What you need to know:
- The pros and cons of PenFed student loan refinance
- Salary and credit requirements to be eligible for PenFed student loan refinance
- How to determine if PenFed student loan refinance is a good fit for you
Pentagon Federal Credit Union, more commonly known as PenFed, is a financial institution that serves all 50 states in the United States; Washington, D.C.; as well as Guam; Puerto Rico; and Okinawa.
PenFed Credit Union offers several financial products, including student loan refinancing, which lets borrowers consolidate their student loans into one payment. While refinancing your student loan with PenFed may be more convenient, you lose certain benefits when you consolidate federal loans, such as forbearance, deferment and income-driven repayment plans.
Let’s take a closer look to see if PenFed student loan refinance is the right fit for you.
PenFed student loan refinance at a glance
|Fixed APR||3.48 - 6.03%|
|Variable APR||2.27 - 7.01%|
|Terms||5 to 15 years|
|Loan Amount||$7,500 to $300,000|
|Minimum Credit Score||670|
To start your search for the right loan consolidation or refinance option for your situation, compare the pros and cons of the lender you’re considering. Take a look at the advantages and disadvantages of refinancing student loans with PenFed.
There’s a lot to like about the PenFed student loan refinance product, including married couples, can refinance their separate loans into one payment as well as cosigner release eligibility. Here are a few more benefits associated with PenFed student loan refinance:
- No fees: PenFed does not assess pre-payment penalties, origination or application fees
- Flexible loan terms: PenFed offers 5-, 8-, 12- and 15-year terms, which could help decrease your monthly payments if needed
- Multiple student loan types serviced: PenFed refinances federal and private student loans
- cosigner release: PenFed student loan borrowers can request their cosigner be released from the obligation after they make 12 consecutive, timely payments
Salary requirements, credit score minimums and limited forbearance options are some of the things borrowers will have to deal with if they refinance their student loans with PenFed. Keep these things in mind about PenFed student loan refinance before applying for a loan:
- No in-school payment option: Only borrowers who graduated with a bachelor’s degree or higher (and are employed) are eligible for student loan refinancing with PenFed.
- No concrete forbearance or deferment options: PenFed does not advertise deferment or forbearance. The company will work with borrowers on a case-by-case basis, however, in the event they lost their job. Forbearance is possible, but interest would accrue during that time.
- Income and credit requirements: You will need a cosigner if you apply for a loan up to $150,000, your credit score is between 670 and 699, and your annual income is $25,000 to $41,999.
Meanwhile, your cosigner must earn at least $42,000 annually and have a credit score of 720 or higher. Loan requests exceeding $150,000 require a cosigner if your credit score is between 670 and 724 and your annual income is between $25,000 and $49,999. Your cosigner will have to earn at least $50,000 annually and have a credit score of 725 or higher.
PenFed student loan refinance eligibility requirements
There are a handful of basic requirements borrowers must meet to refinance their student loan through PenFed outside of the financial ones mentioned in the previous section. Applicants must be:
- A U.S. citizen
- Age of majority in their state of residence
- The borrower of at least one outstanding, completely disbursed private education, federal-backed or Parent loan
- The borrower on the student loan application and on the promissory note
- A graduate with a bachelor’s degree or higher
- Able to provide proof of income and meet the borrower credit requirements
Cosigners must meet all of PenFed’s eligibility requirements, too. Borrowers also have to be a PenFed Credit Union member to refinance their student loans with the institution. There is no requirement for military service, and borrowers only need to sign up to become a member after they’re approved.
PenFed student loan refinance application process
Applying for a loan with PenFed is a two-step process. First, you’ll have to disclose information that allows PenFed to conduct an initial credit review to determine your interest rate.
This information includes your name, email address, home address, education level, current salary and housing expenses. All of this information will lead to a “soft” credit inquiry or pull and won’t affect your credit score. At this point, you can see what type of APR you’re eligible for.
After reviewing your interest rate offer, you can opt to complete the application process, which includes a “hard” credit pull. Hard credit checks may impact your credit score, temporarily. PenFed requires the following items to complete your application process:
- Income verification (paystub or tax return)
- Photo ID (driver’s licenses, passport or state-issued ID card)
- Payoff verification statements from each of the borrowers’ current loan servicers (the statement should project the payoff amount 10, 15 or 30 days into the future)
- Graduation verification (picture or copy of your diploma or transcripts)
- PenFed membership application (this is only needed after your pre-approval)
PenFed student loan refinance Parent PLUS loans
The PenFed Parent PLUS student loan refinance product allows parent borrowers to consolidate PLUS loans with other kinds of federal direct loans, including subsidized and unsubsidized. Parents may assume direct loan debt that is in their child’s name, whether the child is included on the refinance application or not.
PenFed Parent PLUS student loan refinance also accesses no origination fees or prepayment penalties. Additionally, students who graduated with at least a bachelor’s degree can use PenFed Parent PLUS refinance to assume their parent’s debt into their own name.
Should you refinance your student loan with PenFed?
Whether a PenFed student loan refinance is your best option depends on your current financial situation. Consider PenFed’s financial eligibility requirements again. Based on those requirements, you might want to refinance with PenFed if:
- You earn a significant five-figure annual salary
- You have a strong credit history
- You have someone willing to cosign your loan
The last point about a cosigner is important if the two other points are not true. Remember, you have to earn at least $42,000 a year and have a credit score of 700 to apply for a loan of $150,000 or less on your own. And if you want to borrow more than $150,000, you’re going to have to earn at least $50,000 annually and have a credit score of 725 or more. Those could be high marks to hit if you’re just coming out of college and not working in a high-paying industry just yet.
The required cosigner could make qualifying for refinancing your loan easier and possibly get you a better interest rate. Just remember that the cosigner is tied to you for at least 12 months and their credit will suffer if you don’t make payments on time.
If you’re attracted to PenFed’s relatively low fixed and variable APRs and can meet its financial eligibility requirements (with or without a cosigner), you may have found your student loan refinancing company. If you want a competitive interest rate with less demanding financial requirements or don’t have access to a cosigner, however, there are other student loan refinance options available. Check out Student Loan Planner’s top-rated student loan refinancing companies for more information.