoted by more well-known banks and online lenders.

Remember that if you choose a fixed rate, you won’t have to worry about your interest rate changing over time like variable interest rates do. Inherently riskier, variable rates start out lower but could rise over time.

Your APR will also depend on your creditworthiness (or that of your cosigner) as well as which of the following repayment periods you choose for your PenFed student loans:

Term (years)Lowest fixed APR*Lowest variable APR*
53.23%2.58%
83.45%2.64%
124.18%2.84%
154.39%2.97%
* APRs current as of Aug. 24, 2020

Consolidate your partner’s debt with PenFed’s couple loan

The credit union’s spouse loan makes it possible for couples to save money on their student loans without having to refinance separately.

If both you and your significant other have student loans, you can combine them into a couple loan. When you apply for a couple loan, PenFed combines your incomes and bases your interest on the higher of your two credit scores. Either you or your partner must have a 670 credit score and $42,000 in annual income.

Consolidating student loans with a spouse isn’t the right move for everyone, however, so proceed cautiously.

Refinance parent PLUS loans, possibly into the student’s name

It’s also possible to refinance federal parent PLUS loans, either as the mom or dad, or as the ex-student.

However, if you’re the parent, your son or daughter must be the primary borrower on at least one other loan to be eligible for PenFed student loan refinance.

Shopping around will help you secure your best loan terms, however, so check out the offerings of competing lenders that refinance parent PLUS loans.

Option to add a cosigner — and release them in 12 months

Adding a student loan cosigner with good or excellent credit can increase your chance of getting a lower interest rate. It can also help you qualify for PenFed student loan refinance.

Loan amountYou’ll need a cosigner if your …And your cosigner needs …
Up to $150,000● Credit score is 670 to 699
● Income is between $25,000 and $41,999
● A 720 credit score and $42,000+ income
Above $150,000● Credit score is 670 to 724
● Income is between $25,000 and $49,999
● A 725 credit score and $50,000+ income

If you’re adding a cosigner to your application, they must also be a U.S. citizen the age of majority in their state.

On the plus side, after 12 months of consecutive on-time payments, you can apply to have PenFed remove your cosigner from the loan. At this time, PenFed will reevaluate your financial and credit profile to make sure you qualify for a cosigner release.

Cosigners are jointly responsible for the student loan debt. So, cosigning a student loan can be risky for both the cosigner and the primary borrower. PenFed student loans’ cosigner release policy can help resolve any long-term concerns.

In-house loan servicing

This national credit union also stands out for servicing its own loans. If you elect to apply for PenFed student loan refinance, you won’t have to worry about your new debt being passed off to a loan servicer that manages your repayment.

Unfortunately, that is the case with other refinancing lenders, who may issue your new loan before sending you elsewhere to make your monthly payments.

What to keep in mind about PenFed student loan refinance

PenFed Credit Union membership is required

Like most other student loan refinancing credit unions, PenFed has certain eligibility requirements to become a member. The good news is you can bypass those requirements if you apply for its student loan refinancing program.

After you’re preapproved, you’ll fill out a membership form as part of the underwriting process. Once you’re approved, you’ll be a full-fledged member and will have access to PenFed’s other products and services.

PenFed doesn’t charge a membership fee, as you only need to maintain a $5 savings account balance. Also, PenFed provides member discounts on home, auto, financial and other services.

Other eligibility requirements can be stiff

To be eligible for the program, you must meet some basic requirements:

  • Be a U.S. citizen
  • Be at least the age of majority in your state
  • Be the borrower on at least one outstanding education loan
  • Have a bachelor’s degree or higher
  • Have a strong credit history
  • Have an annual income of at least $42,000 (or $25,000 with a cosigner)

PenFed also requires an annual income of at least $42,000 and a credit score of at least 700 to apply without a cosigner. Even with a cosigner, you must earn at least $25,000 and have a 670 credit score or higher to qualify.

If you can’t meet these thresholds, no sweat: Some other refinancing programs have no minimum income requirements or require as little as $24,000 annually.

In fact, there are a handful of cases where an alternative lender might be more accessible should you find yourself ineligible for PenFed student loan refinance:

ScenarioAlternative lender
You’re still in school or have an associate degreeEdVestinU works with borrowers who hold an associate degree, or didn’t graduate
You’re a noncitizenProdigy Finance is among lenders assisting international borrowers
You have less than $7,500 in loans to refinanceLendKey sets its minimum lending amount at $2,000
Your income is below $42,000 (and you don’t have a cosigner)Splash Financial has no minimum income requirement
Your credit score is below 700 (and you don’t have a cosigner)Earnest only requires that your score eclipses 650

Lacking deferment and forbearance options

PenFed doesn’t offer a clear-cut deferment or forbearance policy. But it does work with borrowers on a case-by-case basis during times of economic hardship.

Other extraordinary circumstances may also apply (losing a job after refinancing, an illness or a death in the family) if you’re looking for assistance with your PenFed student loan payments.

Unfortunately, if you head to graduate school, you won’t get a deferment on your payments during that time. And if you do qualify for forbearance, it may or may not be favorable. That’s because interest will continue to accrue during the forbearance period.

No industry-standard autopay discount

Some refinancing programs offer a 0.25% rate discount if you sign up for automatic payments. PenFed, however, doesn’t offer this or any other type of rate discount.

On the other hand, PenFed student loan refinance does offer low interest rates, so compare its terms to other lenders that do offer student loan discounts.

Applying for PenFed student loans refinancing

To find out what kind of rate you qualify for, you first need to share basic information about yourself, your education history and financial picture.

PenFed

Next, you can share more information about your current loans, select a term and view what APR you might qualify for if you apply solo or with a cosigner.

The good news is inputting this information to figure out your rate does not affect your credit in any way because you don’t give Purefy or PenFed your Social Security number.

After you go through that prequalification process (or if you want to skip it altogether), you can apply online. You’ll need to create a student lending profile so you can log in to see your application.

To file a formal application, you’ll need to hand over screenshots or smartphone pictures of …

  • Pay stub or tax return, among other options to verify income
  • ID, such as a driver’s license or passport
  • Payoff verification statements from your existing loan servicers
  • Your diploma or transcripts

You’ll then consent to e-sign certain documents and agree to disclosures and terms and conditions. After that, you can submit your application.

When you apply, PenFed will run a credit check, which will trigger a hard inquiry on your credit report. If you apply with a cosigner, the same will happen with their credit report.

Should you apply for the PenFed student loans refinancing program?

If you meet PenFed’s income and credit score requirements, its program is worth considering. Its competitive interest rates, speedy cosigner release policy and options for couples and parents make it a strong option among top refinancing banks.

If you plan to go back to school, though, you might want to choose a program that has a deferment policy. Also, if you have federal student loans, keep in mind that you’ll lose access to student loan forgiveness and income-driven repayment plans if you refinance through PenFed.

To make sure PenFed is right for you, shop around and compare rates and other features. With time and research, you’ll find the best student loan refinancing program for you.

Student Loan Hero has independently collected the above information related to PenFed student loan refinance, which is current as of Aug. 24, 2020, unless otherwise noted. PenFed Credit Union has neither provided nor reviewed the information shared in this article.

The information in this article is accurate as of the date of publishing.

Andrew Pentis contributed to this report.

Interested in refinancing student loans?

Here are the top 6 lenders of 2021!
LenderVariable APREligible Degrees 
1.89% – 5.99%1Undergrad
& Graduate

Visit Splash

1.99% – 5.64%2Undergrad
& Graduate

Visit Earnest

1.99% – 6.84%3Undergrad
& Graduate

Visit CommonBond

1.91% – 5.25%4Undergrad
& Graduate

Visit Lendkey

2.25% – 6.53%5Undergrad
& Graduate

Visit SoFi

2.17% – 4.47%6Undergrad
& Graduate

Visit PenFed

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of Feburary 1, 2021.


2 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.


5 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: 1. Fixed rates from 2.99% APR to 6.99% APR (with AutoPay). Variable rates from 2.25% APR to 6.53% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.12% plus 2.38% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score.Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

6 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are 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.