PenFed Powered by Purefy Student Loan Refinancing Review

PenFed is one of the few lenders to allow married couples to refinance together.

Ryan LaneJune 18, 2020

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Our Take

5.0

NerdWallet rating 

The bottom line: Pentagon Federal Credit Union, or PenFed, offers student loan refinancing for its members, with loans issues by online lender Purefy. It's best for married couples who want to refinance their student loans into a single one.

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Full Review

Best Student Loan Refinancing for Fast Payoff, Best Student Loan Refinancing for Parents

PenFed Student Loan Refinance
Check Rate

on Purefy's website

Check Rate

on Purefy's website

Fixed APR

3.23 - 5.53%

Variable APR

2.58 - 4.98%

Min. Credit Score

670

Pros & Cons

Pros

  • Married couples can refinance student loans into a single loan.

  • You can refinance parent PLUS loans in your name.

  • You can see if you’ll qualify and what rate you’ll get without a hard credit check.

Cons

  • Estate is still responsible for the loan if the borrower dies.

Compare to Other Lenders

PenFed Student Loan Refinance
LendKey Student Loan Refinance
Splash Financial Student Loan Refinance
Check RateCheck RateCheck Rate
Fixed APR

3.23 - 5.53%

Fixed APR

2.99 - 8.77%

Fixed APR

2.80 - 6.72%

Variable APR

2.58 - 4.98%

Rates and offers current as August 1, 2020. 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 3.23% APR to 5.53% APR and Variable Rates range from 2.17% APR to 5.53% 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.

Variable APR

1.99 - 8.57%

See LendKey's full terms and conditions at https://www.lendkey.com/disclaimers

Variable APR

1.89 - 6.77%

FIXED APR Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 5.80% per year for a 5-year term, 3.30% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.69% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 3.94% per year to 7.05% per year for a 15-year term, or 4.37% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan). The Rate will not change during the term. Repayment examples are for illustrative purposes only. The following Fixed Rate examples are based on a $10,000 loan amount using the lowest APR for each application term listed above. All student loan rates used in calculating the examples are shown without the autopay discount (.25%). There are no application or origination fees, and no prepayment penalties. The monthly payment for a sample $10,000 loan with an APR of 2.88% per year for a 5-year term would be $179.15. The monthly payment for a sample $10,000 loan with an APR of 3.30% for a 7-year term would be $133.49. The monthly payment for a sample $10,000 loan with an APR of 3.45% for a 8-year term would be $119.35. The monthly payment for a sample $10,000 with an APR of 3.69% for a 10-year term would be $99.78. The monthly payment for a sample $10,000 with an APR of 4.18% for a 12-year term would be $88.43. The monthly payment for a sample $10,000 loan with an APR of 3.94% for a 15-year term would be $73.67. The monthly payment for a sample $10,000 loan with an APR of 4.37% for a 20-year term would be from $62.57. Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.98% (with autopay) to 6.90% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is 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 July 28th, 2020, the one-month LIBOR rate is 0.16625%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.23% per year to 6.30% per year for a 5-year term, 3.83% per year to 6.35% per year for a 7-year term, 2.18% per year to 4.15% per year for a 8-year term, 3.97% per year to 6.40% per year for a 10-year term, 2.84% per year to 4.29% per year for a 12-year term, 2.97% per year to 6.65% per year for a 15-year term, 4.35% per year to 6.90% per year for a 20-year term, or 4.28% per year to 6.86% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates 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. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. 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. Variable APRs and amounts subject to increase or decrease. Variable rates are indexed to the one-month LIBOR rate. The following Variable Rate examples are based on a $10,000 loan amount. Repayment examples are for illustrative purposes only. All student loan rates below are shown without the autopay discount (.25%). There are no application or origination fees, and no prepayment penalties. The monthly payment for a sample $10,000 loan with an APR of 2.23% per year for a 5-year term would be $176.29. The monthly payment for a sample $10,000 loan with an APR of 3.83% for a 7-year term would be $135.91. The monthly payment for a sample $10,000 loan with an APR of 2.18% for a 8-year term would be $113.61. The monthly payment for a sample $10,000 with an APR of 3.97% for a 10-year term would be $101.10. The monthly payment for a sample $10,000 with an APR of 2.84% for a 12-year term would be $82.03. The monthly payment for a sample $10,000 loan with an APR of 2.97% for a 15-year term would be $68.91. The monthly payment for a sample $10,000 loan with an APR of 4.35% for a 20-year term would be from $62.46. The monthly payment for a sample $10,000 loan with an APR of 4.28% for a 25-year term would be from $54.34.

Min. Credit Score

670

Min. Credit Score

660

Min. Credit Score

660

Full Review

Pentagon Federal Credit Union, known as PenFed, offers student loan refinancing for its members. PenFed stands out because it allows married couples to refinance student loans together.

PenFed also lets you release a co-signer after 12 on-time payments. That's much faster than many lenders offer, making PenFed a good option if you can't qualify to refinance on your own. However, spouse co-signers are ineligible for this option.

Online lender Purefy is the exclusive provider of PenFed student loans. Purefy was previously part of the Bank of Virginia, issuing student loans under the name CordiaGrad. It became a separate company in 2016.

PenFed student loan refinancing at a glance

  • Offers personalized rate estimates via a soft credit check.

  • Married couples can refinance together.

  • Borrowers can refinance their parents’ PLUS loans.

How PenFed could improve

Like other five-star lenders, PenFed isn't perfect. It could improve by offering additional programs such as:

  • Discharging loans if the borrower dies or becomes disabled.

  • Offering military deferment, as well as academic deferment for borrowers returning to school.

  • Refinancing loans for lawful permanent residents of the United States.

» MORE: Top credit union student loan refinance lenders

PenFed student loan refinancing details

  • Soft credit check to qualify and see what rate you’ll get: Yes.

  • Loan terms: 5, 8, 12 or 15 years.

  • Loan amounts: $7,500 to $300,000.

  • Can transfer a parent loan to a child: Yes.

  • Application or origination fee: No.

  • Prepayment penalty: No.

  • Late fees: Yes; a fee equal to 20% of the interest portion of the payment applies after the payment is five days late. The minimum late fee is $5; the maximum is $25, except where prohibited by law.

Compare PenFed’s range of interest rates with other student loan refinance lenders. Your actual rate will depend on factors including your — or your co-signer’s — credit history and financial situation. To see what rate PenFed will offer you, apply on its website.

Financial

  • Minimum credit score: 670. You'll need a higher score if you’re applying without a co-signer or refinancing more than $150,000.

  • Minimum income: You’ll generally need an income of at least $25,000 if you’re applying with a co-signer, and $42,000 if you’re applying without one. If you’re refinancing more than $150,000, the minimum income is $50,000 or $100,000, depending on how much other debt you have.

  • Typical credit score of approved borrowers or co-signers: 773.

  • Typical income of approved borrowers: $96,985.

  • Maximum debt-to-income ratio: Generally, 35% for applicants with undergraduate degrees and 40% for applicants with graduate degrees.

  • Can qualify if you’ve filed for bankruptcy: Yes, if the bankruptcy was 10 or more years ago. You can also qualify — even with a recent bankruptcy on your record — if you have a co-signer who meets all of the credit, income and debt-to-income criteria, and you have a credit score of 670 or higher and income of $25,000 or more.

Other

  • Citizenship: Must be a U.S. citizen. Unlike many other lenders, PenFed doesn't refinance college debt for permanent residents.

  • Location: Available in all 50 U.S. states.

  • Must have graduated: Yes, must have a bachelor's degree or higher.

  • Must have attended a school authorized to receive federal aid: Yes.

  • Percentage of borrowers who have a co-signer: 27%.

You must be a Pentagon Federal Credit Union member to qualify to refinance your loans, but membership is included — at no additional cost — as part of the refinancing process.

Many lenders are offering relief related to COVID-19. Check this list of private loan relief options to see what this lender offers.

  • Academic deferment: No.

  • Military deferment: No.

  • Forbearance: PenFed offers relief for up to 6 months if you've lost your job or face a different temporary hardship. You can also apply for permanent hardship relief, with no maximum length, if you expect your situation to last longer than 6 months. Relief may take the form of skipped payments — like a traditional forbearance — or a temporary or permanent adjustment to your repayment plan.

  • Co-signer release available: Yes, after 12 months of consecutive on-time payments.

  • Death or disability discharge: No.

  • Loan discharge if co-signer dies or becomes disabled: No.

Repayment Preferences

  • Allows greater-than-minimum payments via autopay: Yes.

  • Allows biweekly payments via autopay: Yes.

  • Loan servicer: Pentagon Federal Credit Union, known as PenFed.

  • In-house customer service team: Yes.

  • Process for escalating concerns: Yes.

  • Borrowers get assigned a dedicated banker, advisor or representative: Yes, each borrower is assigned a personal student loan advisor.

  • Average time from approval to payoff: From three to 14 days.

Refinancing student loans with PenFed through Purefy comes with the following perks:

  • Spousal consolidation: Partners who both have student loans can qualify to refinance with PenFed based on their combined incomes and the higher credit score of the two. This means the spouse with the lower credit score would likely qualify for a lower interest rate than he or she would otherwise.

  • Member discounts: PenFed members receive discounts on auto, home, financial and other products and services. For example, members can save money on car rentals and tax preparation software. Visit the PenFed website for complete details.

Before refinancing with PenFed through Purefy

Before deciding on a student loan refinance lender, compare multiple student loan refinance options to make sure you’re getting the best rate you qualify for. In addition to interest rates, compare lenders’ repayment options and the flexibility they offer borrowers who are struggling to make payments.

If you aren’t eligible to refinance with PenFed

If PenFed denies your refinance application, the lender will let you know why. Depending on the reason, you may want to consider other lenders, including those that allow a co-signer.

NerdWallet recommends prequalifying with multiple refinance lenders before you apply. This will let you know which lenders you may be eligible with, without affecting your credit.

Student loans ratings methodology

NerdWallet believes the best student loan is one you can repay at the lowest interest rate you can get. That’s why NerdWallet’s student loan ratings reward lenders that offer a variety of loan terms, limit their fees and penalties, and extend borrowers multiple options to avoid default. Points are also awarded for soft credit checks, underwriting transparency and other consumer-friendly features. Use these ratings as a guide, but we encourage you to shop around for the lowest interest rate you can qualify for. NerdWallet does not receive compensation for its reviews. Read our editorial guidelines.

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