Student debt has surpassed credit card and auto debt combined so it’s no great mystery as to why borrowers seek relief in a variety of ways. One of the most popular options for borrowers to lower the cost of their student loans is through refinancing. There are many factors to consider when thinking about refinancing your student loans. If you are on the fence about refinancing and you’re not quite sure if it’s right for you, read on.
First things first — do you qualify? Before starting an application, it’s good to know the requirements so you don’t fill out unnecessary paperwork. Here are the basic eligibility requirements to get you started:
If you meet some (but not all) of this criteria and need to apply with a cosigner, your cosigner will need a FICO of 720 or higher and an annual income at or above $42,000. To learn more about what a cosigner means for your loan, read our blog post.
It’s important to know your FICO credit score before you begin. If you are considering a cosigner, you’ll also need to know their score. If you meet the requirements but still want to apply with a cosigner in hopes of qualifying for a better rate, keep in mind that a cosigner will only help you if their FICO score is higher than yours. Our rates are based on your credit score, not your income, and if you apply with a cosigner we’ll use the higher FICO score to present your rate. If you aren’t sure what your score is, you can check your rate for free with CreditKarma before getting started.
Now you probably want to know if the refinancing process will actually save you money, and if so, how much? PenFed lets you check your rate without a credit check or an application so you can see what you would save before starting the process. You can use our Find My Rate tool to see the fixed and variable interest rates you qualify for or give us a call at 202-888-4320 if you’d rather discuss your options with one of our loan specialists. We can even calculate how much interest you’d save compared to your current loan situation and the cost of your monthly payments after refinancing. If your current loans have varying interest rates and some are lower than what we offer, you always have the option of only refinancing your higher interest rate loans to maximize your savings.
At PenFed, there are no origination or application fees, no pre-payment penalties, and no penalties if you choose to pay off your loan early.
A goal many people have when refinancing is to shorten their term to pay off their student loans faster. Others want to keep the same term and lower their interest rate. We cover different strategies for refinancing in more detail here if you want to weigh your options.
PenFed offers 5, 8, 12 and 15-year terms for fixed and variable interest rates. Whether a fixed or variable rate is right for you all depends on your financial needs and flexibility. If you aren’t sure which is best, you can always contact one of our loan specialists at 202-888-4320.