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Published: Aug 17, 2023 13 min read

More than 43 million Americans currently have student loan debt amounting to $1.77 trillion (and rising). If you’re one of them and wondering how refinancing student loans saves money, this article is for you. Refinancing a student loan means trading your current loan for a new one that typically offers better rates, lending terms and payment plan. One way of doing that is with the Pentagon Federal Credit Union.

Read this PenFed student loan refinance review to learn the details of refinancing your existing loan with the lender.

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Best for refinancing parent PLUS loans

The biggest benefit of refinancing your student loan is getting a lower interest rate than the one on your current loan. This can reduce your monthly payments and/or help you pay off the principal amount faster. Since parent PLUS loans generally have higher interest rates than PenFed student loans, it can make sense to refinance your student loans with the credit union if the new terms make financial sense.

Additionally, since parent PLUS loans are nontransferable, you can’t transfer the loan to your child as a PLUS even if your child can repay it. However, PenFed allows you to refinance the PLUS loan in your child's name, thus making it transferable. This may be an option if your child is employed or has built a credit score good enough to receive a lower interest rate, which is one reason PenFed’s Student Loan Refinancing program is among the best student loan refinance options available.

PenFed Student Loan Refinance pros and cons

  • Transparent requirements and rates
  • Affordable terms
  • Can transfer responsibility to student
  • Requires good credit and income
  • Rules borrower out of loan forgiveness
  • Requires membership

Pros explained

Transparent requirements and rates

Many borrowers who are wondering if they should refinance their student loans haven’t yet because they’re unsure of the requirements and rates they’ll face. PenFed is transparent about its eligibility requirements — including income demands and cosigner qualifications — and the interest rate you can get. The lender lists the requirements on its website and allows you to pre-qualify to see the rate you’d receive before you commit to refinancing your loan(s).

Affordable terms

PenFed allows you to refinance high-interest student loans for a lower interest rate. Significantly, there are no refinance fees or prepayment penalties, which makes PenFed Student Loan Refinancing affordable and attractive. You can also have a parent or spouse cosign your new loan. This may lower your interest rate and monthly payments, particularly if the cosigner has a strong credit score and sound financial standing (like sufficient income and a good debt-to-income ratio). That’s generally how refinancing student loans saves money — by lowering monthly payments.

Can transfer responsibility to student

Since a PenFed loan refinance makes the loan transferable, parents can use it to transfer the responsibility of the loan to the student after graduation or when they start working and are financially stable enough to continuously make loan payments.

Cons explained

Requires good credit and income

PenFed requires a minimum credit score of 670 to refinance private and federal student loans. This locks out students and parents who have bad credit for financial reasons or for lacking enough time to build a good credit score. PenFed’s Student Loan Refinancing program is mostly suitable for those who started a job after graduating college and have been able to improve their credit and financial standing with an income.

Additionally, you’re not eligible for a PenFed Student Loan Refinancing if you or a cosigner don’t have income. The lender requires an annual income of at least $50,000 for the borrower or an eligible cosigner.

Rules borrower out of loan forgiveness

Those who use PenFed Student Loan Refinancing aren’t eligible for the federal student loan forgiveness program. That’s because PenFed loans are private, while federal loan forgiveness programs target federal student loans. Even if your original loan was federal, refinancing it with PenFed makes it private and therefore rules you out of any loan forgiveness programs.

Requires membership

Lastly, you’ll need to be a PenFed member in order to refinance a student loan with the institution. If you're currently not a member, you can join and start the refinance application process.

PenFed Student Loan Refinancing offerings

PenFed offers a fixed rate student loan refinance program, meaning those who refinance through the credit union won’t face interest rate fluctuations now or in the future.

Fixed rate student loan refinancing

Whether you have a private or federal loan, PenFed allows you to refinance it for a fixed rate student loan. The main benefit of a fixed rate loan over a variable rate loan is that your monthly payments remain the same over the duration of the loan. This makes your payments predictable and easier to plan for.

Additionally, your interest rate will never go up even if economic conditions push rates higher. Therefore, a fixed rate student loan from PenFed can shield you from higher monthly payments during economic downturns or when interest rates rise in response to high inflation.

Refinancing to a PenFed fixed rate student loan can also help you by changing your repayment term. When you refinance a student loan, you can alter your repayment plan by choosing a new term length for the new loan. PenFed student loans offer terms between five and 15 years. You can choose a shorter term if you want to pay off the loan quickly, or a longer term if you want to make smaller monthly payments and save more of your income.

PenFed Student Loan Refinancing pricing

The starting point for PenFed student loan interest rates is lower than most other options on the market, like parent PLUS loans. This makes PenFed an affordable student loan refinance option. The company’s website has an external link to Sparrow, where you can determine which rate you qualify for. Doing so doesn’t affect your credit score and will inform you of whether you’ll get a lower interest rate than what you’re currently paying on your student loan.

Additionally, PenFed doesn’t charge refinance fees or prepayment penalties. This reduces the overall cost of credit, which further makes it an affordable and attractive refinance option.

PenFed Student Loan Refinancing financial stability

A lender’s credit rating reflects its financial stability, reliability and overall ability to meet its financial obligations. Unfortunately, PenFed is not rated by the major credit rating agencies, including A.M. Best and Standard and Poor’s.

However, according to its annual report, the credit union has strong financials. PenFed’s filings indicate year-over-year growth of 20% in its deposit balances, which equates to $4.6 billion. According to the audited financial statements, also provided in its annual report, PenFed had $774.89 million in cash and cash equivalents in 2022, marking a 42% increase from the year prior, and $35.5 billion in total assets, marking a 9% increase from the year prior. The credit union also generated $1.4 billion in total interest income in 2022, up 38% from the year prior.

PenFed’s net worth ratio of 9.52% is above the NCUA’s minimum requirement of 7%. A net worth ratio shows the return investors could get if all the profits the company earned could be passed through to them. The credit union is 2.52% (or $900 million) above the recommended minimum, indicating that the lender is well capitalized. As a result, it was able to pay market-leading dividend rates to members.

PenFed Student Loan Refinancing accessibility

PenFed has over 50 branch locations in 13 different states, the District of Columbia, Puerto Rico and Guam. While customers can get in-person service from PenFed branches, the credit union also allows borrowers to apply online for student loan refinancing directly from its website. PenFed also has a mobile app that lets borrowers manage their accounts, including making student loan payments, while on the go. Both the app and website are available 24/7.

PenFed has teletypewriter (TTY) contacts for customers with hearing impairments. The credit union doesn’t mention anywhere on its website whether it has other special accessibility options, like in-person language translators.


As the second-largest federal credit union in the U.S., PenFed offers student loan refinancing to U.S. citizens who have completed and earned their associate, undergraduate or graduate degrees. Foreigners and U.S. students who are still enrolled are ineligible. If you meet the requirements, you can refinance your current student loan online in fewer than 15 minutes, according to PenFed.

Contact information

PenFed doesn’t have a dedicated line for student loans and student loan refinancing. However, you can reach its 24/7 self-service line at 1-800-247-5626. If you’re a member, you can reach its customer support at 724-473-6333.

For customers in the U.S., PenFed can be contacted via those phone numbers from Monday to Friday between 7 a.m. and 11 p.m. EST, Saturday between 8 a.m. to 11 p.m. EST and Sunday between 9 a.m. to 5:30 p.m. EST. Callers with hearing impairment can reach PenFed’s TTY line at 1-800-225-6378 or 1-541-225-6801. The credit union has the following toll-free international numbers:

  • Spain: +900-99-1013
  • Italy: +800-876204
  • Germany: +0800-818-5360
  • U.K.: +0800-89-1401

PenFed provides secure messaging and secure upload via its website, where you can find a contact form, but not by email. The credit union’s social media accounts are also linked on its website.

User experience

PenFed has a self-service website that provides information on how to refinance student loans. The lender says you can pre-qualify in a couple of minutes and complete the application in as little as 15 minutes. PenFed’s online student loan refinance takes five steps:

1. Find your rate by pre-qualifying for refinancing in a matter of minutes.

2. Apply online. This should take 15 minutes or fewer.

3. Submit the necessary documents as outlined by PenFed, then open your membership with the credit union.

4. Get the loan rate and term length that you qualify for.

5. Review your loan application and e-sign it.

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PenFed Student Loan Refinancing customer satisfaction

PenFed is not accredited by the Better Business Bureau (BBB). The credit union has a poor customer rating on the BBB’s website. While there aren’t many PenFed Student Loan Refinancing reviews, many of the complaints arise from the lender’s other products. Overall, customers are largely dissatisfied with its handling of loans, with some users claiming that PenFed is too quick to sell defaulted loans to collection agencies.

However, PenFed has excellent reviews on other online customer review sites. Some users praise the credit union for offering affordable interest rates on its loan products.

PenFed Student Loan Refinancing FAQs

What is PenFed Credit Union?

Pentagon Federal Credit Union, or PenFed, is a financial institution that offers checking, credit cards, loans, loan refinancing and money market certificates. With 2.9 million members and $35.3 billion worth of assets, PenFed is the second-largest credit union in the U.S. It offers competitive interest rates, particularly for borrowers who want to refinance parent PLUS loans.

Is PenFed a good credit union?

PenFed was founded in 1935 and has proven through its staying power that it is a good credit union. Anyone can join because its membership is open to all. It offers a wide range of products, many of which come with discounts for members. Borrowers who run into income challenges can take advantage of PenFed's financial hardship programs. The credit union maintains a versatile website that acts as an information center for existing and potential customers.

How long does it take PenFed to approve a loan?

While PenFed doesn't specify how long it takes to approve loans, the lender says that you can pre-qualify for one in fewer than 15 minutes. Once the loan is approved, it takes between one to seven business days to disburse the funds. Electronic transfers take the shortest time, while checks take the longest.

Is PenFed good for student loans?

With competitive rates and terms of up to 15 years, PenFed is among the most solid institutions offering a student loan refinancing program. PenFed allows you to replace your existing student loan with a new one that potentially has better rates and terms. It also allows refinanced loans to be transferable.

How we evaluated PenFed Student Loan Refinancing

To evaluate PenFed’s Student Loan Refinancing program, we considered the following factors:

  • Plans and offerings: We scrutinized the types of student refinance loans that PenFed offers.
  • Pricing: We looked at PenFed’s interest rates and fees relative to market rates and fees.
  • Financial stability: We examined PenFed’s ability to generate revenue and meet its financial obligations.
  • Accessibility: We appraised how easy it is to access PenFed’s student loan refinance and the overall application process.
  • Customer satisfaction: We evaluated PenFed student loan refinance reviews on multiple platforms.

Summary of Money's PenFed Student Loan Refinancing review

If you can get a lower rate, refinancing your student loan may make sense. PenFed is among the best student loan refinancing financial institutions, especially for parent PLUS loans, which generally incur higher interest rates than PenFed. The credit union allows you to choose a repayment term of up to 15 years. If you have a good credit score and/or a cosigner, you can qualify for a lower rate, which may reduce your monthly payments and help you save a larger portion of your income.

PenFed’s offerings for refinanced student loans require a credit of 670 or better. You won’t be eligible for loan forgiveness if you refinance to a PenFed student loan, and the credit union has a minimum income requirement of $50,000. These eligibility requirements may block some borrowers from refinancing with PenFed.

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