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Student Loan Refinancing Overview

1. What is student loan refinancing?

Student loan refinancing is the process of either taking one or multiple student loans and then refinancing them into a new single loan that often include new terms, such as a lower interest rate, a new monthly payment, and a new repayment length.

2. Who should refinance?

Refinancing is a great solution for working graduates or those no longer enrolled in school who have high-interest rates on current outstanding student loans. Refinancing can lower your interest rate and shorten your term to help you get out of debt faster. Borrowers should be aware that by refinancing, they may lose certain benefits offered by the federal programs, such as deferments, forbearance, and income-based repayment plans.

3. What loans can I including in my refinancing?

Our lenders will refinance federal, private, and Parent PLUS student loans. When you refinance with one of our lenders, all of your loans are consolidated into one easy monthly payment.

4. Where can I find my rates?

Use our Find My Rate tool to calculate your exact estimated interest rate, compute your monthly payment, and compare lifetime interest savings all without completing a profile or submitting to a credit check.

5. How does applying with a cosigner help my application?

Although you may have good credit yourself, applying with a cosigner who also has good credit and strong income can ensure that you meet our lender's credit criteria. This will increase the likelihood that you will pass our lender's initial credit screening process and they provide you with a lower interest rate on your student loan refinance. You can check your rate with a cosigner before applying by estimating your cosigners credit score on our Find My Rate tool. Our lenders will use the higher of the two credit scores for qualification purposes which means you can max out on savings.

Please note that when an application has a cosigner, the borrower and the cosigner will both a) jointly apply for credit; and, (b) be jointly liable for the requested loan. Each of our lenders has a different policy for a cosigner release. PenFed borrowers with a cosigner on their loan may request a "cosigner release" if after one year (12 consecutive months) of on-time payments is met, and a quick re-evaluation (note: this does not mean the borrower would have to re-apply) is completed on the borrower's financial and credit profile. Give us a call at 202-888-4320 if you would like to see if you qualify.

For Citizen's cosigner release, borrower must make 36 consecutive on time payments before requesting a cosigner release.

PenFed Cosigner Requirements:

If your annual income is between $25,000 and $41,999, then you will need an eligible cosigner on your application. Also, if your credit score is between 670 and 699, then you will need an eligible cosigner on your application.

Citizens Cosigner Requirements:

If your credit score is between 620 and 679 you will need an eligible cosigner on the application. Your cosigner must have a credit score at or above 660 and you and your cosigner must have income at or above $24,000 to qualify.

6. How long is my cosigner jointly responsible for my loan?

Your cosigner is jointly responsible for your loan for the life of the loan so make sure you choose wisely and can manage all the payments. If you miss a payment, it will damage your cosigner's credit as well as your own.

7. How much can I borrow?

PenFed: The minimum loan amount is $7,500, and the maximum is $150,000.

Citizens: The minimum loan amount of $10,000 and the maximum depends on your degree type. For undergrads and those without degrees, the maximum loan amount is $90,000. For those with graduate degrees or an MBA, the maximum is $225,000, and those with MD, DDS, Law, Pharmacy or Veterinary degrees may refinance up to $300,000.

8. Are there any fees associated with this loan?

Zip, zero, nada. Our lenders never have fees and we don't think you need to have any additional charges for trying to save money. There are no pre-payment penalties, origination, or application fees.

9. Can I refinance my student loan while I'm still in school?

You must be out of school or no longer enrolled in school to be eligible to refinance with one of our lenders.

Applications Process

1. How do I apply?

Great! Once you have used our Find My Rate tool and selected the loan you are interested in click the apply button to be taken directly to the lenders application.

2. What number do I call if I have questions?

We will always provide free consultations about your student loan scenario via email info@purefy.com, or via phone, 202-524-1115. We pride ourselves in putting you first and finding the best solution for each unique situation.

3. Where do I send my underwriting documents?

Each of our lenders has a slightly different process but in general, to expedite the processing of your loan documents, and to keep them secure, it is best to upload them directly to your application.

4. Can I refinance loans for 2 or more borrowers into one loan (i.e. Can two people refinance their loans into 1 loan)?

We can typically facilitate this request for married couples and other unique situations. However, please call one of our student loan experts at 202-524-1115 or email us at info@purefy.com to discuss options before proceeding with an application so we can find the best solution for you.

5. What is a Reference (a field listed in the PenFed application)?

A reference is an individual who could verify your name and address, but who does not reside with you at your physical address. If we were unable to get a hold of you, we would contact your reference. This only applies if you were severely past-due on paying your loan. A reference is not contacted during the application process.

6. Who can I use as a reference?

Your reference can be anyone over the age of 18, as long as he or she is not living at the same address as you. If you are applying with a cosigner, you cannot use him or her as your reference, nor can your reference live at the same address as your cosigner. Lastly, you and your cosigner cannot use the same reference (so make sure to call dibs).

7. What information is considered in the initial credit review on the application?

The initial credit review considers all of the information you and your cosigner provide during the application process, such as income, degree, and school, as well as the information obtained from your credit report. Once you pass the credit review, the next step is to provide documentation that supports the credit information.

8. If I save my application to come back and finish it later, how long is it kept on file?

It depends on the lender you choose but your application will be saved for at least 30 days. But why wait when you can save money on your loan now? You can access your unfinished application by logging into your account at your lender's website.

9. How do I check the status of my loan?

Log in with PenFed or Citizens Bank to check your status. Each of our lenders has a checklist in the application to allow you to see where you are in the process and what is still needed.

10. I can't log into my account. How do I reset my username and/or password?

Please visit PenFed or Citizens Bank log in page. On the log in page, there is a link to reset the password or to obtain your username.

11. Upon pre-approval, what documents do I need to provide to complete the application process?

PenFed: PenFed requires 5 items during the underwriting process:

  • Income verification: A paystub or tax return
  • Photo ID: A Driver's License, Passport, or state-issued ID card
  • Payoff Verification Statements from each existing servicer: a statement that projects the payoff amount 10, 15, or 30 days into the future
  • Graduation verification: A copy or photo of your diploma or transcripts
  • PenFed Membership Application: included in your application after pre-approval

No need to break out the fax machine, a smartphone picture or screen shot will suffice.

Citizens:

  • Social Security Number and Date of Birth
  • Driver's license or state ID number
  • Current contact information (e.g. address, phone number, email)
  • A recent pay stub or other income information
  • Billing statements for the loans you wish to refinance

12. I see that you are partnered with PenFed Credit Union. Do I need to be a PenFed member to refinance? How do I become a member?

In order to refinance with PenFed, you will need to become a PenFed member but don't worry - it's easy to join, and there is no requirement for military service. You'll fill out a membership form during the underwriting process after you are pre-approved. Once your membership is confirmed, you'll have access to PenFed's award-winning products and services. You do not need to be a member to apply to refinance your student loans, we only require membership after pre-approval.

13. What are Payoff Verification Statements?

A Payoff Verification Statement is a statement provided by lenders and servicers that verifies the amount it would take to completely pay off your loan at a certain day in the future (often 10, 15, or 30 days in advance). The amount takes into account the loan balance, interest, fees, and any accrued interest during the time that the statement is requested and the future payoff date provided. This document is critical to the Purefy processing team during the underwriting process as it allows us to prepare an accurate payoff figure for your existing loans. On the contrary, loan statements or monthly billing statements solely provide the loan balance at a certain time, and they do not account for accrued interest.

Servicing the Loan After you Refinance

1. Following disbursement, when will I receive information about managing my account going forward?

It depends on the lender you refinance with but after your loan disburses you can set up your auto pay (if available) and your account to manage your loan. On the day after your loan is disbursed, you will receive a notification from your lender with the steps to set up your online account and manage it going forward.

2. When can I expect my old loans to be paid off?

It typically takes 3-14 business days for your old servicer(s) to receive the payoff funds, apply them to your account, and process the payoff. Please check your account at your old servicer(s) to ensure that the payoffs have been applied after this timeframe. Contact Purefy if the balance is still outstanding after 14 business days and we will help you take care of it.

3. How long do I need to continue making payments with my old servicer after I refinance?

We recommend that you continue making regular payments with your existing loan servicer to avoid missing a payment while the disbursement goes through. Any overpayment our lenders make on your existing loan will be refunded directly to you by your existing servicer in the form of a paper check sent to the address on your application. If your servicer sends us the refund, our lenders will apply the funds directly to the principal balance of your loan.

4. Does Purefy offer deferments or forbearance?

Each of our lenders has a slightly different policy. PenFed and Citizens do not advertise for deferments and forbearance. However, if a borrower lost his/her job, or there was an extraordinary circumstance (death, illness), PenFed and Citizens would absolutely work with the borrower on a case-by-case basis to determine the best remedy. If forbearance is in the interest of both parties, then interest would accrue during the forbearance period, but no payment would be due.

5. What happens if I default on my loan?

Defaulting on a loan is a very serious matter which could have an adverse effect on your personal credit score. Further, bankruptcy does not cancel the obligation to repay an education loan. If you are about to miss a loan payment, contacts your lender immediately to work out a repayment schedule.

6. Is there a penalty for pre-payment or paying the loan off early?

No, you can pay your loan off early regardless of your repayment terms without any penalty. You will only be charged the amount of interest that has accrued on the loan until the day the loan is paid off.

7. What repayment options are there?

We only offer one type of repayment option; principal and interest payments. Any payment larger than the amount due made before the due date will be applied directly to the loan's principal balance.

8. Who is the loan servicer?

PenFed and Citizens Bank are the servicers of the student refinance loans. You can contact a representative of the PenFed Member Services team at 800-247-5626 or visit the website at www.PenFed.org. Citizens general assistance can be reached at 1-800-922-9999 or visit the website at www.citizensbank.com

9. When will my first payment be due? How do I set up my account?

If you refinance with PenFed, your first payment is due 30 days after the loan disburses. To set up an account with PenFed, visit www.PenFed.org and click Create Online Account to register for Online Banking - you will need your member number and security code (call 1-800-247-5626 to establish your security code and obtain your member number). Mobile App: Once you create your online account, you can pay via our mobile app which is available for download on the App Store and Google Play.

By Mail:

PenFed Credit Union
P.O. Box 247009
Omaha, NE 68124-7009

If you have additional questions, please contact a Member Services Representative at 800-247-5626.

Citizens:

Citizens allows for payments online, over the phone, in person at a branch or by mail. Please visit their website payment page to view all options, set up your account or make a payment.

10. Is there a deferment period?

Like other private lenders, our lenders do not offer a deferment period.

Interest Rates

1. Why are your longer term loans priced higher than your shorter term loans?

This accounts for the interest rate risk. It's always riskier for both parties to lock-in to a long-term rate without the information of where rates may be headed.

2. How is the interest calculated on my loan?

Interest is calculated as simple daily interest for student loans. This means that each day the outstanding principal balance is multiplied by the interest rate and divided by 365 days to calculate that day's interest amount. For example, if you have a $10,000 loan and the interest rate is 7%, one day's interest will be
($10,000 x 0.07) / 365 = $1.92.

3. How are your interest rates determined?

Our lenders generally determine interest rates by your credit score and the type of degree you have. Your loan amount has no impact on the rates offered. Your annual income is factored into DTI (debt-to-income) calculations but won't have any effect on your interest rate. If you apply with a cosigner or refinance with your spouse, our lenders use the higher credit score to calculate your interest rate and save you even more on your student loans. Remember, you can check your estimated rate using our Find My Rate tool.

4. Can a borrower prepay the loan at any time?

Yes, a borrower may prepay the loan either partially or in full at any time without incurring any fees of penalties. So if you won the lottery, and want to take care of that balance, fees won't get in your way.

Credit Checks and Your Student Loans

1. Why is a credit check necessary?

The credit check serves two main purposes. First, it is used to verify the identity of all people signing the application. Second, it's used for qualification purposes and helps us offer you the best pricing we can based on your credit history.

2. What if I have no credit history?

There are many things that contribute to your credit history. If you aren't sure what your score is, you can check your credit score for free at CreditKarma. But if you have no credit history, you won't be eligible for our program.

Personal & Financial Information

1. Is my Social Security number needed?

Our lenders will request your Social Security number once you move forward with an application. But your Social Security number is not needed to check your rates and see what you can save using our Find My Rate tool.

2. What is the difference between a U.S. citizen and a Permanent Resident?

U.S. Citizen - A person who was born in the United States, including the lower 48 states, Alaska, Hawaii, Puerto Rico, Guam, and the U.S. Virgin Islands; or who became a citizen through naturalization; or who was born outside the United States to U.S. Citizen parents under qualifying circumstances (derivative citizenship) and who has not renounced U.S. citizenship.

Permanent Resident - Any person not a citizen of the United States who is residing in the U.S. under legally recognized and lawfully recorded permanent residence as an immigrant. Also known as "Permanent Resident Alien," "Lawful Permanent Resident," "Resident Alien Permit Holder," and "Green Card Holder."

At this time, only U.S. citizens and Permanent residents are eligible for Purefy loans through our lenders. If you are a resident alien with a US Citizen as a cosigner, you can refinance with Citizens Bank, one of our lenders.

3. What is the difference between a permanent address and a mailing address?

Your permanent address is the location that you consider to be your primary place of residence (like your parents' or guardian's address). Your mailing address is wherever you want to receive all of your loan documents.