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  • Writer's pictureNathan Zarcaro

The 2022 Guide to Refinancing Student Loans With PenFed

Updated: Mar 24, 2023

PenFed is one of America's largest student loan refinancing companies. Officially "Pentagon Federal Credit Union," the company has been around since 1935 and serves over 2.7 million members in a variety of ways.

PenFed is our favorite lender for those looking to consolidate student debt with their spouse in order to simplify their student loan repayment.

A college student attends graduation

PenFed does business in all fifty states, as well as Washington, D.C and Puerto Rico. Offering undergraduate and graduate refinancing solutions, PenFed is known for creative solutions such as Parent PLUS loan refinancing and spousal consolidation, but also for relatively strict eligibility requirements.

This article will cover:

PenFed refinancing at a glance

PenFed Credit Union logo

Minimum Loan Amount


Maximum Loan Amount


Variable APR


​Fixed APR


Term of Loan

5, 8, 12, and 15 years

PenFed student loan refinancing eligibility

Like every other lender, PenFed does have eligibility requirements that they will expect you to meet before you can refinance with them. The loans are issued by Purefy, an online only lender. Among these requirements are:

  • A United States citizen

  • A minimum credit score of 670 (you can build credit while in college)

  • A minimum income of either $42,000 or $50,000, depending on the loan amount

  • You must have achieved at least a Bachelor's degree

  • Must be a PenFed Credit Union member, but this can wait until after you're approved

There is slightly more to it than just these bullet points though.

Generally, to qualify without a cosigner, your credit score will need to be in the 700s (with that minimum income threshold of $42,000).

But if you are looking to refinance over $150,000 in loans, that's when you'll need to earn at least $50,000 per year, and your credit score will also need to be at least 725.

Don't panic though if this is not where your numbers are. To be eligible to refinance with a cosigner, your credit score can be as low as 670, and your income as low as $25,000, provided that your cosigner has credit exceeding 720 and income exceeding $42,000.

Unsure if refinancing your student debt is the right approach for you?

Download our free student loan calculator to gauge what your best options are!

Our student loan calculator

Loan Terms

PenFed's loan terms are slightly more rigid than those of other lenders, but you'll still get to choose among 5, 8, 12, and 15 year terms. One thing that is missing, however, is a longer term option in the 20 year range, which could mean that those with loan balances on the higher end of the spectrum may have difficulty in finding an affordable option here.

Pros to using PenFed

PenFed is typically rated really highly as a private lender, and it's pretty easy to see why. Here are some of their biggest differentiators.

  • Spousal consolidation

  • No fees

  • Parent PLUS refinancing

  • Soft credit checks for rate estimates

Spousal consolidation

Arguably the greatest perk of using PenFed applies if you are attempting to consolidate your student debt with a spouse or significant other. In fact, as of time of writing, they are the only major United States based lender that can do this.

With the opportunity to significantly simplify the repayment process for couples nationwide, it is something worth considering.

No origination and application fees

Like many lenders out there, PenFed does not charge application or origination fees, nor do they assess prepayment penalties. Good news for borrowers trying to pay off their debt as soon as possible!

Without these fees, the only expenses you will incur during your relationship with PenFed is the interest that accrues on your outstanding student loan debt.

Parent PLUS refinancing

We've written a lot lately about Parent PLUS loans. Only certain lenders allow you to refinance these loans, and even fewer lenders allow you to refinance these loans into your child's name.

By doing so, you're freeing yourself from the burden of the loan and essentially transferring it to your child, who the loan was originally taken out for anyway.

Every family's dynamic is different, but it is important that you recognize this as an option.

Soft credit checks for customized rate quotes

It is always nice to find a lender like PenFed that is willing to offer you a rate estimate off just a soft credit check, which does not impact your credit score. This way, there is less pressure to commit to working with a lender if your rate estimate comes in higher than expected, and you'll be able to rate shop elsewhere.

Cosigner release

PenFed also offers the option for cosigner release, and the program is much simpler than it is with many other private lenders in the market. If you decide to add a cosigner to your refinancing application, they'll likely be happy to learn that they can be released from your loan after just twelve complete and timely monthly payments.

And while spousal cosigners are not eligible for these terms, it is still among the most flexible that we've seen.

Cons to using PenFed

Unfortunately, no lender is absolutely perfect. Pentagon Federal could improve by addressing the following.

  • Less flexible loan terms: Since there is no term offering longer than 15 years, those with the highest balances may not find significant monthly savings that they can afford. If these borrowers have federal loans, you may be better served pursuing income-driven repayment instead.

  • You must have a degree to be eligible: Many lenders share this requirement, but without having graduated with at least a Bachelor's degree, you won't be able to refinance your debt. Without a degree, you'll want to consider Citizen's Bank, RISLA, or another lender.

  • No forbearance or deferment: Instead preferring to handle things on a case by case basis, there are no published guidelines or policies regarding forbearance and deferment. This is a significant disadvantage as compared to lenders like Earnest, who includes 12 months of forbearance in their refinanced loans as a borrower protection of sorts.

  • Strict credit and income thresholds: With more stringent income and credit thresholds that other lenders, PenFed likely requires a cosigner with more regularity than other comparable lenders. While not a huge deal, for some borrowers, it may only be worth it for a significantly lower interest rate.

With these cons, those that are unsure as to whether they truly want to refinance would be wise to consider starting with Splash Financial or LendKey, since they are marketplaces that will compare rates for you. The best part is that you can receive your rate in less than two minutes without negatively impacting your credit.

Applying for refinancing with PenFed

Applying for your loan starts with a pre-approval process that can be conducted with only a soft credit inquiry, meaning that your credit score will not be impacted in any way. To start this pre-approval process, you'll be asked to supply them with information including personal information, your education salary, income, and some of your expenses.

PenFed will use this information to gauge your eligibility and gauge what your interest rate will look like.

At this point, if you're unhappy with your quote, you can walk away without negatively effecting your credit score. But if you would like to proceed, you can now move onto the second phase, where your loan will be underwritten and a hard credit pull will be conducted.

Do note that this will show on your credit report and could negatively impact your score for some time.

As you undergo the refinancing underwriting process, you will be asked to provide the following information at a minimum.

  1. Income verification documentation (a paystub or tax return will do for most borrowers)

  2. Photo ID (passport, driver's license, or state ID card)

  3. Payoff verification statements from each current loan servicer that show your projected payoff amount 10, 15, or 30 days into the future

  4. Proof of graduation (either your diploma or a transcript that mentions your graduation)

You usually don't need to fax any of this information in either - smartphone pictures are usually sufficient.

One thing to keep in mind is that you will need to become a PenFed member in order to refinance, but this is not required until after you receive your message of pre-approval.

Is student loan refinancing with PenFed right for you?

We like to say that no lender will be perfect for every single American, but that there is a lender for everybody that wants to refinance their loans.

Generally, though, Pentagon Federal Credit Union in a great option for the following types of borrowers:

  • Those with higher and steady incomes - If you make over $50,000, you'll be free to refinance up to the $300,000 maximum without needing a cosigner. Otherwise, you'll need some help to qualify.

  • Those with great credit - If your credit score is well into the 700s, you likely will not need a cosigner, making PenFed a more attractive lender for you.

  • You want to take advantage of spousal consolidation or refinancing your Parent PLUS loans - These perks are hard to find, so if they are worth it to you, PenFed could be worth it!

Some of the challenges that we've talked about here may very well be worth it, since PenFed's rates are typically very competitive. That said, it is possible to find competitive rates elsewhere that won't require you to jump through the same hoops and requirements.

But refinancing with PenFed is much more of a no-brainer if you have good income and credit.

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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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